Today I want to talk about code.
I know, this newsletter is for professional investors and not developers – why aren’t we talking about price? Don’t worry, we will further down. But things are evolving with Bitcoin technology that are worth keeping an eye on. While these changes have little to do with the short-term price movements, they are likely to play a significant role in bitcoin’s long-term value proposition.
Before we go into more detail about why these are significant, let’s look at why Bitcoin development matters.
The idea of changes to the Bitcoin protocol will be surprising to many. I mean, doesn’t it just, you know, work? Isn’t one of its strengths that you can’t change the code? These highlight two misunderstandings about the technology and its potential.
Bitcoin’s code has been chugging along for over 10 years now, but it has undergone a few changes. In the early days, there were frequent bugs that Bitcoin’s pseudonymous creator Satoshi Nakamoto and collaborators would fix. And old-timers will remember the “civil war” of 2017 around various scaling options that went to the heart of what the community wanted Bitcoin to be. The result was a change to the Bitcoin code to amplify block capacity, while dissenting opinions branched off to form a “new” Bitcoin blockchain, Bitcoin Cash.
There’s also steady work on functionality enhancements, such as enabling sidechains or smoothing information exchange. And compatibility issues and other minor bugs require constant attention. Like all technologies, if Bitcoin is not maintained and frequently updated, it will wither.