BitMEX Research recently published a report explaining why the leading altcoin Ethereum is eclipsing Bitcoin. There are technical reasons for the difference. However, the team claims that the Bitcoin developer culture prior to the launch of Ethereum pushed alternative use cases out of its ecosystem.
OP_Return discussion
The report explores online discussions in March 2014 among Bitcoin Core developers regarding Bitcoin’s application layer. They started with the launch of the Counterparty protocol earlier that year. Counterparty uses OP_Return to store data. This is a type of transaction output that has proven to be unspendable. “It is possible that the function can be used to burn Bitcoin or store random data on the Bitcoin Blockchain,” BitMEX said.
Some do not need pruned Bitcoin nodes to store their data. That’s why he says such transactions help scale Bitcoin. This makes a node less storage dense for the average person. It also helps Bitcoin maintain its decentralization.
However, on March 20, 2014, Bitcoin supporter Jeff Garzik shared his views on a Bitcointalk forum of CounterParty. Garzik began to criticize his use of the Bitcoin Blockchain space. He suggested that if that function stores random data on the Blockchain, it will cause “adverse” or “undesirable consequences”. He also said that more efficient scaling solutions such as side-chains already exist.
The Counterparty developers quickly adopted Garzik’s stance. They use the security of Bitcoin’s Blockchain responsibly. However, they wanted to discuss solutions with Bitcoin core developers on how Counterparty could survive.
However, Bitcoiners have done little to support the lesser protocols. Instead, a Bitcoin developer and mining pool operator named Luke-Jr accused Counterparty users of forcing Bitcoin nodes to store unexpected transaction types against their will. Like Garzik, he proposed mined side-chains as a place for such alternative uses of blockchain data.
“Hopefully, as mining returns to decentralization, we will have less tolerance for abuse/spam with or without the OP_RETURN variant,” said Luke-Jr. It also began censoring all Counterparty-related transactions in its mining pool, backing its statement. On March 28, he compared Counterparty’s use of the Blockchain space to abuse against Bitcoin nodes.
What should the Bitcoin Blockchain be used for?
Luke-Jr’s statement and actions drew the ire of many members of the Counterparty community. Their counter-arguments centered around Luke-Jr’s attempt to dictate what the Bitcoin Blockchain should be used for. One user said, “I can’t believe this attitude. “I didn’t know Bitcoin had owners,” he said.
Others said that Counterparty’s transactions constitute financial transactions. That’s why he claimed that Bitcoin nodes are in line with what they agreed to keep. “You have a much narrower view of possible use cases for Bitcoin than others,” said Counterparty co-founder PhantomPhreak. He made the following statement in this regard:
Bitcoin does a lot of things it wasn’t originally intended to do. We do not want to extend the Bitcoin protocol. Stability, security etc. we want to do something completely within it and as simple and direct as possible for the benefits.
Based on the overwhelming response from the Counterparty community, BitMEX suspects that this moment is turning many developers away from Bitcoin to develop their projects on the leading altcoin Ethereum.
Why is the leading altcoin superior to Bitcoin?
As BitMEX detailed, side-chains failed to gain critical mass as a scaling solution for Bitcoin due to various limitations of the technology, despite support from Counterparty’s competitors. One of these limitations included the complexity of creating such a side-chain. Developers didn’t have time to build a secure, unified mined side-chain before other altcoin projects gained market share. Side-chains like Rootstock and Liquid are now available. However, they are still eclipsed by Ethereum in terms of popularity.
A second restriction remains fixed to the main Bitcoin Blockchain. It also surrounds the use of Bitcoin as a native asset on the Blockchain. To date, developers have yet to come up with a solution to create a completely unreliable bidirectional stabilizer between blockchains. cryptocoin.comAs you follow, Ethereum founder Vitalik Buterin wrote a Reddit post in January. Buterin argued that the security of Blockchain bridges is fundamentally flawed.
Finally, side-chains are considered to have limited use cases that do not ultimately require a security guarantee from the main-chain. Therefore, it is not possible for side-chains to fully solve Bitcoin’s data storage problems, depending on the application. BitMEX said, “It seems that some people who have argued in favor of side-chains as a solution have not been particularly interested in most of the Dapp implementations. It’s like they haven’t tried them,” he says.
The leading altcoin Ethereum also has features that make it more developer and user-friendly, such as faster block times, less conservative block size restrictions, and a more flexible scripting language. “However… the most important factor is culture,” the report says. Late last month, popular crypto venture capitalist and researcher Nic Carter wrote a scathing article against bitcoiners who reject alternative use cases for blockchains such as stablecoins and decentralized finance.
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