With the increase in institutional interest in Bitcoin, the focus has now moved from competition in the market to issues regarding the future governance of the Bitcoin network. According to Michael Saylor, Bitcoin is now well-established as a major digital currency. But will face increasing questions about how to make protocol changes going forward.
In several X tweets on July 28, Saylor stated that the rules of consensus of Bitcoin guarantee its scarcity, ownership, settlement, and security. He called these rules the constitutional basis of Bitcoin and said that any change to these rules would harm the economic system of Bitcoin.
Consensus Rules Remain Important for Bitcoin’s Future
As per Saylor, Bitcoin may become capable of increasing its price up to 100x while becoming the base of international capital markets. However, all that will happen only in case the existing monetary system and governance remain unchanged. As Saylor argues, changes introduced today may impact some technologies, financial markets, and economic opportunities.
Saylor believes that protocol changes may influence miner incentives, validation cost, transaction processing, and scarcity of block space. Saylor states that bigger blocks will lower the scarcity while increasing the operating cost of the network validator. Additionally, he notes that covenant systems can add complexity and create additional attack surfaces for the Bitcoin network. Also, restrictions on transaction selection will reduce miners’ flexibility in verifying network transactions.
Institutional Growth Raises Governance Stakes
With institutional investments in Bitcoin continuing to grow, network stability is now as essential as its performance. Michael Saylor thinks that governance will be as critical for determining Bitcoin’s future as adoption and price gains. He has stated that with mining rewards reducing, transaction costs will be more significant for helping the miners stay incentivized as well as keeping the network secure.
According to Saylor, the governance issues can influence miners, exchanges, custodians, developers, institutional investors, as well as companies holding Bitcoin. Furthermore, he has expressed his concerns about the politics around consensus alterations being a problem for the governance, capital investment, innovation, and network security of Bitcoin.
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