Why BlackRock’s Bitcoin Explainer Raises Alarm Bells – DL News

BlackRock has been in the eye of a storm from the Bitcoin community after it released a suspicious three-minute Bitcoin streak explainer.

In the video, the narrator describes one of the fundamental aspects of Bitcoin, its 21 million fixed supply, as a cryptographic base. However, the subtle disclaimer at the bottom caught the attention of Bitcoin users.

“There is no guarantee that the maximum Bitcoin supply of 21 million will not change,” the subtitle reads.

Bitcoin holders abstained.

“Has BlackRock actually figured out a way to implement a hard fork that increases… Bitcoin cap? he asked One Bitcoiner.

“Very scary” He said last.

BlackRock’s video raised questions among Bitcoin users about whether the line was a warning from the company, and whether it eventually plans to exert some of its influence to change specific features of the protocol.

The company now manages more than 524,000 bitcoins worth $53 billion via its bitcoin exchange-traded fund, According to To Dune Analytics.

A new conflict over protocol rules is sparking PTSD in the Bitcoin community. This is due to the battle that took place over the rules between 2015 and 2017.

during Bitcoin block size wara consortium of companies – exchanges and miners – are fighting over the amount of data that can be included in a block and control of the protocol’s rules.

Ultimately, the “small blockers,” or advocates of keeping the blocks small, won out.

sacred

The specific supply of Bitcoin is sacred to its community.

Proponents say this makes it better money than traditional nation-state currencies. The fixed cap protects Bitcoin from devaluation, and is said to be a hedge against inflation – although it has yet to live up to that claim.

Removing fixed supply has the potential to destroy Bitcoin. This is because fixed width is a feature of its design.

Security budget

However, there are people who say that Bitcoin’s hard cap should be raised.

Miners – the computers that secure the Bitcoin network – need to have enough money to continue running their operations.

Currently, they get their money in two ways: from newly issued Bitcoin, and from transaction fees.

However, by design, block rewards are programmed to halve every four years. The concern is what happens when block rewards get too small. Will transaction fees be enough to keep miners running?

“No significant sustainable fees are charged, and the 1MB limit should be abolished,” said Bitcoin developer Nikita Zavoronkov He said Earlier this year.

Others pushed back.

The future of Bitcoin’s so-called security budget — the mechanism and amount paid to miners to continue securing the network — “is Schrödinger’s cat.” He said Jameson Loeb, CTO at cryptocurrency custodian Casa.

He said that people operate according to philosophical assumptions, which are not provable.

“The best way to stave off the security budget crisis is to continue strengthening its reliance on all fronts.”

Pedro Solemano is markets reporter at DL News. Got a tip? Send him an email at psolimano@dlnews.com.