I recently had the pleasure of visiting the beautiful Swiss mountain town of Lugano, and its appeal is that it’s basically Italy but run by the Swiss. This is according to Tether CEO Paolo Ardoino, one of the main backers of the project. Plan Ba Bitcoin conference where I moderated a discussion on Bitcoin’s growth trends nation-state embrace The original cryptocurrency.
The mood at the event was upbeat — not surprising, since everyone there adores Bitcoin — but it was also clear there was trouble in paradise. It turns out there is growing disagreement over Bitcoin’s codebase and whether it should be modified to allow the blockchain to include more non-financial data.
The concept of including data unrelated to Bitcoin transactions is not new, in fact, first block A reference to a newspaper headline about the bank bailout is included on the blockchain. But now, Bitcoin’s largest and most influential group of coders, “Core,” is planning to tweak their software to significantly lift restrictions on how much non-payment information can be included in a block.
For the core crowd, it’s a simple and pragmatic way to promote new uses for Bitcoin and, in the process, charge miners a premium when the blockchain’s lottery payout is 3.125 Bitcoin and will be halved again in 2028. However, a rapidly growing rival faction wants nothing to do with the scheme and is promoting its own Bitcoin client software called Knots.
The faction’s software is led by an influential Bitcoin developer, a devout Catholic, who reportedly named it “Knots” in honor of the “knotted whip” that Jesus used to drive money changers out of the temple. According to one lawyer for Knots I spoke with, the software is necessary to protect the blockchain from what he denounced as spammers and “scam adjacency” projects that facilitate things like Bitcoin NFT.
If you’ve ever met Bitcoin supporters in person or online, you know they’re not known for their wit. Such was the case with Bitcoin’s early luminaries, who have been denouncing each other on stages in Lugano and elsewhere. X. These high-profile supporters include Peter Todd and Jameson Lopp of the core faction, as well as Nick Szabo and Luke Dasher of the rival faction.
The latest split (you can read a helpful breakdown here) is reminiscent of the Bitcoin block size war that erupted from 2015 to 2017, ultimately seeing “small block proponents” (supporting keeping Bitcoin blocks at 1MB) prevail over rivals who claimed that increasing blocks to 2MB or larger would be more commercially viable. That fight spawned a feud that continues to this day.
Knots remains a smaller player in the current battle, but has become the client of choice for more than 20% of Bitcoin node operators. Its growing popularity stems not just from Knots’ stance on scaling the blockchain, but also from the perception that the core crowd has become arrogant and out of touch with Bitcoin’s core values. Meanwhile, the core faction dismissed the knot faction as lying troublemakers.
I’m not in a position to weigh in on much of it, other than to observe that this recent battle over Bitcoin’s soul reinforces what I’ve been saying for years: Bitcoin is an amazing technology, but it’s also a religion. As with any religion, there will be disagreements between old-school believers and modern believers. To the delight of the crowds in Lugano, there was a moment of unity as a restored statue of Satoshi Nakamoto was unveiled on the city’s beautiful lakeside. Bitcoin’s factions may be at war, but there’s no doubt they still worship a common god.
Jeff John Roberts
jeff.roberts@fortune.com
@JeffJohnRoberts
Decentralized News
If you can’t beat ’em, join ’em: The CEO of JPMorgan Chase continues to soften his long-standing anti-crypto stance, with the bank announcing that it will allow borrowers to use Bitcoin and Ethereum as collateral for loans by the end of the year. (Bloomberg)
Coin upgrade: Coinbase’s upcoming crypto token could be worth $12 billion to $34 billion, a JPMorgan analyst said, citing slowing growth in the token and DEX as reasons to upgrade the stock ahead of this week’s third-quarter earnings release. (DL News)
Are we coming to ICO again? In assessing Coinbase’s $375 million acquisition of Echo, which was founded by cryptocurrency influencer Cobie and helps token projects raise capital, one reporter speculated that it could kick off a return to 2016-style initial coin offerings. (Bloomberg)
DATs don’t add up: follow wealth Reveal potential insider trading Ahead of public companies turning to digital asset treasury, a new report provides evidence that insiders associated with some popular DATs are using stock sales to circumvent token lock-ups. (Unfettered)
Trump elects CFTC chairman: The White House has chosen longtime attorney and cryptocurrency expert Mike Selig to lead the agency. After Winklevii helped derail the initial front-runner, Selig’s choice was welcomed by industry veterans eager to finalize a key bill to divide responsibilities between the SEC and CFTC. (Politico)
Main characters of the week
Samsoor Said—Bloomberg/Getty Images
CZ is the easy choice for the final week’s protagonist Obtain a presidential pardon. Critics, pointing to the $2 billion deal involving the Trump family stablecoin and Binance, criticized the pardon as gross corruption, while many on Crypto Twitter claimed it was fair given that CZ, who admitted guilt, had allegedly become the target of political prosecution.
meme of the moment
@Globalstats11
Bitcoin enthusiasts seeking to make the pilgrimage have a growing number of options. In addition to the refurbished Satoshi Nakamoto statue unveiled in Lugano, there is also a statue in Budapest. Could a formal shrine—or perhaps a Bitcoin theme park—be far behind?