The Crippling of Bitcoin by Blockstream.
Bitcoin was created in 2009 by Satoshi Nakamoto as the first decentralized currency based on blockchain technology. Bitcoin promised the ability to conduct transactions without the need to rely on a trusted third party, built on digital signatures and cryptography rather than centralized, government-controlled fiat money. Bitcoin was designed to be anonymous, private, permissionless, trustless, immutable and scarce.
A major problem with Bitcoin, in addition to its non-existent anonymity and many other shortcomings, is the block size limitation introduced by Satoshi Nakamoto as a temporary measure. Once the blocks were close to full, it would be raised again. Satoshi left the project in 2010 and left instructions on how to adjust the block size. As soon as he left the project, institutional money flowed into Bitcoin development and they took control. Blockstream was founded and the destruction of Satoshi Nakamoto's genius invention was initiated.
Most of the Bitcoin Core developers were recruited by Blockstream and now, as employees of Blockstream, make up the majority of Bitcoin Core developers, giving this company virtually complete control over Bitcoin Core development. For a for-profit company, one wonders how it can possibly profit from the development of a decentralized peer-to-peer cryptocurrency that is designed to have no intermediary organization from which to profit. Blockstream's solution was to intentionally castrate Bitcoin Core in order to cash in on users with side chains and second layer solutions.
Sidechains are separate blockchains that are linked to Bitcoin Core. One sends Bitcoin to a smart contract and receives a new coin on the sidechain. Coins on the sidechain can be different from Bitcoins in almost every way. They can have better smart contract features, offer instant transactions or anonymity features. The main difference between sidechains and the bitcoin chain is that transaction fees no longer go to the miners, but to the pockets of the sidechain developers, in a centralized structure that violates the very spirit of what makes Bitcoin valuable in the first place.
These profitable side chains now do what Bitcoin Core itself is no longer capable of doing. So the more Bitcoin can do, the less side chains are used, and vice versa. Blockstream consequently benefits not from what Bitcoin Core itself can do, but from what it cannot. Since Blockstream has control over Bitcoin Core development at the same time, this is a clear conflict of interest. If Bitcoin Core scales perfectly on the chain, has reliable instant transactions and general smart contract capabilities, there is no need for side chains and second layers, the company would have no revenue stream and would eventually go out of business. However, if Bitcoin cannot scale properly on the blockchain, has unreliable transaction times, high fees, and no smart contract capabilities, there are many opportunities for Blockstream to profit from these shortcomings.
Since Bitcoin Core developers are for the most part also employees of Blockstream, the following has now happened. Bitcoin's block size has not been further increased to achieve better scaling. Transaction fees fluctuate wildly, confirmation times are completely unreliable, instant transactions with zero confirmation have been eliminated, the opcodes that enable smart contracts have also been removed. All on-chain progress has been halted, except for compatibility upgrades to integrate second layers that are highly profitable for Blockstream.
Second layers on the Bitcoin blockchain should rather be called rip-off layers. They attempt to restore Bitcoin's original functionality by redirecting fees and decision making from miners to developers. Blockstream's need for these fee collection layers became even greater when they began raising investment money from large institutions like AXA Strategic Investment Venture and the Digital Currency Group (DCG), which have significant ties to MasterCard, the Federal Reserve, the Bilderberg Group, and other central banks, raising further questions about the motives and ethical nature of Blockstream's leaders. It is clear that their values are no longer in line with the original Bitcoin community, which is why most have left.
The control over Bitcoin core development by Blockstream, and thus indirectly by its funders who are strongly connected to the Financial Industry, has now led to the emergence of the Lightning Network as a solution due to the refusal to increase block size and thus scalability. To understand how large institutions have now gained control of this Lightning Network, one must understand how the Lightning Network works.
Assuming two people transact regularly and want to avoid the high transaction fees of the BTC network, they open a channel between them. Each of them takes bitcoins from the BTC blockchain and sends those bitcoins to a multi-signature address, where they are temporarily locked. Now they can move those Bitcoins back and forth without any fees as long as they both sign each transaction. That's because the actual Bitcoins have never been moved. They are essentially trading for the rights to the coins outside of the chain, similar to an IOU. When they close their channel, they are cleared in the blockchain. Their IOUs are redeemed and they receive their share of real bitcoins. The high transaction fee is only incurred when they open or close a channel to settle the transaction.
If you want to trade with someone you don't have a direct channel open with, and don't want to open a channel because of the high fees, you can try to reach your goal through a person you have an open channel with, who in turn has an open channel with the person you want to trade with, through their channel. (e.g. A wants to send a BTC to C, but only has a channel open with B, who in turn has a channel open with C, so the payment can be made from A to C via B, and B receives a small fee for it). Ideally, the Lightning Network should work exactly like this. You jump from individual to individual until the destination is reached. Everyone gets a small fee for making their channel available.
The problem now is that not every channel has been opened with enough BTC, which is not sufficient for some payments. Now this is where the big hubs come in, which have many channels with enough liquidity. If you connect to such hubs via a channel you have solved this problem. The hubs that are also connected to each other via channels have enough liquidity and enough open channels.
Unlike BTC miners that do not transfer value, hubs must be considered as third party settlement organizations that are regulated by strict laws like KYC. Unlike transactions on the BTC Blockchain, the possibility of theft is present here on the Lightning Network. If another party tries to transfer a channel in an old state, they can try to steal your Bitcoins if you can't intercept them in time. To do this, you either need to run a BTC Full Node that is constantly online to check transactions yourself or hire someone to do it for you.
Lightning hubs need large liquidity to keep sufficiently well-stocked channels open and must have fraud departments to constantly check the blockchain to prevent theft. For all this, fees are charged on transactions. All one has to do now is replace the term "open channel" with "checking account" to understand what is at play here. The Lightning Network hubs are run by the same institutions that Bitcoin was supposed to replace. The banks are not fighting Bitcoin Core because Bitcoin Core is going to be the next banking system with all its imponderabilities for people. These include control of money flows, ability to block transactions etc.
Read more about the Fundamental errors of BTC and Lightning Network.
The original Bitcoin didn't need a middleman, didn't need to track fraud, didn't need to approve and didn't need to reverse transactions. Blockstream destroyed all of that to offer a solution provided by the same institutions that run the fiat-money system. Either you give up your freedom and use the Lightning Network, or you pay higher and higher fees in the double or triple digits for transactions on the BTC blockchain.
The brilliant invention Bitcoin, designed to return freedom, security and power to the people around the world, has been betrayed and sold for power, control and money and perverted into the opposite.
But there is an ingenious alternative that has eliminated all the shortcomings of today's Bitcoin.
EPIC Cash.
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