Economics Finance Technology

Who is the Ruler?

Bitcoin is the open source software which means anyone can read its code and anyone can update their own copy with whatever code they want. This is the reason why there are tons of other so called alternative crypto currencies. Same as TCP/IP, Bitcoin is actually a protocol which is basically a set of rules that every bitcoin nodes have to follow to communicate with other nodes. So who actually makes the rule in Bitcoin? The rules of the Bitcoin is set in the Bitcoin Core Client.

Bitcoin is a distributed system and all the participating nodes have to agree to its rules. As of today, there are thousands of Bitcoin nodes around the world that works by the rule of Bitcoin protocol. If one malicious node cheats and grant themselves the excess reward, then all the other honest nodes reject the block created by that one dishonest node. This is the reason why the rules of Bitcoin is super-hard to change if not impossible. Each one of us user who accepts Bitcoin payments can decide for ourselves what we consider to be Bitcoin. If some crooks try to send us counterfeit Bitcoin, using honest bitcoin protocol, we can reject them as they are not following the rules of the protocol.

Nodes are the participant in the Bitcoin network and they basically chose which software to run in them. Most node runs Bitcoin Core which is the main implementation of the Bitcoin protocol that was started by Satoshi Nakamoto and is currently developed by hundreds of developers and companies around the world. Nodes can be run by anyone including but not limited to people like us, exchanges like Coinbase and Coincheck or merchants who accepts bitcoin as payment option. All the honest node will reject the block created by the fault node. Some nodes may also mine Bitcoin which includes mining new bitcoins and creating new blocks and transactions. Miners are the one who makes the tampering of the Bitcoin ledger, blockchain very expensive for bad actors. This seems like miners are the ruler of the Bitcoin, but actually they are simply only following the rules set by the nodes that accept bitcoins. If the miners start creating the fault block, other nodes like exchange or user like us will not accept their faulty coin.

Some people say developers are the rulers of the Bitcoin protocol. And there are hundreds of developers around the world. Each idea that any developer has, have to go through the code review process from all the other developers. So its very hard to get accepted by each developer because the changes which are called Bitcoin Improvement Proposal(BiP), are carefully peer-reviewed by other developers. This process of code-review are done in public unilke the policy and rules of our government, which are done by few men behind the closed door. This is the reason why Bitcoin is called F You Money. I highly recommend the book Bitcoin: Hard money you can’t F*** with. This process of code-review, as its done in open, anyone can join this process and comment on the Pull Request and even submit their code. If some developer presents the code that other developers don’t want to merge, they are rejected. If they want to merge their code anyway, they will have to hard fork the code and give their coin another name. I would recommend the book The Blocksize War: The battle over who controls Bitcoin’s protocol rule to learn why Bitcoin is the way it is today.

Then there are users like us who can buy or get bitcoin from friends or from exchanges or working for someone and receiving as a salary. Some might even run nodes if they prefer, but most of the user dont run their own nodes but rely on thier wallet node which is hosted by the wallet they are using. Actually users are the one who makes the value of the bitcoin through the supply and demand on the market same as how ancient civilization decided to use gold and silver as their medium of exchange through the open market. If the miners and exchanges were to introduce some kind of radical change on the protocol, users would likely sell their coins and make it worthless and putting the offending companies out of business. Thus, Bitcoin is such a protocol that its currency bitcoin is money with Rules without the Rulers, that actually no one can change.

Bitcoin is simply a polite and non-violent way of saying F You to the ones, who wants or tries to be the Ruler.

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