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  "map_content": "Bitcoin_101: What is bitcoin?  \r\n\r\nRead on my blog:  \r\nhttps://steffenkd.de/articles/bitcoin/what_is_bitcoin/  \r\n\r\nRead onchain:  \r\nhttps://ordinals.gorillapool.io/content/ea00a6beb0baa211bf8bd858359980d83ee5b4a54f8185302493cd74493da33a  \r\n\r\nRead here on treechat wihtout pictures though:  \r\n\r\nauthor: steffenkd  \r\ndate: 04.06.2026  \r\nwordcount: ~ 4700  \r\nreading time: ~ 36 minutes  \r\n---\r\nWhat is Bitcoin?  \r\n---\r\nTLDR/Summary:  \r\n---\r\nBitcoin is a peer to peer electronic cash system.  \r\nIt is a decentralized system design, where users and server operators (miners) can create accounts and identities themselves by creating a pair of asynchronous keys with [public-key-cryptography](https://en.wikipedia.org/wiki/Public-key_cryptography).  \r\nUsers then can transact and trade freely peer-to-peer without intermediaries, middlemen or gatekeepers over the internet or in real life.  \r\nThey can also delegate read, write and execution access to their data and content without centralized positions of potential corruption like google, meta, governments, insurances or banks.   \r\nEvery transaction, interaction or timestamp on the network costs a small fee which is being payed to the server operators (miners).  \r\nThere are several server operators (miners) which are all operating and managing their own version of the same database.  \r\nThe server operators (miners) are constantly auditing each other so cheating becomes close to impossible.  \r\nThe history of the database has the same state for all server operators and can't be changed retroactively.  \r\nIf you play by the rules you are being rewarded, if you try to cheat you are being punished.  \r\nWhat is bitcoin?  \r\n---\r\n\"What is Bitcoin?\" is similar to asking \"what is water?\", where several definitions can be equally true.  \r\nIn my opinion the understanding of a topic improves and gets better, the more definitions you have.  \r\nWater i.e. can be described as wet when you have human sensormotorics, as H2O when you are familiar with chemistry, as formless because it takes any shape it is being filled into, as liquid because it can't be carried (except for ants), as rare if you are living in the desert, or as plentiful, when living at a river or the ocean.  \r\nWhen triangulating a location it is similar - the more measuring points you have, the better your localization accuracy.  \r\nWith bitcoin it is similar.  \r\nTherefore I will give you several definitions, analogies and explanations about what bitcoin may be and you can make of it whatever you want.  \r\nHopefully a clearer picture will emerge.    \r\nThe more explanations and definitions you read, the clearer the picture in your mind (the graph) gets and the better the overall understanding.  \r\nBe aware that you should always do your own research and that I may be wrong!  \r\n![geometrical_shapes_2d_vs_3d_pov](/home/lucidebris/ipara/0-vaults/bsv_blogposts_3dordi/images/what_is_bitcoin/understanding_through_perspectives.svg)  \r\nDepending on your point of view and the angle you are looking from, the picture can change and can get more clearly.  The more points of view you have, the clearer your overall picture.  \r\nGo to the original source  \r\n---\r\nI highly recommend to always go to the original source, where the definition was initially forged.  \r\nIn this case you should read [The Bitcoin Whitepaper](https://steffenkd.de/articles/bitcoin/bitcoin_whitepaper/).  \r\nYou can either interact peer-to-peer with the original source or you introduce a middleman, normally an influencer on social media or an artificial-intelligence, which will always distort the original picture or concept to some degree.  \r\nThis distortion can happen either intentionally or by accident.  \r\nThe end result is the same - a distorted picture and understanding of the original content.  \r\nIronically the \"peer-to-peer interaction\" is one of the main themes in bitcoin, but most people investing and talking about it, haven't read the bitcoin whitepaper and therefore haven't interacted peer-to-peer with the original source and information - the irony.    \r\nAnother problem is, that when you have heard about bitcoin from a middleman first, you may already have a distorted picture in your mind.  \r\nWhich may affect the reading of the whitepaper and further research, since you will already be biased even if you are not aware.  \r\nTherefore always try to go to the original source as soon as possible and make up your own mind.  \r\nYou can learn about other peoples opinions and all the different nuances and orientations afterwards.  \r\nIn our attention driven world you should take great care where you get your information from.  \r\nThat all being said, I recommend you do pause and read [The Bitcoin Whitepaper](https://steffenkd.de/articles/bitcoin/bitcoin_whitepaper/) first.  \r\n![original_source](/home/lucidebris/ipara/0-vaults/bsv_blogposts_3dordi/images/what_is_bitcoin/information_distortion_middlemen.svg)  \r\nWhat the inventor had to say  \r\n---\r\nBitcoin was described by a pseudonymous entity named Satoshi Nakamoto in the bitcoin whitepaper in october 2008.  \r\nTherefore the name and definition of \"bitcoin\" is linked to the design and functionality described in this whitepaper.  \r\nDefinitions are important and you should not arbitrarily change them.  \r\nOtherwise you may end up with [Newspeak](https://en.wikipedia.org/wiki/Newspeak) like in George Orwell's 1984.  \r\nAccording to the whitepaper, one of bitcoins purposes is to enable peer to peer interaction by eliminating the need for middlemen.  \r\nSatoshi described bitcoin as a peer-to-peer electronic cash system, not as peer-to-miner-to-peer-digital-gold.  \r\nYou can read the whitepaper and many of Satoshi's emails and forum posts on the [nakamotoinstitute-website](https://nakamotoinstitute.org/library/bitcoin/).  \r\nBitcoin is a database with an address space of potentially 2.099.999.997.690.000 data entries or addresses  \r\n---\r\nWritten out:  Two quadrillion, 99 trillion, 999 billion, 997 million, 690 thousand addresses.  \r\nAn address is essentially the smallest unit of account in bitcoin.  \r\nOther words for addresses which are being used as synonyms in the blockchain space are: satoshis, utxos (unspent transaction output), tokens, electronic coins, data entries, chains of digital signatures or transactions.  \r\nOn bitcoin there won't be more than those 2.099.999.997.690.000 addresses.  \r\nAddresses, satoshis, tokens, utxos, chains of digital signatures, transactions or electronic-coins are mainly made for usage not for hodling.  \r\nThe same way, shoes are made for walking, beer for drinking, e-books for reading and ip-addresses for hosting not for hodling.  \r\nI personally do not know of any circumstances where any wealth or prosperity was ever created by just hodling something and doing nothing.  \r\nServer side - Bitcoin is a small world network and open accessible for server operators (miners)  \r\n---\r\nBitcoin can be described as a\u00a0[Small World Network](https://wiki.bitcoinsv.io/index.php/Mandala_Network) or [Mandala Network](https://www.nature.com/articles/srep09082) which can be visualized and described through graph theory.  \r\n![Mandala-Network](/home/lucidebris/ipara/0-vaults/bsv_blogposts_3dordi/images/what_is_bitcoin/small-world-network1.png)  \r\n[Source of picture](https://www.nature.com/articles/srep09082/figures/1)   \r\nThose networks do consist of more than just one centralized server which introduces redundancy and backup capabilities.  \r\nAdditionally it kinda decentralizes and splits up the power position from one entity like governments, big tech enterprises or central banks into several entities.  \r\nYou then can run whatever you want on top of the network, be it identity, money, social media content or any other form of data.  \r\nIn essence you have several servers, run by different entities which are all acting as auditors which are constantly auditing each other.  \r\nThis way they hold each other accountable and the chance of one party cheating and enriching itself without the other parties recognizing, is highly unlikely.  \r\nThis is how societies kept themselves in check in previous times as well - we audited each other constantly.  \r\nA short quote from Leopold Kohr's - Breakdown of Nations:  \r\n> \"Even a confirmed thief will not steal if he has no chance of getting away with it.  \r\nOn the other hand, even an honest man will misbehave if he has the opportunity, the power to do so.\"   \r\nCriminal actors are rational actors - they won't steal when the chances of getting caught are at 99.99%.  \r\nTherefore they won't.  \r\nThe business model of those servers is the timestamping of user transactions for a small transaction fee to cut their costs and make a profit - but more about that in another article.  \r\nNodes which do not find a block can't break even on their initial investment and won't make a profit.  \r\nThis is not necessarily bad, but it is not a working business model and more like a cash bleeder.  \r\n[Additional information with regards to home run user nodes like on a raspberry pi](https://arxiv.org/html/2506.14197v1).  \r\nUser side - Bitcoin is open accessible and users create accounts themselves  \r\n---\r\nThe Bitcoin network can be participated in by creating a pair of [asynchronous keys](https://www.geeksforgeeks.org/computer-networks/asymmetric-key-cryptography/) and therefore is openly accessible for everyone.  \r\nSimilar to math, writing, poetry, languages or the internet where everybody is free to learn the skills and participate.  \r\nIn previous times you needed pen and paper and the skills of reading and writing.  \r\nAll you need for participation in bitcoin, be it as a user or as a server operator (miner), is an electronic device, an internet connection and a program which can generate [asynchronous key pairs using the secp256k1 elliptic curve](https://furkanakal.com/secp256k1-curve-part-1-fundamentals-key-pair-generation).  \r\n!!!this means you can create your user account and your digital identity yourself!!!  \r\nThe implications are immense.  \r\nNo facebook or meta, no twitter or x, no microsoft or google, no amazon or apple, no visa, mastercard, paypal, JP Morgan, Deutsche Bank or Lehman Brothers, or other banks, no government or state is needed to issue you a user account or identity.  \r\nA user account and identity which, as history has shown, can be arbitrarily censored, banned or deleted whenever those enterprises and institutions decide you have acted against their constantly changing laws, terms and conditions.  \r\nOr just because they do not like your narrative or point of view.  \r\nOn bitcoin you create your account yourself by creating a pair of asynchronous keys.  \r\nThe public key is like your username or email and the private key is like your password.  \r\nDue to a mathematical miracle, those two keys are somehow entangled and connected and you can do all kinds of magical stuff with them, like encrypting all your data and communication.  \r\nAfter creating a key pair you can interact peer to peer with other persons on the internet or in real life and can get a record on the blockchain if needed.  \r\nNo big tech, big government, big media or big banks needed.  \r\nOnly big block bitcoin as originally designed.  \r\nYou then can use those asynchronous keys to delegate read, write and executional access to your personal data, files and content.  \r\nData is money and you now have the tools to own, market and sell your data without intermediaries like big tech, governments or banks taking their cut and interfering with it or restricting you from accessing the network.  \r\nMore about data being money in another article.  \r\nThis is the decentralization aspect on the user side, which can only unfold its full potential, when the blocks are large enough, so that every user can transact on chain.  \r\nIf you restrict the transactions per second like small block BTC is doing with their 1MB blocksize limit, you automatically restrict the decentralization aspect on the user side in favor of the server side - namely people being able to run listening nodes on a raspberry pi.  \r\nSmall block BTC with its 5 transactions per second which is about half a million transactions per day, is essentially cutting out 99.99% of the world population.  \r\nIt would be like everyone of the 7 billion people one earth being able to buy, build or create a car but there is only gasoline for around half a million people to drive each day.  \r\nYou can create your own identity but the probability of using it on the blockchain is close to zero.  \r\nOr in small blocker language: you can be your own bank but you won't be able to transact.  \r\nBut more about that in a later article.  \r\n![asynchronous_keys](/home/lucidebris/ipara/0-vaults/bsv_blogposts_3dordi/images/what_is_bitcoin/asynchronous_keys.png)  \r\n[Source of picture](https://sergioprado.blog/images/20221212-asymmetric-encryption.png)  \r\nBitcoin is a\u00a0[triple entry accounting system](https://iang.org/papers/triple_entry.html).  \r\n---\r\nMost exchanges over the counter are a so called \"implied-in-fact\" contracts due to [acceptance through conduct](https://www.lawcases.net/tag/acceptance-by-conduct/).  \r\nThis evolved over hundreds, maybe even thousands of years and is so called \"common law\".  \r\nIf you want proof that you bought something in case of filing warranty or getting compensation for a faulty or defective product, you need a receipt.  \r\nOn bitcoin this would be a satoshi, utxo, electronic token or chain of digital signatures.  \r\nFor an over the counter exchange you do not even need money, you could also just sign a contract.  \r\nMoney or cash is just a hack for instant settlement to skip the signing of a contract and the additional work and time it implies.  \r\nThe signature part is quite interesting, especially with regards to established contract law and the real signature of a person under a contract.  \r\nThis can be done in an electronic way as well with the already mentioned asynchronous keys.  \r\nSince 2008 there are three different kinds of book keeping:  \r\n| single entry accounting | double entry accounting | triple entry accounting |  \r\n| --- | --- | --- |  \r\n| Simplest form of accounting. | Every transaction affects two accounts, ensuring the accounting equation (assets = liabilities + equity) remains balanced. | Builds upon double entry accounting. |\r\n| Only one account per transaction. | Introduced in the 15th century by Luca Pacioli. | Incorporates a third entry, usually recorded on a blockchain. |  \r\n| Mostly used by small businesses. | Significantly improved the accuracy and reliability of financial data. | This additional entry acts as a verification mechanism, enhancing transparency and security. |  \r\n![triple-entry-accounting](/home/lucidebris/ipara/0-vaults/bsv_blogposts_3dordi/images/what_is_bitcoin/triple_entry_accounting.svg)  \r\n[Here is some more information with regards to blockchain](https://busacta.com/double-entry-accounting-and-triple-entry-accounting/).  \r\n[And just another link if you can't get enough](https://bitcoinmagazine.com/business/triple-entry-bookkeeping-bitcoin-1392069656).  \r\nBitcoin is a\u00a0[Resource Event Agent Model](https://wiki.p2pfoundation.net/Resource-Event-Agent_Model)  \r\n---\r\nIf I would buy a bread at the bakery, the bread would be the resource, the trade of bread for money would be the event and me and the baker would be the agents.  \r\nSo you have a resource, commodity, service or good, which can be mapped to a utxo, token, satoshi or digital chain of signatures.  \r\nYou have an event, like an exchange or trade over the counter, which is represented by the transaction or utxo itself.  \r\nAnd you have one or more agents, which is/are the identities behind the asynchronous key pairs which are trading with each other.  \r\nVoila - resource event agent model.  \r\nIt is interesting with regards to economics, trade and Artificial Intelligence, where a database for memory and a record about what happened would be quite convenient.  \r\nAdditional explanation of [resource-event-agent-model](http://xbrl.squarespace.com/journal/2016/9/27/understanding-the-resource-event-agent-rea-conceptual-model.html).  \r\n![resource_event_agent_model](/home/lucidebris/ipara/0-vaults/bsv_blogposts_3dordi/images/what_is_bitcoin/rea_model.svg)  \r\nBitcoin and blockchain are [WORM databases](https://en.wikipedia.org/wiki/Write_once_read_many)  \r\n---\r\nWORM stands for write-once-read-many.  \r\nSo you can write to a database only once and can't change anything retroactively, but you can read it as many times as you want.  \r\nIt is a very simple concept and is already used for quite some time in enterprise databases.  \r\nThere is a difference between hardware implementations (punch-cards, tape, CD's) and software implementations (blockchain).  \r\nA WORM database can't be changed retroactively without leaving trails.  \r\nThis can be of use in many areas, where you want clear traces of evidence.   \r\nFor example when a programmer working at a bank steals a few million dollars and edits the database afterwards to cover his tracks.  \r\nError code \"402 - Payment Required\"  \r\n---\r\nThere is an http status code, namely [\"402 - Payment Required\"](https://developer.mozilla.org/de/docs/Web/HTTP/Reference/Status/402), which was reserved for future usage.  \r\nIt essentially means, that a website can only be accessed after a payment was received.  \r\nSo the server serves the content only, when a transaction was made.  \r\nSince every youtube-video, blogpost or twitter post has its own web-address and therefore its own website, a content creator can directly delegate access to his content.  \r\nThink about the implications and what that means for big tech and the advertisement business.  \r\nYou could pay a cent or even less directly to the content creator for accessing a post, article, meme, video or podcast.  \r\nNo middlemen or intermediaries like google required.  \r\n![402_payment_required](/home/lucidebris/ipara/0-vaults/bsv_blogposts_3dordi/images/what_is_bitcoin/402_payment_required.svg)  \r\nKISS - keep it simple stupid  - minimalistic design  \r\n---\r\nAsynchronous keys combined with 256-bit hashes provide uniqueness due to a really large address space, security due to close to no collisions and a minimalistic amount of data.  \r\nThis is a really good equilibrium.  \r\nIn other words:  Similar to ipv6 we will have enough addresses with those 2.1 quadrillion satoshis.  \r\nAdditionally there won't be any identical asynchronous key pairs, because the address space of the secp256k1 eliptic curve is so large, that the probability of collisions is close to zero.  \r\nThis means the chance of someone creating someone elses keypair by accident again is neglectable.  \r\nAnd on top of all that this beautiful design only needs a minimalistic amount of data, since it is based on 256 bit data.  \r\nA standard bitcoin transaction is normally not larger than 400 bytes.  \r\nInstead of a 3MB ( 3000000 bytes) picture over Whatsapp, you could send 7500 bitcoin transactions.  \r\nBitcoin is a database and therefore memory  \r\n---\r\nIf a person wants to record an action and pays a fee the bitcoin network can record which private key(s) interacted with which public key(s) at which point in time and if the signatures were valid.   \r\nIdentities can be linked and the stories behind every transaction can also be linked but are firewalled by default and therefore are private.  \r\nPurchase of coffee in real life or buying a song over the internet versus buying a car or a house.  \r\nYou do not want everyone to know that you have bought a song or a coffee, but you want people to know that you are the owner of you house and your car.  \r\nIf you have created a pair of asynchronous keys you can use this keypair on all three bitcoin versions, namely BTC, BCH and BSV.  \r\nBeware of the chains capabilities and their potential network effects and utility in the future though.  \r\nTwo chains are arbitrarily restricted, one is unbounded.  \r\nMemory and identities  \r\n---\r\nIdentity is a very abstract concept.  \r\nIf you are interested you may find Ian Griggs book [Identity Cycle](https://www.iang.org/identity_cycle/) interesting.  \r\nThe history of \"identity\" is quite fascinating, whereas the church started birth registers around 1500, but it took till the mid 1800s for broader adoption of birth certificates.  \r\nToday our identities are normally issued by centralized governments/states or big tech companies.  \r\nRemember, that on bitcoin you are creating your account yourself, without any centralized entity.  \r\nParents can create digital identities for themselves and for their newborn child.  \r\nYou then can link your identity  to your asynchronous key pair and other identities can verify yours while at the same time you are verifying theirs through interactions or transactions.  \r\nThose interactions have to be recorded and therefore memorized, which is why bitcoin and the blockchain is memory.  \r\nReputation and trust probably will play a huge role in this future.   \r\nMore about memory, trust and the search for a path  \r\n---\r\nThere is a paper from [Narayana Kocherlakota about \"money being memory\"](https://www.minneapolisfed.org/research/sr/sr218.pdf).  \r\n> \"There is a simple reasoning behind the main proposition. John and Mary meet. John has apples and wants bananas. Mary wants apples but doesn't have bananas. In monetary economies, this problem is solved by Mary's giving John money in exchange for apples. John then uses the money to buy bananas from Paul; if John doesn't give the apples to Mary, John doesn't get the money and can't buy the the bananas from Paul.  But of course the money itself is intrinsically useless. In terms of reallocation of intrinsically valuable resources, we can think about the situation as being one in which John is considering making Mary a gift of apples. If he makes the gift, Paul will give him bananas in the future; if he doesn't make the gift, Paul won't give him the bananas. The money that John receives from Mary is merely a way of letting Paul know that John has fulfilled his societal obligations and given Mary her apples.\" \r\n![money_as_hack](/home/lucidebris/ipara/0-vaults/bsv_blogposts_3dordi/images/what_is_bitcoin/kocherlakota.svg)  \r\nAnd I would also recommend reading [Mike Hearn's annotations about the early ripple protocol](https://blog.plan99.net/how-did-classical-ripple-work-13fefe1870cf) which has some parallels with regards to \"memory\" where he also states, that Satoshi found that: \"Ripple is interesting in that it\u2019s the only other system that does something with trust besides concentrate it into a central server\".     \r\n> \"John buys his groceries at the local food cooperative, and uses a smart card to make a Ripple payment in the store. The Ripple routing system finds that the food coop has a balance owing at the local hardware store where they buy maintenance supplies. The hardware store in turn has an outstanding bill with the lawyer up the street. John often does landscaping for the lawyer on credit. To complete John\u2019s payment to the food coop, the Ripple system reduces the food coop\u2019s bill at the hardware store, the hardware store\u2019s debt to the lawyer, and finally lawyer\u2019s debt to John. John walks out with his groceries.\"  \r\n![search_for_a_path](/home/lucidebris/ipara/0-vaults/bsv_blogposts_3dordi/images/what_is_bitcoin/ripple.svg)  \r\nMoney is a technology and bitcoin may be John Nash's ideal money  \r\n---\r\nI would recommend reading [John Nash Jr's statements about \"ideal money\"](https://web.math.princeton.edu/jfnj/texts_and_graphics/Main.Content/IDEAL_MONEY.../Older/PENN_STATE/babu.money.b.pdf).  \r\nAccording to his point of view: \r\n> \"The special commodity or medium that we call money has a long and interesting history.  \r\nAnd since we are so dependent on our use of it and so much controlled and motivated by the wish to have more of it or not to lose what we have we may become irrational in thinking about it and fail to be able to reason about it like about a technology, such as radio, to be used more or less efficiently.\"  \r\nMoney is a technology and...\r\nData is money - the Bit and the Coin  \r\n---\r\nBitcoin is a new technology for monetizing data. And since data is money it kinda is monetizing itself as long as users see a value in this economical approach of monetization of data by using the protocol and thereby putting their signature behind it.  \r\n\"Bit\" is the data aspect, whereas \"Coin\" is the monetary part.  \r\nMore about what \"data is money\" means in another article.  \r\nOne short example though: if you have accurate data about how many homes are burning each year in a certain area and you see, that the current insurance company is making a surplus of 200% each year you can compete against them by making an offer with a 60% reduction in price.  \r\nYou are essentially undercutting your competitors by 140% and still making a 60% profit.  \r\nThis can only be done when the data is accurate and it is one of the main reasons, why large enterprises and other institutions are keeping certain data secret.  \r\nAnd it is one of the reasons the governments of this world allow no competition in certain areas, like money, education, identity, bureaucracy and other areas.  \r\nBecause the data may show how inefficient it has become.  \r\nThey have essentially eliminated the control groups and their competition, because the easiest competition is always the one, where you are the only participant.  \r\nPeer to peer  \r\n---\r\nBitcoin works peer to peer which means two persons can interact directly with each other, without any middlemen who can use a man in the middle attack to obfuscate or distort the original intention.  \r\nThink about it with regards to politics and other centralized positions of power where your vote doesn't matter because the person who got your vote has no obligation or duty to do what they have promised.  \r\nCitizens on both sides may vote for peace but get war at the end.  \r\nSo vote with your money.  \r\nPay for what you like and don't pay for what you dislike - simple as that.  \r\nA representative democracy is essentially a system, where you can't pay for what you like, because someone else decides for you.  \r\nBitcoin is a timestamp server with a decentralized structure, where users can vote or delegate read, write and execute access rules to unique tokens and linked data through asynchronous keys and signatures.  \r\nThey own their data and can sell it to whoever they want, whenever they want, at what price they want.  \r\nWithout google, governments, insurance companies, banks or other intermediaries or middlemen in between.  \r\nMore about peer-to-peer and \"simplified payment verification\" in another article.  \r\nI want to add, that small block BTC does not work peer-to-peer but peer-to-miner-to-peer, which is not how bitcoin was designed to work - and that is not my opinion, but a verifiable fact.  \r\nIt is stated in the whitepaper, under \"section 8 - simplified payment verification\".  \r\nAgain, read the whitepaper.  \r\n![p2p_vs_middleman](/home/lucidebris/ipara/0-vaults/bsv_blogposts_3dordi/images/what_is_bitcoin/p2p_vs_middleman.svg)  \r\nData integrity\r\n---\r\nThe bitcoin network is like  a notary, where you can timestamp the hash of a video, audio file, text document or any other file to proof that it existed at least at this point in time and that you have been the person who timestamped it first.  \r\nSatoshi did the same, when he created the genesis block and included the message \"Chancellor on the brink of second bailout for banks\" from \"The Times\" which shows that bitcoin couldn't have started earlier, because the headline hasn't been written yet.  \r\nWhen you want to patent an invention or timestamp a piece of content, you can hash the file which describes your invention and can put that hash into a transaction, send the transaction to yourself and let the miners timestamp it.  \r\nYou then have solid proof that you had this idea or piece of content at this point in time and can proof it later if necessary.  \r\nThe timestamping costs the fraction of a cent.  \r\nA notary or patent office costs hundreds if not thousands of dollars for doing something quite similar.  \r\nThere is an endless amount of usecases for this kind of service.  \r\nI want to add, that the patent office also checks for already existing patents and a few other things.  \r\nIf patents are a good idea would be a separate discussion.  \r\nHowever, the service still is very valuable, especially with regards to private contracts and their attestation.  \r\nSunlight law, transparency and honesty  \r\n---\r\nBitcoins transparent design incentivizes honesty, because  as a node/miner, you are rewarded when playing by the rules and punished when cheating.  \r\nThis is true as long as more than 50% of network participants (not nodes/miners) demand honesty.  \r\nCriminal actors are rational actors and they normally only defraud others if they get more out of it - this makes no sense in bitcoin.  \r\nQuoting Leopold Kohr - Breakdown of Nations once more:  \r\n> \"Even a confirmed thief will not steal if he has no chance of getting away with it.  \r\nOn the other hand, even an honest man will misbehave if he has the opportunity, the power to do so.\"   \r\nThe word \"honesty\" is mentioned 16 times in the bitcoin whitepaper and therefore seems to play an important role in bitcoin and deserves its own article.  \r\nPrivate law societies  \r\n---\r\nBitcoin is a peer to peer electronic contract and signature network where the validators (miners) are getting paid with empty contracts for validating and timestamping other peoples signatures and contracts - a simple computational service for a small fee (money).  \r\nPrivate law society fans like anarchists or libertarians may find bitcoin interesting since you can use electronic contracts similar to private contracts.  \r\nBecause every exchange, be it at the bakery, barbershop or sawmill is essentially a contract through conduct and communication or in other words, [acceptance through conduct](https://www.lawcases.net/guides/acceptance-by-conduct-in-english-contract-law/), a so called \"implied-in-fact\" contract.  \r\nI already mentioned this with regards to \"triple entry accounting\" and for me it was very enlightening.  \r\nYou could use pen and paper at the bakery and write a contract for getting the bread against a credit and certain conditions in the future.  \r\nMoney is just a hack for instant settlement, where the monopoly commodity [(monopoly + commodity = money)](https://www.youtube.com/watch?v=EFX65dHcWMw) is being used, because due to its monopoly it is being accepted by the majority of people.  \r\nAnd normally it reached its monopoly because of utility.  \r\nCurrency is a state issued security and is not money.  \r\nMore about \"what is money?\" in another article.  \r\nWhat Bitcoin is not  \r\n---\r\nBitcoin is not digital gold and it is not for hodling, which essentially means not using it.  \r\nHodling and not using something is the opposite of peer-to-peer-electronic-cash.  \r\nSure, you can do it, but you can also hodl a basketball instead of playing with it, or hodl a house instead of living in it.  \r\nNo wealth is created through hodling something.  \r\nLightning and Sidechains like Liquid are not bitcoin, those are separate networks and protocols which are reintroducing intermediaries and middlemen - welcome to the old system.  \r\nBut more about lightning in a separate article.  \r\nBitcoin is designed as an electronic peer-to-peer-cash-system and was made for onchain usage.    \r\nEverybody can make up his own mind, if all the mentioned definitions and concepts in this article are making sense for eight billion people operating on a network capable of five transactions or timestamps per second - do the math.  \r\n| - | BTC | BCH | BSV |  \r\n| - | - | - | - |  \r\n| Transactions per second | 7 | 116 | > 1000000 |  \r\n---\r\nThanks for reading.",
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  "map_content": "Bitcoin_101: The blockchain trilemma fairytale  \r\n\r\nRead on my blog:  \r\nhttps://steffenkd.de/articles/bitcoin/the_blockchain_trilemma_fairytale/  \r\n\r\nRead onchain:  \r\nhttps://ordinals.gorillapool.io/content/343db0853846585132fe9059a94a8aa4b6321bcb8b247cf3da5f2cbb7b1770c1  \r\n\r\nRead here on treechat, without pictures though:  \r\nauthor: steffenkd  \r\ndate: 04.06.2026  \r\nwordcount: ~ 3750  \r\nreading time: ~ 30 minutes  \r\n---\r\nThe blockchain trilemma fairytale  \r\n---\r\nTLDR/Summary:  \r\n---\r\nTrilemma somehow has a negative connotation.  \r\nIt somehow implies, that there is a problem which has to be fixed.  \r\nThis assumption is based on a false premise.   \r\nYou simply have three variables, namely decentralization, security and scalability which can be balanced out against each other, like in mathematics.   \r\nThis is how you solve mathematical equations.  \r\nAnd the same concept of variables being balanced out against each other due to infinite feedback-loops and co-dependencies can be found all over nature.  \r\nIt is called balance and is not negative at all.  \r\nAdditionally on small-block-BTC we are not talking about an equation with three variables but with only two variables.  \r\nNamely decentralization and security, since the variable blocksize is a frozen constant at 1 MB (one Megabyte).  \r\nWhich would make it a blockchain dilemma (duos, duo, di, dos, two).  \r\nThere are only two variables left, because on small-block-BTC the originally variable blocksize, which was set to 1MB as a temporary [SPAM](https://en.wikipedia.org/wiki/Spamming) and [DDOS](https://www.slictionary.com/definitions/ddos/402cad5d0665ab63deb935c28565e5db876ed780e401e1741b17b5f1633b077d) protection got converted into a frozen constant of 1MB (4MB blockweight).  \r\nThey sacrificed scalability for decentralization and security, which leaves small-block-BTC with just two variables, namely decentralization and security.  \r\nSo we are not talking about a problem (dilemma or trilemma), but just about an equation with several variables.  \r\nAnd on small-block-BTC only two variables are left, because the blocksize was converted into a constant of 1MB.  \r\nTherefore the term \"blockchain trilemma\" is just [Orwellian Newspeak](https://en.wikipedia.org/wiki/Newspeak) to artificially create a problem which never existed in the first place.  \r\nOn the original Big Block Bitcoin, those three variables are still variable and can be balanced out against each other.  \r\nTherefore it scales and can match the demand for transactions with a corresponding supply like free markets always do.  \r\nThe same way a marathon runner can run a marathon because his heart rate is variable, adapts to the stimuli and supplies the demanded heart rate increase.    \r\nIf you want a more detailed version with some pictures, analogies and explanations, keep on reading.  \r\nA classical meme to visualize what happened:   \r\n![bike_meme](/home/lucidebris/ipara/0-vaults/bsv_blogposts_3dordi/images/blockchain_trilemma_pics/bike_fall_meme_bitcoin.jpg)  \r\nPicture: the bike represents the original bitcoin protocol, while the stick represents the artificially and arbitrarily introduced blocksize limit.  \r\nThe temporary blocksize limit wasn't removed as the demand for transactions rose.  \r\nNo [law of demand and supply](https://www.investopedia.com/ask/answers/030415/who-discovered-law-supply-and-demand.asp) possible.  \r\nBitcoin - there never was a blockchain trilemma\r\n---\r\nThe so called [blockchain-trilemma](https://pintu-academy.pintukripto.com/wp-content/uploads/2022/12/ENG-The-Scalability-trilema-Trilema-Blockchain-1024x576.png) is often visually represented by an equilateral triangle with the three points and sides \"decentralization\", \"security\" and \"scalability\".   \r\nThis triangle analogy was introduced by [Zoko Wilcox O'Hearn](https://en.wikipedia.org/wiki/Zooko's_triangle) and Vitalik Buterin and the three points of the triangle had different names.  \r\n![blockchain_trilemma](/home/lucidebris/ipara/0-vaults/bsv_blogposts_3dordi/images/blockchain_trilemma_pics/blockchain_trilemma_triangle.svg)  \r\nPicture: The so called blockchain trilemma, visualized as an equilateral triangle with three variables.  \r\nNormally it is said, that you can only pick two variables.  \r\nBut this is a fallacy.  \r\nYou can pick all three.  \r\nTrilemma or self balancing equation?   \r\n---\r\nThere never was a trilemma in the first place.  \r\nThe triangle is just a visual analogy for an equation with three variables and the solution to the equation is quite simple.  \r\nIt is a basic principle which can be found all over nature and which is being applied in mathematics as well.    \r\nIt is called \"balance\".  \r\nSo it is not a trilemma but just an equation with three variables, which can be balanced out against each other.  \r\nIt would be similar to call the human body with the linkage between blood pressure, stroke-volume, heart rate and the resulting overall performance a trilemma.  \r\nWhich isn't a trilemma at all.  \r\nIt is just natures universal concept of balance at work.  \r\nBut of course you can also intervene planned economy style and convert one of the variables into a constant of 1MB if you think you can outsmart nature or the free market.  \r\nWelcome to our old system, where problems are artificially created so power hungry middlemen and intermediaries can step in and come up with a prepared solution.  \r\nA solution which in many cases provides them with control, power and money.  \r\nThis is by the way one of the main reasons, why the original bitcoin design with big blocks is hated and ridiculed so much.  \r\nBecause it enables peer to peer interaction and eliminates middlemen and intermediaries.  \r\nTo be clear: in the human body scenario there are much more variables at work.  \r\nFor example breath frequency and volume, glucose storage capabilities of muscles and liver, fat storage, body weight, muscle mass; the list would be very long and the variables are all interconnected with feedback loops and co-dependencies.   \r\nThere is a visualization from Roche, called [\"biochemical pathways\"](https://raw.githubusercontent.com/usnish/biochemical-pathways-poster/refs/heads/master/preview.jpg) which is about the chemical processes and interconnections in the human body and may serve as another analogy how complex and interconnected certain systems can be.  \r\nAnd you can either let these equations balance themselves out or you arbitrarily intervene because you know whats best for all - choose wisely!  \r\nFree market versus centrally planned economy.  \r\nHistory doesn't repeat itself but it rhymes.  \r\n![roches_chemical_pathways](/home/lucidebris/ipara/0-vaults/bsv_blogposts_3dordi/images/blockchain_trilemma_pics/roches_chemical_pathways.jpg)  \r\nPicture: \"Roches chemical pathways\" provides a graphical representation of the most important biochemical pathways in living organisms, like glycolysis, the citric acid cycle, fatty acid metabolism, amino acid biosynthesis, nucleotide metabolism, and much more.   \r\nVariables versus constants  \r\n---\r\nA variable is, by definition, flexible.  \r\nWhich means it can adapt to external stimuli - the so called \"free market\" with the law of demand and supply at work.  \r\nIf the demand for transactions rises, the size of the blocks can be increased accordingly and vice versa.  \r\nSimple as that.  \r\nIf you convert a variable into a constant this has certain consequences though.   \r\nConvert your variable heart rate into a constant of 20 beats per minute and watch whats going to happen.  \r\nOr fix the variable longitude of your GPS positioning system at 30\u00b0 west and try to navigate to your destination point - but don't forget to bring a rubber boat or life vest.   \r\nWhenever you convert a variable into a constant you have consequences.  \r\nThe three variables  \r\n---\r\nDecentralization  \r\n---\r\nCentralization means that something is centered in one point.  \r\nTherefore decentralization means that something is not centered in one point but exists in at least two points.  \r\nFor bitcoins game theoretical advantages to come into play a minimal amount of three points or nodes is needed longterm.   \r\nIn my opinion \"decentralization\" is one of, if not the most, misunderstood concept in the so called crypto and bitcoin space.    \r\nWhich is why it deserves its [own article](https://steffenkd.de/blog/decentralization_in_bitcoin/).  \r\nFor those who want to read more about [the decentralization in bitcoin](https://steffenkd.de/blog/decentralization_in_bitcoin/).  \r\nSpoiler alert: [the decentralization in bitcoin](https://steffenkd.de/blog/decentralization_in_bitcoin/) is also an equation, which can be balanced.  \r\nIn this case we have two variables: \"the user-decentralization\" due to identity creation by the users themselves through asynchronous keys, versus \"the miner-decentralization (or server-decentralization)\" due to economic incentives like finding a block and getting paid for timestamping the users transactions.  \r\nIf you limit the amount of transactions you automatically limit the amount of user-decentralization.  \r\nUsers can create their digital identity themselves by generating an asynchronous key pair, but 99.99% of them won't be able to use it on the small-block-BTC blockchain.  \r\nOr in small block BTC language: You can be your own bank, but you won't be able to transact.  \r\nYou would essentially end up with something like another [PGP implementation](https://en.wikipedia.org/wiki/Pretty_Good_Privacy).  \r\nI recommend reading the article to get a better understanding of the concept.  \r\n![blockchain_trilemma_decentralization](/home/lucidebris/ipara/0-vaults/bsv_blogposts_3dordi/images/blockchain_trilemma_pics/blockchain_trilemma_decentralization_3-2016.svg)  \r\nScalability  \r\n---\r\nScalability is the ability of a system, application, or process to handle increased load or demand by expanding its capacity \u2014 without sacrificing performance, reliability, or efficiency.  \r\nThere are two main types:  \r\n- Vertical scaling (scaling up): Adding more power to an existing machine (more CPU, RAM, storage).  \r\n- Horizontal scaling (scaling out): Adding more machines or instances to distribute the load.  \r\nA scalable system can grow smoothly as users, data, or transactions increase \u2014 ideally with proportional or sublinear cost increases rather than exponential ones.  \r\n![horizontal-scaling_vs_vertical-scaling](/home/lucidebris/ipara/0-vaults/bsv_blogposts_3dordi/images/blockchain_trilemma_pics/addition_vertical_vs_horizontal_scaling.svg)  \r\nThe diagram shows how the same sum (1+2+\u2026+16 = 136) is computed in two very different ways:  \r\n- Left (vertical/sequential): Each number is added one at a time which needs a total of 15 steps - no parallelization possible.  \r\n- Right (horizontal/parallel): Numbers are paired up simultaneously at each level \u2014 8 pairs in step 1, then 4 pairs, then 2, then 1 \u2014 having also 15 steps in total, but reaching the answer in just 4 steps due to parallelization.  \r\nThis is the essence of parallel processing: more workers doing work at the same time, fewer steps overall.  \r\nThe utxo-model in bitcoin is another design, which enables parallel processing and therefore horizontal scaling.  \r\nDifferent users can compute their utxos on the blockchain in parallel if they have the corresponding private keys.   \r\nThis makes bitcoin with its utxo based system very flexible and fast compared to an account based system.  \r\nSo if something scales it means that there is more of it and that the supply can be raised.  \r\nThis is another free market principle.  \r\nIf the demand for a good or service rises, it normally gets matched by a corresponding supply if physical possible.  \r\nIn the technical area i.e., we experience an increase in computational power due to [Moores Law](https://en.wikipedia.org/wiki/Moore%27s_law), which is driven by an increased demand for computation.  \r\nSimilar to running a profitable node or miner instead of a non profit one, processing and timestamping a transaction is just a service which can be calculated and priced in economical.  \r\nYou just need a few metrics, like energy costs, technical equipment, storage costs, bandwidth costs, rental fees and a few others.  \r\nAfterwards you add a certain percentage on top, depending on how many transactions you are able to process or mine, what your competitors charge and how much profit you want to make.  \r\nAnd voila, you get a realistic price for processing a transaction based on simple market principles and metrics.  \r\nYou can restrict yourself to running a marathon at once centimeter/minute so everybody on earth, even turtles and slugs can run with you.  \r\nOr you can compete against the best 10, 100 or 2016 other runners and find out whats possible.  \r\nAsk the best runners in the world how they trained: by competing against the best or by competing against slugs?  \r\n1MB blocks versus unbounded blocks.  \r\nOne system is arbitrarily restricted to 1MB (4MB blockweight), the other one is unbounded.   \r\nOnly limited by the markets demand for transactions and by technical limitations like processing power, bandwidth and storage capacity.  \r\nI thought about writing a separate article about \"Scalability in bitcoin\", but in my opinion the concept is not that hard to grasp.  \r\nSecurity  \r\n---\r\nLike [the decentralization in bitcoin](https://steffenkd.de/articles/bitcoin/decentralization_in_bitcoin/), this is another misunderstood concept in bitcoin.  \r\nSince it is highly correlated with [proof of work](https://steffenkd.de/articles/bitcoin/proof_of_work) and [honesty](https://steffenkd.de/articles/bitcoin/honesty/) I recommend you read both of my articles on the topic.   \r\nHere is a short excerpt from the introduction of the bitcoin whitepaper:  \r\n> \"The network timestamps transactions by hashing them into an ongoing chain of hash-based proof-of-work, forming a record that cannot be changed without redoing the proof-of-work. The longest chain not only serves as proof of the sequence of events witnessed, but proof that it came from the largest pool of CPU power. As long as a majority of CPU power is controlled by nodes that are not cooperating to attack the network, they\u2019ll generate the longest chain and outpace attackers.\"  \r\nAs can be seen, there is a sequence about \"a majority of CPU power being controlled by nodes that are not cooperating\" which means, that it is not just about hashpower, but about honesty.  \r\nWhich is the main reason why the word \"honest\" is mentioned over 16 times in the bitcoin whitepaper.  \r\nNine times in relation with \"honest node\".  \r\nSo if you think that the security of the bitcoin network is solely about hashrate, which is equivalent to \"brute force\" and would be analogous to \"the strongest guy is always right\", you may eventually find out that you are wrong.  \r\nAsk yourself a simple question: do you want to live in a society, where the strongest guy is always right?  \r\nLike Ragnar Redbeard states in his book \"Might is Right\"?  \r\nNo?  \r\nThen you may see \"proof of work\" not as the ultimate consensus mechanism, but more like a signal and investment up front, which will vanish  and be lost in case of getting caught cheating by another bitcoin miner (server operator).   \r\nAgain, read my article about [proof of work](https://steffenkd.de/articles/bitcoin/proof_of_work).  \r\nIf you think that the strongest guy in the village can just take your bike, car or house or murder someone else, because he is the strongest guy, then well...good luck with that narrative longterm.  \r\nAnd good luck with the concepts of ownership, possession, law, accountability, fairness, honesty and peace.  \r\n![blockchain_trilemma_security](/home/lucidebris/ipara/0-vaults/bsv_blogposts_3dordi/images/blockchain_trilemma_pics/blockchain_trilemma_security_top.svg)  \r\nThievery is thievery, murder is murder and scamming is scamming no matter how strong you may be.  \r\nAs long as a majority of users has a demand for honesty, accountability, law and truth, bitcoin will come up with the corresponding supply.  \r\nNatures concept of demand and supply at work.  \r\nThe original bitcoin protocol - balance at work  \r\n---\r\n[On the original bitcoin protocol](https://thatsbtcnotbitcoin.com/), the three variables \"security\", \"scalability\" and \"decentralization\" can be balanced against each other.  \r\nSimple as that.  \r\nSome may call it the free market principle of supply and demand.  \r\n  \r\n![big_blocks](/home/lucidebris/ipara/0-vaults/bsv_blogposts_3dordi/images/blockchain_trilemma_pics/blockchain_trilemma_scalability_big_blocks.svg)  \r\nPicture: All three variables can be balanced out against each other, which would result in a slightly different shaped triangle.  \r\nIt will never be perfect and will constantly change, similar to your heartbeat, stroke-volume, blood pressure or heart-beat-variability.  \r\nBut that's the beauty of it.   \r\nThis is quite easy, since variables can either be increased or decreased while only being restricted by technical or economical thresholds or limits.  \r\nIf you are familiar with [Moore's Law](https://en.wikipedia.org/wiki/Moore%27s_law) you may know, that processing power, storage capacity and data transmission speeds are all growing exponentially.  \r\nWhich is the main reason why most people have a super computer in their pockets or on their desk right now on which they are reading this article.  \r\nIf you want to visualize it, you can imagine a flat triangle being balanced on top of a pencil.  \r\nThe balance point is most certainly not on one of the corners or edges but somewhere in the center instead.  \r\nIt is not at the extremes but somewhere in the middle which can be proven mathematically, geometrically and physically.  \r\nA lot of nature is just numbers, calculus and geometry.  \r\nLike it is said to be stated on Plato's academy in Athens: \"Let no man ignorant of [geometry](https://en.wikipedia.org/wiki/Analogy_of_the_divided_line) enter here!\"  \r\nYou can focus on just one or two sides, like security and decentralization and completely ignore the third, namely scalability.  \r\nYou can sacrifice scalability for the goddess of decentralization.  \r\nBut this is an extreme.  \r\nAnd nature has a tendency for [Galton's \"regression to the mean\"](https://rss.onlinelibrary.wiley.com/doi/full/10.1111/j.1740-9713.2011.00509.x), which means, that it will go for a point somewhere in between the two extremes over time.  \r\nExtremes are good to test thresholds and to have reference points to actually find the mean or comfort zone.   \r\nBut they are normally not longterm sustainable without high costs or sacrifices - in this case the sacrifice of \"scalability\".  \r\nNature flows like a wave, and every wave fluctuates between two extremes.  \r\nBut the extremes themselves are just reference points for the Gaussian playground in the middle.  \r\nThe Yin and the Yang with the S-curve in between.  \r\nThe twilight, wave or snake - which keeps the two sides hidden from each other for an endless godly play.  \r\nAnd sometimes the mean or median can travel up or down.  \r\nDue to [Moore's Law](https://en.wikipedia.org/wiki/Moore%27s_law) for example, certain computational metrics have increased over time.  \r\nThis is also how wealth is created or how it increases.   \r\nWealth is not created by hodling magic numbers though.  \r\nYou have to use those magic numbers.  \r\nThose magically entangled key pairs.  \r\nAnd you should use those magic numbers at scale.   \r\nTo enable peer-to-peer trade to nourish the magical creation of wealth.  \r\nOn small block BTC you can use those magical numbers five times per second.  \r\nOn Big Block Bitcoin the usage is mainly restricted by technical limitations.  \r\nAt the moment the capabilities are at around [one million transactions per second](https://aws.amazon.com/blogs/web3/how-the-bsv-association-built-a-million-tps-blockchain-node-using-aws/).  \r\nAnd one million isn't the limit or in [Satoshis words according to Mike Hearn](https://bitcointalk.org/index.php?topic=149668.msg1596879#msg1596879):  \r\n> \"The existing Visa credit card network processes about 15 million Internet purchases per day worldwide.  \r\nBitcoin can already scale much larger than that with existing hardware for a fraction of the cost.  \r\nIt never really hits a scale ceiling.  \r\nIf you're interested, I can go over the ways it would cope with extreme size.\"  \r\nThe blockchain dilemma with 1MB-BTC-Core:  \r\n---\r\nBy converting the blocksize variable into a constant of 1MB (4MB blockweight), 1MB-BTC-Core essentially converted the so called blockchain-trilemma into a dilemma.  \r\n  \r\n![small_blocks](/home/lucidebris/ipara/0-vaults/bsv_blogposts_3dordi/images/blockchain_trilemma_pics/blockchain_trilemma_scalability_small_blocks.svg)  \r\nDue to the frozen blocksize of 1MB, the blockchain trilemma on small-block-BTC is like a triangle which is so flat, that it looks more like a straight line than a triangle.  \r\nSince you can easily have 1GB blocks, you would have to shrink the size of the triangle on one side by x1000 to adjust for the scale difference.  \r\nWhich would make it look more like a flat line.  \r\nAnd that is not up for debate, it is a simple and obvious fact and can be verified mathematical and geometrical.  \r\nOne of the most basic market principles is the [law of demand and supply](https://www.investopedia.com/ask/answers/030415/who-discovered-law-supply-and-demand.asp) like already mentioned several times.  \r\nIt implies, that whenever a market signals a higher demand, it normally is met by other market participants with an equivalent raise of supply, if possible.     \r\nOn small-block-BTC, this market principle no longer works, since it was artificially and arbitrarily restricted to 1MB - planned economy style.  \r\nAnd since small blockers have completely sacrificed scalability for decentralization, they won't even consider scaling in parallel to [Moore's Law](https://en.wikipedia.org/wiki/Moore%27s_law).  \r\nComing back to the human body analogy: if you start running a marathon, and the demand for energy rises, your body automatically increases breath frequency, heart rate, stroke volume and blood pressure to supply your muscles with the demanded surplus of energy and oxygen - supply and demand at work.  \r\nThe variables go up or down to keep a balance and react to external stimuli.  \r\nNow convert your variable heart rate into a constant and restrict it to 30 beats per minute and watch what's going to happen.  \r\nSpoiler alert: no marathons, no sports and no walks in nature possible.  \r\nLying in bed will be your sole activity.  \r\nYou have artificially and arbitrarily crippled yourself.  \r\nThe same happened with small-block-BTC with its 1MB blocksize.  \r\nThat doesn't necessarily mean, that there are no usecases for small-block-BTC.  \r\n[But it is not bitcoin](https://thatsbtcnotbitcoin.com/) as described in the [whitepaper by Satoshi Nakamoto](https://steffenkd.de/blog/bitcoin_whitepaper/).  \r\nAdditionally the trilemma is actually a dilemma and on top of all that, it was artificially created.  \r\nSmall-block-BTC is by design unusable as \"peer to peer electronic cash\", which is the heading of the whitepaper.  \r\nLong story short: \r\n---\r\nI would argue, that there never was a blockchain trilemma in the first place and that it is just an endless self balancing equation with three variables.  \r\nAnd on small-block-BTC it is an artificially and arbitrarily created problem.  \r\nAdditionally on small-block-BTC it isn't a trilemma, since there are only two variables involved, which makes it more of a dilemma (duos, dos, two).  \r\n![small_vs_big](/home/lucidebris/ipara/0-vaults/bsv_blogposts_3dordi/images/blockchain_trilemma_pics/big_block_vs_small_block_bitcoin.svg)  \r\nIf you have any understanding about nature and supply and demand at work, you may come to the conclusion, that there never was a problem with the original bitcoin design.  \r\nThe small blocker narrative was socially engineered to delay the mass adoption of a global peer-to-peer protocol, with less centralized points of power and potential corruption.  \r\nAnd if you think about what this actually means, you may come to another conclusion: that most people, who have any position of power in our current system, have an interest in bitcoin not being able to scale.  \r\nBecause if it scales, its game over for most of the power hungry middlemen and intermediaries world wide.  \r\nThe end for the control freaks, wannabe dictators, regulators, puppet masters and parasites.  \r\nThe end for big media, big banks, big tech and big government in its current state.    \r\nThis probably is one of the main reasons why Jack Dorsey is pushing small-block-BTC-Core.  \r\nHe has a conflict of interest with his 2009 founded payment provider business Square/Block-Inc.  \r\nA scalable bitcoin is directly competing with his business.  \r\nAnd his business is mainly about power and control.  \r\nTherefore he and the powers behind him prefer bitcoin to be crippled so they can establish themselves as payment providers to stay in control.  \r\nAll the so called \"second layer solutions\" are not bitcoin and they are introducing intermediaries, middlemen and gatekeepers again - welcome back to the old system which bitcoin initially was meant to replace.   \r\nThey are rich already, but they want to control the payment-, data- and information-streams and those who have access to it.  \r\nThis can be done through intermediaries, middlemen and gatekeepers like Dorsey or Bill Gates and other people in positions of power like them.  \r\nArbitrary censorship and moderation:  \r\n---\r\nThe small blocker narrative took over due to [arbitrary censorship](https://medium.com/@johnblocke/a-brief-and-incomplete-history-of-censorship-in-r-bitcoin-c85a290fe43) and [moderation on bitcointalk and reddit](https://www.reddit.com/r/btc/comments/3z0pkq/theymos_caught_redhanded_why_he_censors_all_the/).  \r\nYou can also read [Roger Ver's \"Hijacking Bitcoin\"](https://www.amazon.de/-/en/Hijacking-Bitcoin-Hidden-History-BTC/dp/B0CXWBCWDR?crid=1FNX4EFXUUSOG&sprefix=hijacking+bitcoi%2Caps%2C137&sr=8-1).  \r\nIt is similar to looking back to 2020 and arguing that the media and governments around the world have acted completely ethical and moral during COVID and that people took the vaccination completely unbiased and free from any form of propaganda, censorship or moderation.  \r\nAnd the same people will tell you that the free markets invisible hand has decided and that it was all about the UASF (user activated soft fork).  \r\nMore about the user activated soft fork in another article, but be aware that instead of using the \"proof of work signal\", which can't be faked, it reintroduced the old account voting system, where one person could fake a potential infinite amount of votes - the irony.   \r\nA bitcoin miner has to put his money where his mouth is, whereas a raspberry node essentially can be just an IP-address which is not much of an investment at all and can be faked.  \r\nThere is nothing wrong with having a different opinion.  \r\nI don't even have a problem with censorship and moderation, if the rules are clear up front.  \r\nBut using your power to arbitrarily censor and moderate your opposition on established discussion boards and forums essentially means, that your arguments are too weak to stand on their own.  \r\nYou have lost and time will show.  \r\nTime will always show.  \r\nCompute will always show.  \r\n---\r\nThanks for reading!",
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  "map_content": "Bitcoin_101: The decentralization in bitcoin  \r\n\r\nRead on my blog:  \r\nhttps://steffenkd.de/articles/bitcoin/the_decentralization_in_bitcoin/\r\n\r\nRead onchain:  \r\nhttps://ordinals.gorillapool.io/content/bc36aef15520dc000446ab2ba22d92978a64ab9b3332f7893c33148e6d12b1a6  \r\n\r\nRead here on treechat, without pictures though:  \r\nauthor: steffenkd  \r\ndate: 04.06.2026  \r\nwordcount: ~ 3300  \r\nreading time: ~ 25 minutes  \r\n---\r\nThe decentralization in Bitcoin  \r\n---\r\nThe word \"decentralization\" is inflationary used in the so called bitcoin and crypto space and in my opinion is one of the most misunderstood concepts in the whole space.  \r\nYou may not be aware, but Satoshi himself hasn't used the word \"decentralization\" even once in his whitepaper.  \r\nSince another mantra in the space is \"don't trust, verify\", I recommend you read [The Bitcoin Whitepaper](https://nakamotoinstitute.org/library/bitcoin/) and verify my statement yourself.  \r\nEven though I admit, that the concept of \"decentralization\" can be read between the lines.  \r\nSo maybe, just maybe, this concept of decentralization has a somehow different meaning as it is propagated by the majority of the so called bitcoin and crypto influencers for the last decade.  \r\nIn this article I try to explain what I think the concept of \"decentralization\" in bitcoin means.  \r\nAnd where its boundaries and limits are.  \r\nDecentralization in the mathematical sense  \r\n---\r\nCentralization means that something is centered in one point.  \r\nTherefore decentralization means that something is not centered in one point but exists in at least two points.  \r\nMathematically \"central\" can be expressed through the number one (1).  \r\nThis automatically means, that every number greater than one (n>1) is decentralized.    \r\nFor the game theoretical nature of bitcoin to play out longterm, you would need at least three (3) nodes though.  \r\nWhich would set the minimal amount of nodes for bitcoin to work properly longterm at three nodes (3).  \r\nTo be clear: the original bitcoin is still being rolled out and during bootstrapping even one or two nodes would suffice for some time.  \r\nBut this would be a discussion of its own.  \r\nSo you could write a small program which compares if the amount of nodes is equal or greater than the number two (n != 2) and returns a boolean value (0 or 1) which means its either true or false.  \r\nIt is either centralized or decentralized, simple as that.  \r\nNow you could write another program which checks if several values are greater than two (n>2) and order those values either by highest to lowest or lowest to highest.  \r\nThis program could check if a value is more decentralized than another.  \r\nIf we would put in the numbers 144, 2, 69, 88, 369, 3, 2016 and 1845 the program would order them in the sequence 2, 3, 69, 88, 144, 369, 1845, 2016, with 2016 being more centralized than 2.  \r\nThis means something is decentralized, when it is larger than the number one and that you can have different levels of decentralization.  \r\n![centralization_vs_decentralization](/home/lucidebris/ipara/0-vaults/bsv_blogposts_3dordi/images/the_decentralization_in_bitcoin/centralization_vs_decentralization.svg)  \r\nPicture:  The two structures represent opposite philosophies.  \r\nIn a centralized system, every node speaks only to one hub.  \r\nSimple to control and monitor.  \r\nBut that one hub is both the bottleneck, the single point of failure and the single point of potential corruption.  \r\nTake this one point down or corrupt it and the whole network collapses or can be abused.  \r\nIn a decentralized network, every node can reach others via multiple paths.  \r\nRemoving or corrupting any single node barely disrupts the system and the traffic just reroutes.  \r\nThe trade-off is complexity: there's no one place to manage, influence, corrupt or audit everything.  \r\nThe advantage and utility of decentralization  \r\n---  \r\nSo decentralization means, that something exists in more than one place or in case of bitcoin, in more than two places.  \r\nThis has certain effects, and introduces redundancy and backup capabilities into a system.  \r\nIn a decentralized system you do not have one single point of failure, or, in case of power and control, not one single point of potential corruption.  \r\nThink about it with regards to politics, advertisement, big banks, big tech, big government, big media, lobbying and the extensive spending of tax payer money.  \r\nAnd about how Jeffrey Epstein has managed to corrupt many people in those positions of power.  \r\nThose are the advantages of decentralization.  \r\nYou do not have one large pot of tax payers money where you only have to corrupt a few politicians or regulators to sell your useless product to the masses any longer.  \r\nInstead you would have to go from door to door to convince every citizen about the effectiveness and utility of your product, ideology or narrative.  \r\nIt would be quite interesting for example, to see how many vaccinations would be sold in such a system.  \r\nOr if the citizens of two nations would actually vote for war.  \r\nI personally would bet against it!  \r\nThe so called \"representative democratic systems\" world wide are nothing else than \"man in the middle attacks\" against humanity itself.  \r\nCompared to an entrepreneur in the economic system, where I have a claim of compensation or warranty if a false or broken product was delivered, a representative has close to no obligation to actually do what he has promised.  \r\nWhich bares the question why why need those representatives at all.  \r\nEspecially when having a peer-to-peer-electronic-cash-system like bitcoin which eliminates middlemen and intermediaries.  \r\nAt some point the majority of people world wide may realize that they are being played, exploited and incited against each other - by big media.  \r\nPeople on both sides may vote and wish for peace and cooperation but they get war at the end.  \r\nBecause lobbies in the background are corrupting those centralized points of power, namely politicians.  \r\nInstead of having to corrupt 80 million people in germany they only have to go for 630 politicians - actually only for half of them.  \r\nAnd voila, the armaments industry can squeeze every little drop out of the tax payers on both sides of the conflict.  \r\nCitizens on both sides suffer and a few powerful people in the background get massive profits.  \r\nBe aware, that you have to invest more energy and work to run and coordinate those different servers or miners though.  \r\nBut the current big tech enterprises around the world already have decentralized their internal server structures.  \r\nNetflix for example doesn't have just one server where every human being on earth streams his movies from.  \r\nI do not know how many they have, but they probably already have a lot, since decentralization makes also sense from a \"data delivery perspective\".  \r\nAt the moment we have google, netflix, amazon, microsoft, spotify, x and several other big tech enterprises who each runs several large server farms around the world.  \r\nAdditionally a centralized entity like a bank can keep certain data secret, like the accounting of money or if it happens in their favour.  \r\nA short quote from Lord Acton:  \r\n> \"Power tends to corrupt and absolute power corrupts absolutely.\"  \r\nAnd while we are on it, another one from Leopold Kohr's \"Breakdown of Nations\":  \r\n> \"Even a confirmed thief will not steal if he has no chance of getting away with it.  \r\nOn the other hand, even an honest man will misbehave if he has the opportunity, the power to do so.\"   \r\nAnd since I mentioned media I will bring in Malcolm X as well:  \r\n> \"The media's the most powerful entity on earth.  \r\nThey have the power to make the innocent guilty and to make the guilty innocent, and that's power.  \r\nBecause they control the minds of the masses.\"  \r\nIf you split up those centralized positions of power, which are just centralized positions of potential corruption you may end up with less temptation, less corruption, less misinformation, less money wasting and less resource misallocation.  \r\nYou would reintroduce the [law of supply and demand](https://www.investopedia.com/ask/answers/030415/who-discovered-law-supply-and-demand.asp), [the free market principle](https://en.wikipedia.org/wiki/Free_market), [the wisdom of crowds](https://en.wikipedia.org/wiki/The_Wisdom_of_Crowds) [the gaussian normal distribution](https://en.wikipedia.org/wiki/Normal_distribution) and [the law of large numbers](https://en.wikipedia.org/wiki/Law_of_large_numbers).  \r\nBut more about those concepts in another article named \"why bitcoin?\".  \r\nWhat Satoshi Nakamoto had to say about it  \r\n---\r\n> [The current system where every user is a network node is not the intended configuration for large scale.  That would be like every Usenet user runs their own NNTP server.  The design supports letting users just be users.  The more burden it is to run a node, the fewer nodes there will be.  Those few nodes will be big server farms.  The rest will be client nodes that only do transactions and don't generate.](https://satoshi.nakamotoinstitute.org/posts/bitcointalk/287/).  \r\n> [The existing Visa credit card network processes about 15 million Internet purchases per day worldwide.  Bitcoin can already scale much larger than that with existing hardware for a fraction of the cost.  It never really hits a scale ceiling.  If you're interested, I can go over the ways it would cope with extreme size.](https://bitcointalk.org/index.php?topic=149668.msg1596879#msg1596879).  \r\nSatoshi Nakamoto created the name bitcoin and defined its design and technical capabilities in the bitcoin whitepaper.  \r\nThe name bitcoin therefore is linked to the design described in the whitepaper.  \r\nBitcoin was released under a [MIT-license](https://en.wikipedia.org/wiki/MIT_License) which allows copying of the software and overall is very generous with using the source code.  \r\nYou can essentially do whatever you want with it.  \r\nCrippling the original design and then passing it off to the masses as the original bitcoin brand is bad sportsmanship though.  \r\nAnd time will show since the truth can stand up straight on its own.   \r\nThe essence of decentralization  \r\n---\r\nThe essence of decentralization in bitcoin is that auditors are auditing each other.  \r\nBy that you have redundancy and backup capabilities in case of data loss.  \r\nAnd whoever makes a mistake or wants to cheat and enrich himself will get caught by the other auditors and users and will lose his initial investment.  \r\nEndless decentralization, which essentially is decentralization for the sake of decentralization is a questionable narrative though.  \r\nBackup capabilities and redundancy are useful.  \r\nBut at a certain amount of backups the additional work and energy needed for coordination and keeping them up to date and in sync increases, while the benefits decline.  \r\nAn example:  \r\nOne data backup backup will add 100% utility to your case.  \r\nIf your original data gets corrupted you have a copy to keep going - quite obvious and logical.   \r\nBut a second backup may only add a 50% increase of utility already, since it is unlikely that the original and the backup fail at the same time.  \r\nA third backup will only add 25% utility, because the probability of the original data and the two backups failing at the same time decreases further.  \r\nMaybe the function is 100%, 99%, 98% and so on, maybe it is 99.99%, 66.66%, 33.33% and so on, but that is not the point.  \r\nThe point is, that every additional backup is less useful than the previous one.  \r\nMeanwhile every additional update adds a little amount of time, energy or work needed for coordination and keeping it in sync.  \r\nIf you backup your data onto a hard drive regularly it will be obvious that connecting and synchronizing a second hard drive takes more time, energy and overall work than syncing just one hard drive.  \r\nYou may have automated the process, but this simply means that the computer is doing the work for you.  \r\nYou may not see it, but the work is there.  \r\nIt still costs computing power, bandwidth, hardware, energy and time to keep those backups in sync.  \r\nThe lesson here is, that a potential infinite amount of decentralization, redundancy and backups becomes uneconomical at a certain point.  \r\nBut where should be the threshold and who decides where the threshold should be?  \r\nYou may be familiar with the value-cost-ratio or [benefit-cost-ratio](https://www.investopedia.com/terms/b/bcr.asp), where two functions are being laid over each other and the intersection of the graphs is where the sweet spot lies.  \r\nAbove or before this intersection point it is profit, below or after this intersection point it is loss (or vice versa, depending on how you display the data and graphs).   \r\nWith bitcoin miners it is similar.  \r\nA bitcoin miner simply has to calculate his \"cost-benefit ratio\".  \r\nThe metrics and data you need for calculation are your expenses and your expected returns.  \r\nThat's it.  \r\n![benefit_cost_ratio](/home/lucidebris/ipara/0-vaults/bsv_blogposts_3dordi/images/the_decentralization_in_bitcoin/backup_bcr_curves_marked.svg)  \r\nPicture:  \r\nThe best \"benefit-cost-ratio\" is marked with a star at Tier 2 (RAID-1), where $2.4k annual costs protect $18k of data value, yielding a 7.5\u00d7 return.  \r\nThe two kinds of decentralization in bitcoin  \r\n---\r\nThe misunderstood decentralization on the miner or server side - 2016 maximum   \r\n---\r\n2016 is the maximum amount of blocks which can be mined during the two weeks \"difficulty adjustment period\", after which the difficulty adjustment algorithm readjusts the difficulty.  \r\nAfter this period a bitcoin miner has to recalculate his benefit-cost-ratio.  \r\nThis is how a profitable business is run - you supply a service, account for expenses and add a profit on top.    \r\nIf a miner or node doesn't find a block during this two week \"difficulty adjustment period\" he essentially can't get a return on his initial investment and therefore is a non profit enterprise.  \r\nHis uptime and run conditions are not based on delivering a profitable service paid by the users.  \r\nIf you are running an enterprise which supplies a service and has a cashflow with inputs and outputs, you are more embedded in the entangled economical network than someone who doesn't.  \r\nThis is not necessarily bad, but beware that profitable businesses will more likely attract entrepreneurs who want to run them, due to their profitable nature based on demand and supply.  \r\nIn comparison, a non profit enterprise like a \"non mining node\" on small block BTC may attract less participants, due to its cash bleeding nature.  \r\nSo the supply of non mining nodes on small block BTC is solely based on the emotions of their hosts and not on profit oriented market principles.  \r\nThis can change any time due to a shift in sentiment or ideology.  \r\n![decentralization_3-2016](/home/lucidebris/ipara/0-vaults/bsv_blogposts_3dordi/images/the_decentralization_in_bitcoin/decentralization_3-2016.svg)  \r\nPicture:  \r\nTheoretically, only 2016 blocks can be found during the two week \"difficulty adjustment period\", which therefore serves as the upper limit for economical nodes on the bitcoin network.  \r\nAnd if you do not find a block, you are not a miner.  \r\nThe same way you are no car builder if you can't produce a driving car, you are no marathon runner if you can't finish a marathon and you are no chess player if you can't finish a chess party.  \r\nIf you enter a competition you agree to certain rules and in case of bitcoin the competition is about finding a block.  \r\nTherefore the amount of decentralization in bitcoin mining lies somewhere between 3 - 2016.  \r\n2016 nodes therefore is the theoretical upper limit for decentralization on the bitcoin network.  \r\nIn my opinion more than 100 nodes are highly unlikely due to [the pareto-principle](https://en.wikipedia.org/wiki/Pareto_principle) and [the power-law](https://en.wikipedia.org/wiki/Power_law) though.  \r\nThe ignored decentralization on the user side - infinite/unbounded \r\n---\r\nLike already stated in [\"what is bitcoin?\"](https://steffenkd.de/articles/bitcoin/what_is_bitcoin/#user-side---bitcoin-is-open-accessible-and-users-create-accounts-themselves) users which want to participate on the bitcoin network can create their user accounts themselves.  \r\nI highly recommend to read the article or at least the passage before reading on.  \r\nThis account creation can be done due to the properties of public key cryptography.  \r\nBy creating a pair of so called [asynchronous keys](https://www.geeksforgeeks.org/computer-networks/asymmetric-key-cryptography/) a user is able to create his own identity without the need of centralized entities like big tech, big government or big banks.  \r\nUsers then can verify each others identities and create a network of trust.  \r\nSince you are not dependent on centralized entities like google, meta, x, banks, governments or institutions alike, you essentially have a \"decentralization of identity creation on the user side\".  \r\nThis \"decentralization of identity creation on the user side\" makes most sense, if users can write to the bitcoin blockchain database.  \r\nOtherwise it would be like everyone of the seven billion people one earth being able to build an electric water heater with two copper rods and a bucket, but there is only electricity for about 500000 people each day.  \r\nWith around seven to eight billion people on earth this is laughable.  \r\nYou would just have another [PGP](https://en.wikipedia.org/wiki/Pretty_Good_Privacy) or GPG implementation.  \r\nWhich is not necessarily bad, but PGP and GPG already exist and I do not think we need another copycat.  \r\nIt already isn't used by a lot of people.  \r\nAnd Big Tech is already using asynchronous key pairs, but instead of you creating and managing your own keys on your device, big tech is doing it for you - the irony.  \r\nOn small-block-BTC it would take around 40 years till everyone of the 7 billion people on earth has written to the bitcoin blockchain, because small-block-BTC is only capable of five transactions per second.  \r\nAnd it doesn't really matter if it is 30 years, 40 years or 45 years - everything above one day is impractical.  \r\nSo on small-block-BTC you have uneconomical nodes, which do not find any blocks and can't break even on their costs.  \r\nAnd at the same time the amount of transactions is so low, that the \"decentralization of identity creation on the user side\" is useless for 99.99% of users at scale.    \r\n99.99% of people who created their identity themselves won't be able to use their newly created identity on the small-block-BTC blockchain.  \r\nOr in small blocker language: You can be your own bank but you won't be able to transact.  \r\nWhy should you run a node on a raspberry-pi, if you do not find any blocks and therefore can't break even on your costs?  \r\nAnd on top of that you won't be able to to transact on the network you are running a listening node for, because by design only 5 people per second can make a transaction.  \r\nSerious question: Why should anyone do this and where are the incentives?  \r\nI  would consider this a double fail.  \r\nThe good news is, that you can use your identity on all three major bitcoin versions, namely BTC, BCH and BSV.  \r\nTwo of those bitcoin versions are restricted, one is unbounded.  \r\nYou can use the sovereignity of your asynchronous key pair identity and decide independent and autonomous which bitcoin version you want to use.  \r\nThe balance between user and server side decentralization  \r\n---\r\nOn an unbounded bitcoin version, the miners simply supply the demanded amount of transactions by the users, based on the universal [law of demand and supply](https://www.investopedia.com/terms/l/law-of-supply-demand.asp).  \r\nOnly restricted by technical limitations like [Moore's Law](https://en.wikipedia.org/wiki/Moore%27s_law).  \r\nOn the bitcoin versions with a restricted blocksize, the user-side-decentralization can't unfold its full potential.  \r\nAgain: you can be your own bank but you won't be bale to transact.  \r\nSmall block BTC is not peer-to-peer but peer-to-miner-to-peer.  \r\nAnd on Lightning you can't sign a utxo over to someone else, but you have to search for a path through intermediaries and middlemen again.  \r\nThose are no innovations, those are steps backward.  \r\nBut more about that in another article.  \r\nThree different versions: BTC, BCH and BSV  \r\n---\r\n| Bitcoin version | People (n) | tx/s | time for 1 billion transactions |  \r\n| --- | --- | --- | --- |  \r\n| BTC | 1 billion | 5 | > 6 years |  \r\n| BCH | 1 billion | 120 | 100 days |  \r\n| BSV | 1 billion | 1000000 | 17 minutes |  \r\nOn the BitcoinSV blockchain the blocksize is unbounded.  \r\nThis means you have a potential network effect which can include every human being.  \r\nSince BitcoinSV is able to process around one million transactions per second, it means that it would take around 17 minutes for the network to process one billion transactions.  \r\nOn BCH you have a blocksize limit of 32MB which means that you will end up with around 120 transactions per second.  \r\nThis means the BCH blockchain has a capability of 10 million transactions per day.  \r\nWith 1 billion people wanting to make a transaction, it would take the network around 100 days to process all the transactions.  \r\nOn BTC you have a blocksize limit of 1MB (4MB blockweight), which means, that the network can only process around 5 transactions per second which are 432000 transactions per day.  \r\nWith 1 billion people wanting to make a transaction, it would take the network over 6 years to process one billion transactions.  \r\nSelf sovereignity and self custody is therefore not a realistic scenario.  \r\nIt exists in theory, but in praxis a majority (99.99%) of people will never be able to transact onchain.  \r\n---\r\nThanks for reading!",
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