BTC is the Establishment

I was having a scroll through crypto twitter yesterday when I came across this meme and had a good laugh at it – then it occurred to me that most people would have no idea what it was about or the significant truth that lies behind it. While Cyberpunks like to celebrate its supposed anarchist roots and being a bit of a FU to the powers that be, BTC is actually very much controlled by the existing banking establishment.

To understand how establishment finance control BTC it is necessary to provide some background and start with the company which more than any other has both profited from BTC and controlled the narrative surrounding it, and that company would be Blockstream.

Blockstream is a technology company founded Adam Back, whose stated purpose is “to sell sidechains to enterprise charging a fixed monthly fee, taking the transaction fees and even selling the hardware”.

While BitCoin was originally designed in the White Paper as a single layer data and payment provider, capable of peer to peer payments (P2P) under the malign influence of Blockstream the purpose of BitCoin was transformed into a number of inter-connected side chains, with BTC at the centre, and the services and side chains provided by Blockstream hanging off the side and taking their cut:

Essentially under this model the efficiencies provided by blockchain technology, which were meant to be continuously re-invested back into the system to allow ever improving efficiencies and scope for more business to be built on top of it, to instead be transformed into a system where by individual functions that could be performed by a single blockchain, to be instead split apart and the efficiencies largely consumed by private fees. The fees from side chains do not go to the miners – they go to the developers of the chains.

Blockstream needed Bitcoin to be unscalable, with a hard block cap to ensure that mass adoption is impossible. Every failing of Bitcoin was a victory for Blockstream, because it allowed them to provide a patchwork service on top of the original protocol to fill the need.

However, the problem with BitCoin is that it was actually capable of doing EVERYTHING right from the start, so in order for the above model to be implemented it was necessary for Blockchain to break BitCoin, introduce various inefficiencies, and then be able to provide “solutions” for the very problems that it needlessly created, effectively transforming it from BitCoin into the BTC that we have today.

The first and most important influence that Blockstream played in transforming BitCoin into BTC was the small block narrative – being “BTC will only be secure if my Raspberry Pi can help protect the network” which involved taking the “distributed” processing narrative outlined in the White Paper and turning it into the “Decentralised” node validation model that Core enthusiasts have swallowed hook, line and sinker. The fact that Satoshi originally envisaged that over time as transaction growth on the network increased most of the processing would shift to large server farms and that most users of the networks in terms of service providers using the blockchain to run partial nodes has been continently brushed over.

To achieve this Blockstream firstly infiltrated the original BitCoin Core development team, essentially paying the salaries to various BitCoin developers, like Greg Maxwell and Luke Dashjr, who both stymied the scaling plans of BitCoin and began twisting the narrative into the “Digital Gold” that is so dominant today.

The capture of BitCoin Core by blockstream developers was completed in Gavin Andersen, who was the lead BitCoin developers who Satoshi left in charge when he stepped away from the project, was locked out of the Core developer servers and all the files transferred across to a new Github server in May 2016.

I won’t go into the details of the long Big Block Small Block debate that culminated in the first BitCoin chain split that produced Bitcoin Cash, however the debate started in 2014 and raged through to 2017. What is important to realise is the role that Blockstream played in the disinformation at that time and the significant role it continues to play in controlling the crypto narrative of today.

In 2017 Adam Back actually admitted to the fact that Blockstream employed a ‘large’ team whose job is to ‘debunk and disprove’:

Essentially this is the team that was lead by Greg Maxwell to argue that scaling was impossible (it has since been proven that it is), it was impossible to process large blocks (again they can and are being processed today) and that it is necessary to have small blocks for security (most BTC transactions are processed by a similar number of large scale miners as processes the other Bitcoin chains). Maxwell was also eventually banned from Reddit after found to be running a sock puppet army that was at the center of various Sybil attacks on any individual or organisation that attempted to run against Blockstream’s narrative.

Anyhow, while I could write at length about the dodgy stuff that Blockstream is responsible for and the even more dodgy stuff its various employees have gotten up to, that is not the purpose of this article, so to bring it back on topic – “How is BTC controlled by establishment Finance?

Answer: Through Blockstream.

Currently these are the major shareholders and shareholdings of Blockstream and related affiliate companies:

In Feb 2016 AXA strategic Ventures, invested $55m into the first funding round A for Blockstream and as a part of that funding commitment joined Blockstream’s Advisory Board. Around the same time Blockstream also secured a similar amount of funding from the Digital Currency Group, which was founded by Barry Silbert who has an investment banking background.

If there is ONE company that any investor in the crypto space should be aware of it is Digital Currency Group (DCG) and the role it plays in controlling literally hundreds of crypto companies ranging from online digital exchanges (I count at least 9) as well as many of the supposed Crypto media organisations that play such an important role in disseminating DCG propaganda.

So where did DCG group secure its funding from? Mastercard (among other):

Fresh off the heels of selling his first company, SecondMarket Solutions, to Nasdaq last week, financial whiz Barry Silbert is officially launching his next startup, Digital Currency Group, and announcing that it has raised an undisclosed sum from a number of investors, including MasterCard, Bain Capital Ventures and New York Life.

– Laura Shin, Forbes

So who sits on DCG board or as an “adviser”? Well obviously Barry Silbert, but there are two others that are particularly noteworthy:

Glenn Hutchins: Former Advisor to President Clinton. Hutchins sits on the board of The Federal Reserve Bank of New York, where he was reelected as a Class B director for a three-year term ending December 31, 2018.

Then there is the big Kahuna himself:

Lawrence H. Summers: Chief Economist at the World Bank from 1991 to 1993. In 1993, Summers was appointed Undersecretary for International Affairs of the United States Department of the Treasury under the Clinton Administration. In 1995, he was promoted to Deputy Secretary of the Treasury under his long-time political mentor Robert Rubin. In 1999, he succeeded Rubin as Secretary of the Treasury. While working for the Clinton administration Summers played a leading role in the American response to the 1994 economic crisis in Mexico, the 1997 Asian financial crisis, and the Russian financial crisis. He was also influential in the American advised privatization of the economies of the post-Soviet states, and in the deregulation of the U.S financial system, including the repeal of the Glass-Steagall Act.

Together AXA and Mastercard, through their control and influence of DCG have played an enormous and important role in shaping the crypto industry that we see today, and turning BitCoin, a system of limitless scaling possibilities, into the expensive, crippled, fee driven abomination that we see in BTC today.

Why would they do this?

Contrary to the popular media narrative the likes of which MB has swallowed, BitCoin and Blockchain technology does present enormous cost saving opportunities – just not in the form the BTC has been transformed into (MB and DLS is 100% correct on that).

AXA recognise the savings in the technology, having previously issued statements such as:

“We are convinced that blockchain technology has the ability to transform not only financial services but also other industries. Blockstream has one of the best technical team in the industry and we strongly believe in their approach of developing foundational infrastructure for various blockchain applications. Blockstream’s open source approach and sidechains will enable critical long-term success of this technology. We are excited about the close partnership that we will have with them in driving deeper engagement, thought leadership and technological transformation in the world of insurance and asset management as we believe that in this industry, blockchain technology will be a conduit for systematic changes.”

François Robinet, Managing Partner, AXA Strategic Ventures.

So it is perfectly possible that AXA are invested in Blockstream simply to back the Blockstream business model based around building sidechains and syphoning off economic value from BTC by introducing inefficiencies, providing solutions and charging fees for the service. Lacking any further evidence around their motivation I’ll accept that.

What about Mastercard? Here I am not so sure, Mastercard haven’t exactly made much comment in regards to their blockchain investment, so in Mastercard’s case I’d rather examine their actions rather than their lack of words. The best place to start in this regard is to examine what they have been up to in terms of securing patents over blockchain technology:

*I think this chart is actually a little dated, as I’m pretty sure that China now leads the patent filing through Alibaba or Ant group finance or whatever it is called now.

Personally I’m of the opinion that Mastercard are well aware of the economic savings that can be potentially delivered by blockchain technology and through their investment in DCG and Blockstream are working to stymie development in terms of the original vision for BitCoin while the work to develop their own blockchain technologies, with them acting as middlemen:

In all of these cases, cryptocurrencies still don’t move through our network. Our crypto partners convert the digital assets on their end to traditional currencies, then transmit them through to the Mastercard network. Our change to supporting digital assets directly will allow many more merchants to accept crypto — an ability that’s currently limited by proprietary methods unique to each digital asset. This change will also cut out inefficiencies, letting both consumers and merchants avoid having to convert back and forth between crypto and traditional to make purchases.

Added to this work, Mastercard is actively engaging with several major central banks around the world, as they review plans to launch new digital currencies, dubbed CBDCs, to offer their citizens a new way to pay. Last year, we created a test platform for these banks to use these currencies in a simulated environment. Using our deep experience in payments technologies, we look forward to continuing these partnerships with governments and helping them explore the best ways to develop these new currencies.

Mastercard

Why should we care? Well quite simply BitCoin was designed as a public, transparent ledger designed to shed light upon the movement of money. It’s main competitors are private, side chains or in the case of Mastercard, entirely private ledgers. If BitCoin as a public ledger fails, and this is what I fundamentally believe BTC is being set up to do with the Ponzi that is being encouraged through the lack of regulation, then once it fails and fails spectacularly, then the rules and regulations will come thick and fast and close the technology down in all but private use cases. This is what I believe the purpose and end game is for the BTC and ‘digital gold’ bubble.

If that occurs, then blockchain technology has the potential to turn our future world into an unparalleled financial dystopia – where every expenditure we make can be tracked and traced by Govts and private corporations intent on milking us like cattle for every productive endeavor we engage in.

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bjw678

 If BitCoin as a public ledger fails, and this is what I fundamentally believe BTC is being set up to do

If the chain is too large it can never be public. A “Public” chain locked away in a server farm is no more public than a private database in a server farm. Block size was limited precisely to maintain that publicness.

bjw678

 It is false.

Except it isn’t.
Care to declare any financial interests in alternative crypto?

bjw678

A diagram does not a system make.
But of course a system that supports that is FEASIBLE, they are in operation all over the world already.
They require a central server to hold all the data though, not a public blockchain. Putting a blockchain in a dedicated server farm turns it into the thing you are complaining about.
We’ve already done the maths on how completely impractically large a blockchain will become to support transaction rates you are talking about. At that point bsv may as well be mastercard for all the practical difference there is.

Maintaining the blockchain as a practical, public ledger that anyone can verify and is stored in hundreds of thousands of locations is the whole point of blockchain and why the size limit is imposed on bitcoin.
At the point no-one but a central server farm can hold the blockchain and you just ask them about an individual transaction you are at the current paypal/mastercard/bank model and have to TRUST what they are telling you, whether it’s stored in a blockchain or a database.

bjw678

And frankly, your system will be outcompeted by someone using a much simpler and cheaper database system requiring far less server resources to undercut you, since you no longer offer the reduced counterparty risk that bitcoins provides by being non centralised.

bjw678

where the public assurance for the transaction type cannot be otherwise guaranteed without requiring a trusted 3rd party intermediator,

You seem to be deliberately obtuse. If the blockchain is only stored in one place then it is trivial to manipulate and interfere with the data stored in it.
They become the trusted 3rd party.
The distributed nature of the blockchain is what guarantee’s the trust, not that it is a blockchain. If you have no alternative to compare against you have no option other than to trust what you are given.

Peachy

5 or 6? So few could easily be subverted. Bought. Hacked. Strong-armed by govt(s). Nuked. Or even jsut have power cut.

bjw678

I dont know why I bother but here

Mining pools are groups of cooperating miners who agree to share block rewards in proportion to their contributed mining hash power.

While mining pools are desirable to the average miner as they smooth out rewards and make them more predictable,

bjw678

Except those 6 miners cannot alter any past transactions because I have a copy of the block chain that I or any other person can compare their version to and see any changes.

Do you see the difference yet?

bjw678

of which there will probably end up being maybe 5 or 6.

lolololololololololololololololololololol

but the whole bitcoin chain was going to be modified by hundreds of thousands of participants or more all for one guy…

 technical aspects of Bitcoin, it was about ownership and who influences control over it and the narrative that is pushed.

presumably that will be a very short list for your proposed “solution” say 5 or 6 people. probably less than you claim are controlling bitcoin.

bjw678

again deliberately obtuse.
Raw storage cost is not a problem for a centralised storage system. Like mastercard.
It is for a decentralised system, like bitcoin. because it is size x number of copies.
It really seems that you want to ride the decentralised bandwagon with a new mastercard equivalent.

and as an indelible on the blockchain across large professional mining farms.

Like mastercard currently does on it’s servers for a fraction of the cost. Because it isn’t indelible just because it’s a blockchain. As you loved to point out previously in this

Last edited 3 years ago by bjw678
Peachy

This has been interesting reading. I own that I never paid attention to the block size wars at the time and never bothered to look into the controversy subsequently. Peachy be lazy.

But I feel that the above has served as a very basic primer on the issues. So thanks.

Having read what’s above, I’m feeling inclined to bjw’s explanation… I can’t run a Bitcoin core thingy on my Mac if it needs 157,000gb. And that much more every year.

Sure MasterCard or IBM can, but that’s not “trustless” anymore.

bjw678

Again deliberately obtuse, or you really don’t understand any of this very well at all.
You don’t need to mine to be able to verify every single transaction on the blockchain. you need to be able to store the entire blockchain.
I haven’t mined bitcoin since 2013 or so but have run a node since then and still do.

That quote is nice but I really think you know not what it means.
I was mining on my pc on a graphics card, but that has been replaced by “specialists with server farms of specialized hardware. ” not A specialist with a server farm, or a couple of specialists with a server farm each.

In fact it perfectly describes the current bitcoin ecosystem.

bjw678

Stewie,
You are the one who simply does not understand WHAT A TRUSTLES SYSTEM IS.

Running a fucking node is IRRELEVANT for the security of the overall network, it is a fucking nonsense that dummies, like yourself have swallowed hook, line and sinker.

So since you are so smart please tell me how i know the miners aren’t changing the blockchain behind the scenes?

Or don’t if you don’t understand it, you fucking retard.

Do you understand – sufficient security is gained through 5 or 6 commercial miners, competing with each other and risking the hundreds of millions of dollars they’ve invested in the system to process thousands of transactions a second.

Do you understand that this is a self defeating argument. Paypal and mastercard and the banks are secured by exactly the same thing, have first mover advantage and lower processing and transaction costs because they don’t have the blockchain overhead, and also have brand recognition. So good luck with that.

edit:
I can’t help but feel you have been conned by the proponents of this system given your rather aggressive response to some facts.

Last edited 3 years ago by bjw678
Peachy

Stewie, I know there is only an infinitesimally small chance that I coul mine any BTC these days and that’s ok 😀

It seems to me that you give too much credit to Nakamoto – he might have had his views. But he may have been wrong. Or at least his views have been proven suboptimal* in the real world. You can’t always point to what that guy thought as an eternal truth. He is fallible…. or at least should be assumed to be so, given that everyone else is.

*”optimal” obviously has many dimensions – legal, technological, cultural, economic… all from the perspective of the particular time and place when forks (haw haw, see what I did?!) in the road were arrived at and decisions need to be made.

bjw678

the quote attributed to Satoshi describes the current bitcoin system perfectly. It really doesn’t support stewie in the least, and neither do the other quotes and references to the white paper if you actually understand the system.

He/they may not be infallible but the more I understood about bitcoin the more I appreciated that for every compromise they had to make they chose the option most likely to lead to success of bitcoin. History has proven that they were correct. It’s pretty easy to claim this and that while riding on the coattails though…

bjw678

I never said it can’t be done on a server farm.

I SAID DOING IT ON A SERVER FARM IS NOT A TRUSTLESS SYSTEM.

And we have far better ways of doing it on said server farm.

So actually I guess it depends on what IT is. If it’s trustless, then actually NO you can’t do it on a server farm.

Last edited 3 years ago by bjw678
Peachy

Blokes – can I test my thinking with you. I think the disagreement between you (and btc/BSV) is really about which bits of the structure are public and which are private.

In both cases, we can say there is ultimately going to be too much data for the blockchain to live on people’s private computers. But:

1) With BSV you’d have a fat heavy chain. So fat and heavy that the beginning of it would be held somewhere in a private/centralised location & the public would just play with the tip to which née blocks are added.

2) with BTC you have a thin light chain, which the public could have copies of in its entirety. But then you’re looking at private/centralised solutions to deal with big chunks of new data being attached at the tip (or to the sides) of the chain – such as the lightning network.

Right?

Peachy

Well, I benefited from having it explained to me (https://www.ezfka.com/2021/03/05/btc-is-the-establishment/#comment-896), so didactic purpose ACHIEVED!

I don’t think that either approach is better or worse, per se. And luckily they can both co-exist (technically).

Maybe in practical terms they can’t both coexist and must fight to the death. In this case we must expect a dirty fight and the winner will not necessarily be the more technically admirable (or satoshi-pure) implementation. That is just life.