The innovator’s dilemma has come for Bitcoin and you shall know it by the name of Q-day.

Q-day is important because it’s probably a real threat to Bitcoin as we know it, but the powers that be in the Bitcoin ecosystem have been putting up resistance to discussing it because putting up resistance to critique has effectively become a lucrative product of the Bitcoin community.

Bitcoin was created as a peer-to-peer medium of exchange. So far, this has not worked out, for a variety of reasons. Many Bitcoin critics like to point to the fact that it’s not quite cash so far (peer-to-peer was in the title of the Bitcoin whitepaper, after all) as a failure of Bitcoin. But it’s not unusual for the world to use inventions differently than their inventors expected.

The internet was intended for the military to distribute plans, not cat videos, after all.

It happens with art, too. Jack White didn’t expect “Seven Nation Army” to be a song played at football games and Friedrich Nietzsche didn’t expect his philosophy to fuel a particularly toxic form of nationalism.

Once we put our work into the world, it belongs to the world, not to us. The Argument from Inventors’ Intent is fallacious. You are here:

• The main use case of Bitcoin has turned out to be storing value.

• Its secondary use case has been betting on inflation.

• The third and least used (but most important) has been a way to move value without a third party, unstoppably.

In that way, Bitcoin’s primary product is, of course, bitcoin (BTC), the asset. But the Bitcoin community has built a profitable service atop that product.

The service is stamping out FUD.1

High status community members monetize this service through further enhancement in the value of their own stack of Bitcoin. In that way, stamping out FUD has been a very lucrative service to provide!

Further, the best FUD stompers have turned on direct monetization, through podcasts, products, newsletters, conferences and social media.

A certain category of person has shown themselves to be eager buyers of the FUD stomping service, even if they only “buy” with attention. Buying with attention is fine because attention has never been easier to monetize.

Bitcoin has maneuvered itself into a position where saying “Bitcoin is perfect” is socially rewarded, while saying “Bitcoin has a problem” is treated as disloyalty. Over the last weeks, even relatively technical voices have dismissed quantum concerns as “alarmism,” “bagholder bias,” or “academic” hand-wringing.

—Hasu, on X.

The concept of the innovator’s dilemma was first defined by Prof. Clayton Christensen in 1997, when the internet was a baby.

Every successful company was once an innovator.

These legacy companies once deployed a new product that the world wanted. Even if they didn’t invent the product, they delivered on it in a way that worked. That product found product-market fit. They did the work to make sure more people learned about it.

The work became fairly easy, which is how they became legacy companies. They do the work they know how to do and profit. It’s a cycle that gives one a very strong incentive to believe that the status quo will persist. After all, your ability to pay your mortgage depends on the status quo persisting.

But the world changes! It used to change very slowly. Lately, it’s been changing quickly.

The problem Q-day presents is that it disrupts the business of FUD stomping. FUD stompers have made their career out of stomping out any existential concerns about Bitcoin.

But now they have a dilemma as the first real existential concern for the oldest cryptocurrency has arisen: Do they declare a truce on one FUD point? Or will that destroy the credibility of their FUD stomping business.

This is a particular dilemma because Q-day FUD isn’t new. It’s just that the ground has shifted. This puts FUD stomping service providers on very uncertain ground.

The trouble is that the problem for Bitcoin here is a people problem more than a technical problem, and if the FUD stompers don’t pivot a little here the people problem could engender a serious technical problem for the protocol and, thereby, the asset it secures.

And this is where you come in. A game of social capital is afoot right now, and the fight will be either maintaining or shifting consensus.

If you are reading this, you are probably a regular person, maybe a small holder of Bitcoin. You are probably not a core developer. You are probably not a quantum scientist or computer engineer.

But your take here still matters quite a bit because it’s going to be the social energy in the community that decides what happens.

However...

No worries. I’m going to tell you exactly what you need to know about it. Exactly what you need to know. And if enough people ingest this, Bitcoin can actually productively unravel this Gordian knot. No destructive cutting this time! That’s what should be avoided.

So allow me a detour from innovators and their dilemmas.

We started this discussion with the introduction of a term that there’s (I’m spitballing) probably only a 60% chance you are familiar with, even if you’re coming to this newsletter reasonably informed about crypto, blockchains and Bitcoin.

That term is “Q-day.” Until exploring this topic I was only vaguely acquainted with the notion of Q-day.

It probably seems strange that I waited quite so long to describe Q-day, but that was on purpose. I didn’t wait because I’m trying to string you all along, but because I want to make a point here about how to approach unsettling new concepts.

But let’s discuss Q-day now. It’s been enough that the point of it will come home in just a few more paragraphs.

Q-day is the moment in which today’s quantum computers become powerful enough to break many forms of public key encryption, methods that had previously been considered all but unbreakable using computers as we know them, even computers-as-we-know-them if they were thousands and thousands of times more powerful than they are now.

The thing about quantum computers is that they are different in kind from computers we use now. They operate on another level, but it’s also not even quite right to say that they can do more faster. It’s a phase shift, a whole other thing we haven’t seen before (just like Bitcoin was).

Like moving from data storage on spinning disks (like records!) to solid-state storage. Or going from analog to digital photography, where there was no physical medium permanently registering light.

Experts have theorized that quantum computers can do a few things well. They might be able to do other things well. We don’t know until they exist, but they don’t really exist yet (or barely).

But one of the things they can do well — probably! — is crack cryptographic hashes and signatures.

Bitcoin relies on cryptography to make hashes and it relies on digital signatures. It’s the latter that has people worried. There is bitcoin secured using a variety of different encryption schemes. And much of this bitcoin has been transacted in ways that could have exposed sufficient information to make them vulnerable.

Bitcoin dev shop Chaincode Labs puts the coins in danger somewhere between 20 and 50% of the supply.

As for explaining quantum further, though, I’m going to stop there. On purpose. For your own good.

There’s a decent chance that if you’re reading this you’re idly hoping for an explanation in here that will make the quantum threat to Bitcoin legible to you.

But, look, there’s a cognitive error that we tend to make when the world changes. The first thing humans want to do is understand how the new thing works. If they can’t understand it, they dismiss it.

If you are bought into Bitcoin, then you are quite familiar with this. Any time Bitcoin comes up among the unconverted, they almost always say: “I just don’t understand it.”

But do they need to? Or do they just need to hold it?

We are all surrounded by and make use of things we don’t understand — not in any fundamental way. Things that we each use that I suspect neither of us understand in a deep way: electric cars, cellular telephones and credit cards.

What you do know is that they have worked consistently enough that you feel like you can rely on them.

What you need to understand about an existential threat to your investment is not how-that-threat-works but how-soon-you-need-to-take-action.

But if you look at any discussion of the quantum threat to Bitcoin and cryptocurrency, what you always see is a long preamble about how cryptography works and how quantum works.

None of this actually matters for the typical bitcoin holder.

What matters is the state of the engineering, indications that the threat is real and actionable steps you can take to mitigate the threat.

As investor Nic Carter put it in a dispatch on the topic recently:

“We’ve known for a long time in a detached, academic way that quantum computing would cause unique challenges for blockchains and digital assets. I even put ‘quantum’ on my Bitcoin FUD dice in 2018. But quantum never felt real. It felt like one of those technologies like fusion that was ‘always 30 years away’ with progress stalled due to fundamental limitations.”

Which brings us back to Bitcoin, the dilemma of Q-day, the product of FUD stomping and imminent realities.

Change is hard.

A few weeks ago Carter decided to dig into the quantum threat to Bitcoin. For context, Carter has had a strong career as a FUD stomper. One innovation he’s well known for the FUD dice. It was a satirical way to refresh a FUDsters’ memories about the big critiques against the original cryptocurrency.

Quantum was one of the points on an iteration of the FUD dice.

But Carter has always been one who was willing to update his prior convictions based on developments.

So first he wrote a long post explaining how the particular kind of cryptography that protects Bitcoin works. It’s a big, wild and dense post.You probably don’t really need to read it.

He was more getting himself ready to work on the second post, where he goes into the threat. And, honestly, if you’re a pragmatic investor, the important part of the post is the long thread at the end where he goes through various signs that that Q-day could be on the horizon.

Of course it is impossible to know how soon Q-day could hit. Discoveries are unpredictable things. We have seen long-promised technologies prove to be delayed again and again. We might never crack it!

But... they thought self-driving cars were coming soon in the 40s. But they are here now (go to Austin).

Science fiction writers have fretted about artificial intelligence going back to the 60s, but we are here now. It looks more real than ever.

Not everything has worked out. Virtual reality still mostly sucks. Cold fusion is a no go so far. No jet packs, either, but there are these crazy water jet packs.

Also people are bouncing around on these water foil things that seem fully impossible to me, but... look at ‘em go!

The point is that if you’ve lived through the last 20 years and haven’t memory holed the before times, the idea that some other major problem could crack any day seems feasible.

Especially because the two most important things to solving any problem have been accumulating in the quantum space: talent and capital.

That’s the most compelling part of Carter’s second post. He shows that money and skills are starting to accumulate around the problem at pace.

Which brings us to another cognitive mistake people tend to make. We have this idea that change is a gradual thing. But it’s not. Change comes in the night.

But that message doesn’t work for folks with product to move.

After Carter’s second point came out, a class of long time Bitcoiner turned up to begin decrying him as a FUDster, denigrating his credibility and attempt to categorize him as someone who was preaching the doom of Bitcoin.

No less a light than Adam Back has thrown pedantic shade on Carter’s argument. Back is an extremely important messenger. Many have theorized that he’s actually Satoshi. He probably is not, but his work was cited in Satoshi’s paper. He gave an example of proof-of-work that Satoshi found useful (Hashcash).

Braggable.

Back has been subtweeting Carter pretty hard this week. While an alum of Back’s company has been satirizing Carter’s cautionary notes.

The Bitcoin internet of beefs has fully flared back up in Bitcoin land with this one, with followers of both Carter and Back rally to support the side of their respective senpai.

Anyone who has ever been in a relationship knows that people seldom fight for the reason they are fighting.

The irony of the present battle is that there are actually good faith Bitcoiners who want to grapple with the Q-day threat. They have put in a Bitcoin Improvement Proposal (BIP-360), but these things are always a slow process.

And look, how do these fights break down?

It’s not cut and dry, but my view of the present fight is that it largely breaks down between Bitcoin purists and crypto types that strongly favor Bitcoin.

Carter and his cohort fall in the very-Bitcoin-but-not-100%-Bitcoin cohort (largely — there are exceptions). Though many in this group have been adept evangelists of Bitcoin, they are often viewed as apostates by the other cohort, the purists (small differences, etc). This cohort doesn’t even like the concept of “crypto” because it suggests that Bitcoin is a fellow traveler with these other projects that they want nothing to do with.

To my eye, the debate has broken down along these lines.

However Hasu, a pseudonymous researcher who’s both technically adept and gifted at communication, broke it down differently in a post he made urging action yesterday.

“There are broadly two camps in Bitcoin today. The first believes Bitcoin can ossify and thrive. Tail risks exist, but the cost of reopening the change process is higher than the expected benefit, so gridlocked governance is not a problem and may even be a feature.

The second believes there are threats large enough that Bitcoin will have to steer around them, and that Bitcoin’s governance and discourse norms make that steering so difficult that it becomes a material risk in itself. “

The innovator’s dilemma conjectures that a new product arises that finds a niche out there that slowly disrupts the incumbent.

The incumbent product that matters here (remember) is stomping the FUD around Bitcoin. Providers of that service have been easily batting back Q-day FUD for a long time, because Q-day seems impossible.

Now a determination has formed among a set of credible messengers, however, that this particular source of previously dismissed FUD must be tackled head on, soon. So, the longest serving providers of the FUD stomping service face the decision of whether or not they continue to provide the product that has served them so well: averring in every situation that Bitcoin is perfect as it is, right now.

FUD stompers are there to reassure Bitcoin investors that have made a generationally responsible decision with their wealth. Buying bitcoin is still a punk move. People want to believe, but they also want reassurance. That’s what FUD stompers provide, and that pays pretty well.

But a part of that reassurance is convincing the mass of bitcoin holders that there are not credible threats out there to Bitcoin. So another way to look at what the FUD stompers do is that they enforce consensus. That consensus is that bitcoin is the best investment and it’s perfect just as it is.

Which illuminates why they risk product corruption if they pivot a little and learn to do a new kind of work: consensus building.

This is more urgent than it seems, because, as Carter points out in his third post on the topic, it’s not enough for Bitcoin to deploy an upgrade one day before Q-day. It honestly needs to happen a ways out from Q-day, so that word can spread and people have time to move their coins.

The danger here is that one side fights against the change to the very end, which could lead to another Bitcoin and Bitcoin Cash type situation (that time Bitcoin split for a hot minute in 2017). That is, a contentious fork. Now that Bitcoin is wired into the mainstream financial system, that would be real chaos.

The beauty of a decentralized system is that it offers a censorship-resistant way to hold value under a credibly neutral system that doesn’t care about your citizenship, your politics, your race or beliefs.

But. There are trade-offs.

There’s an especially bad path.

Bitcoin fails the Q-day test and the network gets meaningfully compromised. It probably wouldn’t completely destroy it, but it would be like that moment when the DeFi app Compound Finance2 lost control of a massive stash of its governance tokens and almost $200 million in tokens got prematurely distributed — to the wind.

A surprise Q-day could shatter faith in Bitcoin.

That’s not something we’re meant to discuss, but I’m not a Bitcoiner. I’m a journalist who likes Bitcoin. A moment like this wouldn’t destroy Bitcoin, because there’s no doubt some chains will deal with the Q-day threat in plenty of time. Blockchains will persist.

But Bitcoin and its community, for all their stubbornness, are the standard-bearers for the cypherpunk values. If faith in the protocol were broken, it’s hard to imagine that any other coin could take up the standard as effectively and a lot of the energy around ensuring the world can continue to enjoy this neutral transaction layer would be lost.

And that would be too bad.

But there is time.

Which brings me around to my point about explanations above. What matters here is not understanding the threat itself. It’s understanding that there is a threat. Leave getting it to the engineers.

But the sooner a social consensus forms such that there’s social reward for attending the threat, the sooner Bitcoin will be able to move forward productively.

It’s easy to slam your face against the concept of quantum and think: I’ll never get this. And you probably won’t. I don’t think I do, tbh.

But anyone can understand this: There’s an army just over those hills. We don’t know which way it’s headed, but everyone should get their guns.

Right?

You don’t need to speak the army’s language to understand the look in its soldiers’ eyes.

There are encouraging signs.

The aforementioned Back has been an important critic of the Q-day warning (at least in my feed), but he recently quoted one of the BIP-360 proposers on Twitter, writing, “Be prepared, not scared.”

He’s citing Hunter Beast, a relative unknown in the bitcoin world. But Back is one of the high priests of Bitcoin. If he’s willing to give tacit approval to the discussion proceeding, other detractors might fall in line.

The proposal in BIP-360 looks to my untutored eyes like a relatively constrained one. It just looks to update a key portion of the last big update made to Bitcoin. That seems like it could be tractable.

But “ossification” became a meme in recent years. So it’s hard to say. And it’s not even enough for the core developers to push the ultimate update. It has to be adopted by miners. In the past they’ve gone along, but that’s a constituency that’s always changing.

Rising up into the sky like The Specter from the old days of D.C. Comics and looking down on Earth like a disinterested god, though: The question is which group do you think can move faster: the governance process of Bitcoin or engineers, at work within unknown labs, labs not only at many well-funded private companies, highly motivated by profit, but also the labs of every Bitcoin-curious government in the world — which for sure includes China and North Korea, but also probably also includes

🥁🥁🥁

These United States.

1 FUD means fear, uncertainty and doubt. Footnoting this because everyone knows this but journalist habits die hard.

2 Don’t get mad I talked about a DeFi project, bitcoiners. It’s illustrative here. Deal with it.

The innovator’s dilemma has come for Bitcoin and you shall know it by the name of Q-day.

Q-day is important because it’s probably a real threat to Bitcoin as we know it, but the powers that be in the Bitcoin ecosystem have been putting up resistance to discussing it because putting up resistance to critique has effectively become a lucrative product of the Bitcoin community.

Bitcoin was created as a peer-to-peer medium of exchange. So far, this has not worked out, for a variety of reasons. Many Bitcoin critics like to point to the fact that it’s not quite cash so far (peer-to-peer was in the title of the Bitcoin whitepaper, after all) as a failure of Bitcoin. But it’s not unusual for the world to use inventions differently than their inventors expected.

The internet was intended for the military to distribute plans, not cat videos, after all.

It happens with art, too. Jack White didn’t expect “Seven Nation Army” to be a song played at football games and Friedrich Nietzsche didn’t expect his philosophy to fuel a particularly toxic form of nationalism.

Once we put our work into the world, it belongs to the world, not to us. The Argument from Inventors’ Intent is fallacious. You are here:

• The main use case of Bitcoin has turned out to be storing value.

• Its secondary use case has been betting on inflation.

• The third and least used (but most important) has been a way to move value without a third party, unstoppably.

In that way, Bitcoin’s primary product is, of course, bitcoin (BTC), the asset. But the Bitcoin community has built a profitable service atop that product.

The service is stamping out FUD.1

High status community members monetize this service through further enhancement in the value of their own stack of Bitcoin. In that way, stamping out FUD has been a very lucrative service to provide!

Further, the best FUD stompers have turned on direct monetization, through podcasts, products, newsletters, conferences and social media.

A certain category of person has shown themselves to be eager buyers of the FUD stomping service, even if they only “buy” with attention. Buying with attention is fine because attention has never been easier to monetize.

Bitcoin has maneuvered itself into a position where saying “Bitcoin is perfect” is socially rewarded, while saying “Bitcoin has a problem” is treated as disloyalty. Over the last weeks, even relatively technical voices have dismissed quantum concerns as “alarmism,” “bagholder bias,” or “academic” hand-wringing.

—Hasu, on X.

The concept of the innovator’s dilemma was first defined by Prof. Clayton Christensen in 1997, when the internet was a baby.

Every successful company was once an innovator.

These legacy companies once deployed a new product that the world wanted. Even if they didn’t invent the product, they delivered on it in a way that worked. That product found product-market fit. They did the work to make sure more people learned about it.

The work became fairly easy, which is how they became legacy companies. They do the work they know how to do and profit. It’s a cycle that gives one a very strong incentive to believe that the status quo will persist. After all, your ability to pay your mortgage depends on the status quo persisting.

But the world changes! It used to change very slowly. Lately, it’s been changing quickly.

The problem Q-day presents is that it disrupts the business of FUD stomping. FUD stompers have made their career out of stomping out any existential concerns about Bitcoin.

But now they have a dilemma as the first real existential concern for the oldest cryptocurrency has arisen: Do they declare a truce on one FUD point? Or will that destroy the credibility of their FUD stomping business.

This is a particular dilemma because Q-day FUD isn’t new. It’s just that the ground has shifted. This puts FUD stomping service providers on very uncertain ground.

The trouble is that the problem for Bitcoin here is a people problem more than a technical problem, and if the FUD stompers don’t pivot a little here the people problem could engender a serious technical problem for the protocol and, thereby, the asset it secures.

And this is where you come in. A game of social capital is afoot right now, and the fight will be either maintaining or shifting consensus.

If you are reading this, you are probably a regular person, maybe a small holder of Bitcoin. You are probably not a core developer. You are probably not a quantum scientist or computer engineer.

But your take here still matters quite a bit because it’s going to be the social energy in the community that decides what happens.

However...

No worries. I’m going to tell you exactly what you need to know about it. Exactly what you need to know. And if enough people ingest this, Bitcoin can actually productively unravel this Gordian knot. No destructive cutting this time! That’s what should be avoided.

So allow me a detour from innovators and their dilemmas.

We started this discussion with the introduction of a term that there’s (I’m spitballing) probably only a 60% chance you are familiar with, even if you’re coming to this newsletter reasonably informed about crypto, blockchains and Bitcoin.

That term is “Q-day.” Until exploring this topic I was only vaguely acquainted with the notion of Q-day.

It probably seems strange that I waited quite so long to describe Q-day, but that was on purpose. I didn’t wait because I’m trying to string you all along, but because I want to make a point here about how to approach unsettling new concepts.

But let’s discuss Q-day now. It’s been enough that the point of it will come home in just a few more paragraphs.

Q-day is the moment in which today’s quantum computers become powerful enough to break many forms of public key encryption, methods that had previously been considered all but unbreakable using computers as we know them, even computers-as-we-know-them if they were thousands and thousands of times more powerful than they are now.

The thing about quantum computers is that they are different in kind from computers we use now. They operate on another level, but it’s also not even quite right to say that they can do more faster. It’s a phase shift, a whole other thing we haven’t seen before (just like Bitcoin was).

Like moving from data storage on spinning disks (like records!) to solid-state storage. Or going from analog to digital photography, where there was no physical medium permanently registering light.

Experts have theorized that quantum computers can do a few things well. They might be able to do other things well. We don’t know until they exist, but they don’t really exist yet (or barely).

But one of the things they can do well — probably! — is crack cryptographic hashes and signatures.

Bitcoin relies on cryptography to make hashes and it relies on digital signatures. It’s the latter that has people worried. There is bitcoin secured using a variety of different encryption schemes. And much of this bitcoin has been transacted in ways that could have exposed sufficient information to make them vulnerable.

Bitcoin dev shop Chaincode Labs puts the coins in danger somewhere between 20 and 50% of the supply.

As for explaining quantum further, though, I’m going to stop there. On purpose. For your own good.

There’s a decent chance that if you’re reading this you’re idly hoping for an explanation in here that will make the quantum threat to Bitcoin legible to you.

But, look, there’s a cognitive error that we tend to make when the world changes. The first thing humans want to do is understand how the new thing works. If they can’t understand it, they dismiss it.

If you are bought into Bitcoin, then you are quite familiar with this. Any time Bitcoin comes up among the unconverted, they almost always say: “I just don’t understand it.”

But do they need to? Or do they just need to hold it?

We are all surrounded by and make use of things we don’t understand — not in any fundamental way. Things that we each use that I suspect neither of us understand in a deep way: electric cars, cellular telephones and credit cards.

What you do know is that they have worked consistently enough that you feel like you can rely on them.

What you need to understand about an existential threat to your investment is not how-that-threat-works but how-soon-you-need-to-take-action.

But if you look at any discussion of the quantum threat to Bitcoin and cryptocurrency, what you always see is a long preamble about how cryptography works and how quantum works.

None of this actually matters for the typical bitcoin holder.

What matters is the state of the engineering, indications that the threat is real and actionable steps you can take to mitigate the threat.

As investor Nic Carter put it in a dispatch on the topic recently:

“We’ve known for a long time in a detached, academic way that quantum computing would cause unique challenges for blockchains and digital assets. I even put ‘quantum’ on my Bitcoin FUD dice in 2018. But quantum never felt real. It felt like one of those technologies like fusion that was ‘always 30 years away’ with progress stalled due to fundamental limitations.”

Which brings us back to Bitcoin, the dilemma of Q-day, the product of FUD stomping and imminent realities.

Change is hard.

A few weeks ago Carter decided to dig into the quantum threat to Bitcoin. For context, Carter has had a strong career as a FUD stomper. One innovation he’s well known for the FUD dice. It was a satirical way to refresh a FUDsters’ memories about the big critiques against the original cryptocurrency.

Quantum was one of the points on an iteration of the FUD dice.

But Carter has always been one who was willing to update his prior convictions based on developments.

So first he wrote a long post explaining how the particular kind of cryptography that protects Bitcoin works. It’s a big, wild and dense post.You probably don’t really need to read it.

He was more getting himself ready to work on the second post, where he goes into the threat. And, honestly, if you’re a pragmatic investor, the important part of the post is the long thread at the end where he goes through various signs that that Q-day could be on the horizon.

Of course it is impossible to know how soon Q-day could hit. Discoveries are unpredictable things. We have seen long-promised technologies prove to be delayed again and again. We might never crack it!

But... they thought self-driving cars were coming soon in the 40s. But they are here now (go to Austin).

Science fiction writers have fretted about artificial intelligence going back to the 60s, but we are here now. It looks more real than ever.

Not everything has worked out. Virtual reality still mostly sucks. Cold fusion is a no go so far. No jet packs, either, but there are these crazy water jet packs.

Also people are bouncing around on these water foil things that seem fully impossible to me, but... look at ‘em go!

The point is that if you’ve lived through the last 20 years and haven’t memory holed the before times, the idea that some other major problem could crack any day seems feasible.

Especially because the two most important things to solving any problem have been accumulating in the quantum space: talent and capital.

That’s the most compelling part of Carter’s second post. He shows that money and skills are starting to accumulate around the problem at pace.

Which brings us to another cognitive mistake people tend to make. We have this idea that change is a gradual thing. But it’s not. Change comes in the night.

But that message doesn’t work for folks with product to move.

After Carter’s second point came out, a class of long time Bitcoiner turned up to begin decrying him as a FUDster, denigrating his credibility and attempt to categorize him as someone who was preaching the doom of Bitcoin.

No less a light than Adam Back has thrown pedantic shade on Carter’s argument. Back is an extremely important messenger. Many have theorized that he’s actually Satoshi. He probably is not, but his work was cited in Satoshi’s paper. He gave an example of proof-of-work that Satoshi found useful (Hashcash).

Braggable.

Back has been subtweeting Carter pretty hard this week. While an alum of Back’s company has been satirizing Carter’s cautionary notes.

The Bitcoin internet of beefs has fully flared back up in Bitcoin land with this one, with followers of both Carter and Back rally to support the side of their respective senpai.

Anyone who has ever been in a relationship knows that people seldom fight for the reason they are fighting.

The irony of the present battle is that there are actually good faith Bitcoiners who want to grapple with the Q-day threat. They have put in a Bitcoin Improvement Proposal (BIP-360), but these things are always a slow process.

And look, how do these fights break down?

It’s not cut and dry, but my view of the present fight is that it largely breaks down between Bitcoin purists and crypto types that strongly favor Bitcoin.

Carter and his cohort fall in the very-Bitcoin-but-not-100%-Bitcoin cohort (largely — there are exceptions). Though many in this group have been adept evangelists of Bitcoin, they are often viewed as apostates by the other cohort, the purists (small differences, etc). This cohort doesn’t even like the concept of “crypto” because it suggests that Bitcoin is a fellow traveler with these other projects that they want nothing to do with.

To my eye, the debate has broken down along these lines.

However Hasu, a pseudonymous researcher who’s both technically adept and gifted at communication, broke it down differently in a post he made urging action yesterday.

“There are broadly two camps in Bitcoin today. The first believes Bitcoin can ossify and thrive. Tail risks exist, but the cost of reopening the change process is higher than the expected benefit, so gridlocked governance is not a problem and may even be a feature.

The second believes there are threats large enough that Bitcoin will have to steer around them, and that Bitcoin’s governance and discourse norms make that steering so difficult that it becomes a material risk in itself. “

The innovator’s dilemma conjectures that a new product arises that finds a niche out there that slowly disrupts the incumbent.

The incumbent product that matters here (remember) is stomping the FUD around Bitcoin. Providers of that service have been easily batting back Q-day FUD for a long time, because Q-day seems impossible.

Now a determination has formed among a set of credible messengers, however, that this particular source of previously dismissed FUD must be tackled head on, soon. So, the longest serving providers of the FUD stomping service face the decision of whether or not they continue to provide the product that has served them so well: averring in every situation that Bitcoin is perfect as it is, right now.

FUD stompers are there to reassure Bitcoin investors that have made a generationally responsible decision with their wealth. Buying bitcoin is still a punk move. People want to believe, but they also want reassurance. That’s what FUD stompers provide, and that pays pretty well.

But a part of that reassurance is convincing the mass of bitcoin holders that there are not credible threats out there to Bitcoin. So another way to look at what the FUD stompers do is that they enforce consensus. That consensus is that bitcoin is the best investment and it’s perfect just as it is.

Which illuminates why they risk product corruption if they pivot a little and learn to do a new kind of work: consensus building.

This is more urgent than it seems, because, as Carter points out in his third post on the topic, it’s not enough for Bitcoin to deploy an upgrade one day before Q-day. It honestly needs to happen a ways out from Q-day, so that word can spread and people have time to move their coins.

The danger here is that one side fights against the change to the very end, which could lead to another Bitcoin and Bitcoin Cash type situation (that time Bitcoin split for a hot minute in 2017). That is, a contentious fork. Now that Bitcoin is wired into the mainstream financial system, that would be real chaos.

The beauty of a decentralized system is that it offers a censorship-resistant way to hold value under a credibly neutral system that doesn’t care about your citizenship, your politics, your race or beliefs.

But. There are trade-offs.

There’s an especially bad path.

Bitcoin fails the Q-day test and the network gets meaningfully compromised. It probably wouldn’t completely destroy it, but it would be like that moment when the DeFi app Compound Finance2 lost control of a massive stash of its governance tokens and almost $200 million in tokens got prematurely distributed — to the wind.

A surprise Q-day could shatter faith in Bitcoin.

That’s not something we’re meant to discuss, but I’m not a Bitcoiner. I’m a journalist who likes Bitcoin. A moment like this wouldn’t destroy Bitcoin, because there’s no doubt some chains will deal with the Q-day threat in plenty of time. Blockchains will persist.

But Bitcoin and its community, for all their stubbornness, are the standard-bearers for the cypherpunk values. If faith in the protocol were broken, it’s hard to imagine that any other coin could take up the standard as effectively and a lot of the energy around ensuring the world can continue to enjoy this neutral transaction layer would be lost.

And that would be too bad.

But there is time.

Which brings me around to my point about explanations above. What matters here is not understanding the threat itself. It’s understanding that there is a threat. Leave getting it to the engineers.

But the sooner a social consensus forms such that there’s social reward for attending the threat, the sooner Bitcoin will be able to move forward productively.

It’s easy to slam your face against the concept of quantum and think: I’ll never get this. And you probably won’t. I don’t think I do, tbh.

But anyone can understand this: There’s an army just over those hills. We don’t know which way it’s headed, but everyone should get their guns.

Right?

You don’t need to speak the army’s language to understand the look in its soldiers’ eyes.

There are encouraging signs.

The aforementioned Back has been an important critic of the Q-day warning (at least in my feed), but he recently quoted one of the BIP-360 proposers on Twitter, writing, “Be prepared, not scared.”

He’s citing Hunter Beast, a relative unknown in the bitcoin world. But Back is one of the high priests of Bitcoin. If he’s willing to give tacit approval to the discussion proceeding, other detractors might fall in line.

The proposal in BIP-360 looks to my untutored eyes like a relatively constrained one. It just looks to update a key portion of the last big update made to Bitcoin. That seems like it could be tractable.

But “ossification” became a meme in recent years. So it’s hard to say. And it’s not even enough for the core developers to push the ultimate update. It has to be adopted by miners. In the past they’ve gone along, but that’s a constituency that’s always changing.

Rising up into the sky like The Specter from the old days of D.C. Comics and looking down on Earth like a disinterested god, though: The question is which group do you think can move faster: the governance process of Bitcoin or engineers, at work within unknown labs, labs not only at many well-funded private companies, highly motivated by profit, but also the labs of every Bitcoin-curious government in the world — which for sure includes China and North Korea, but also probably also includes

🥁🥁🥁

These United States.

1 FUD means fear, uncertainty and doubt. Footnoting this because everyone knows this but journalist habits die hard.

2 Don’t get mad I talked about a DeFi project, bitcoiners. It’s illustrative here. Deal with it.