Decentralized digital currencies may have a problem: we’ve allowed them to become sorta centralized.

How else can one explain why Bitcoin’s current internal discord — and its corresponding price dive — has also caused nearly every other cryptocurrency to take a proportional hit?

Think of it this way: what if internal discord at, say, Tommy Hilfiger, caused the entire clothing industry to lose nearly 30% of its market cap in just two weeks? Would we not conclude that clothing production was insanely centralized — that Tommy Hilfiger had an unhealthy amount of influence which clearly threatens the entire clothing market?

And that, my friends, is what Bitcoin has right now: an unhealthy amount of influence in the cryptocurrency industry (and it is an industry). Its disproportionate influence is also why so many in Bitcoin are doing irrational things right now like pushing BitcoinXT as a fork without starting a new network (I’ll explain below).

“Desperate Times Call for Desperate Measures”

I saw that phrase used on the Bitcoin subreddit recently, and I think it’s the perfect description for what’s happening with this push behind BitcoinXT. In case you don’t know what I’m talking about, I’ll bring you up to speed:

1 – Bitcoin theoretically has the potential to process thousands (or more) transactions per second. However, in its early days, a cap was placed by Satoshi himself on the amount of transactions that could be processed per block — a “block size cap” of 1MB. Satoshi said that this was a temporary anti-spam measure that should keep the blockchain small enough that new users could host it on their home computers. He further noted that the cap ought to be removed eventually.

2 – In the last three months, at least two “spam attacks” have taken place on Bitcoin’s blockchain. These involved one or more people sending tiny fractions of bitcoins at a frequency that outpaced Bitcoin’s current processing limit of about seven transactions per second. This created a backlog of tens of thousands of unprocessed transactions, some of which were legitimate and not spam. Bitcoin’s 1MB blocksize was shown to be a hindrance, giving spam the ability to create wait times, i.e. supply shortage.

3 – Discussed very little throughout the spam attacks was this fact: the spam created a minimum price at which a transaction would be processed. Since the beginning, Bitcoin’s “mining fees” — that is, the supposed “price” of getting your transaction processed in a timely way — have been set. Fixed. But during the spam attack, the fixed mining fee of 0.0001 BTC was not enough. The spammer was sending a fee of 0.0003 BTC with each of his thousands of transactions, so one needed to use a higher fee than the spammer in order to get processed within the current block. This emergent market in processing price — having already been suggested by the likes of Liberty.Me’s Justus Ranvier as an alternative to block caps — was dismissed in most Bitcoin circles. To them, Bitcoin should be all about pre-programmed functionality, not about dynamic, emergent things like changing prices.

4 – It became clear to all that if Bitcoin is to avoid more spam attacks — much less scale to be a widely used currency — the block size cap had to go. But here’s where the consensus stopped. While only a tiny minority called for market pricing of transactions to replace block size caps, the vast majority called for mining fees to remain fixed while the block size cap is gradually increased by hardcoded protocol changes.

5 – This brings us to BitcoinXT. It is a literal fork of Bitcoin which bills itself as being the chain with a bigger block size cap. Doesn’t sound too bad, right? If we can’t have a market in fees, we at least should increase that old block size limit. But the BitcoinXTers don’t honestly represent themselves. The truth is, they want more than just an increase in block size. They want a fundamental change in the way Bitcoin operates, and in the way decisions are made about how it will operate in the future. Shockingly, they’re not taking the respectable, customary, and voluntarist route of forking into a new and separate coin that supports their personal preferences. The BitcoinXTers instead want to get a majority presence on Bitcoin’s network, eventually forcing any remaining minority to either join them, or quit Bitcoin.

The Fine Print of BitcoinXT

While BitcoinXT sells itself as a block increase solution — which of course nearly everyone wants — it is also these other things (all viewable on its source code on Github):

Worst of all, Hearn has been a vocal proponent of what many consider the only way cryptocurrency could be turned into an Orwellian nightmare: “redlisting,” or the marking of every coin as either “legal” or “illegal” depending on where it’s been. And though all of us can change our ways, our backgrounds should still be considered: Hearn is believed to have been (and potentially still be) a government intelligence employee. Though he’s not been open about this, he’s made his intentions quite clear by the job title he took while working for the Bitcoin Foundation: Chair of Law and Policy Committee. State-fellator extraordinaire.

Let Me Be Clear

Just like Obomber, I also like to be clear: I do not care if people create spycoins. I do not care if someone creates a FuckMeInTheAssGovCoin that tracks your every move, purchase, and bowel movement. I don’t care that the crypto market would ever see low-level, unattractive competitors join the fray.

But here’s the problem: there currently is NOT the market of which I speak in crypto. Not when Tommy Hilfiger/Bitcoin has the power to adversely affect basically everyone. Most people are not shopping around for their cryptocoin. They’re just looking to Bitcoin as the King — the Undisputed-Market-Leader-Forever.

There is no good reason for Bitcoin to be King. There is no good reason for any competitor in a market to be King — much less a market as vital as currency itself.

Because when it comes down to it — all the jargon and sincerely cool innovations aside — coin projects are just businesses. It may be unavoidable and even desirable that someone has to be in charge of each one of them. That is not a problem so long as there is vibrant competition among coins. As it always does, the market would punish those who don’t serve consumers, and reward those who do.

But that market in competing cryptocurrencies has to exist first. It is the only protection to be found from the chaos wrought by would-be Kings and cartels. So why not shop around? There are coin projects out there which can do things that Bitcoin doesn’t do, all waiting to serve you and court your business.

After all, market is just another word for decentralization.