In 2021, I gave my first talk at the Mallorca Blockchain Days Conference.
I followed it with several more over the next five years, as I was invited to return annually. My first talk, which unfortunately wasn’t recorded, was about Government and Bitcoin. I subsequently turned the talk into a newsletter called Government & Bitcoin – Redressing the Power Balance.
Somewhere during a later software upgrade, that newsletter disappeared from my website.
As part of this evolving series on Bitcoin and governance, I recently went back through my archives and found it again.
Reading it five years later was a rather strange experience.
Long before Bitcoin Core 30, Bitcoin Knots, or BIP 110, I had already become fascinated by the extraordinary influence rules can have on human behaviour.
And strangely enough, that fascination began with dentistry.
The dentist who wouldn't dismiss his patient
It was 2006.
I was completing my MBA dissertation and interviewing dentists about occasions when they might consider ending their professional relationship with a patient.
One dentist in particular was rather timid and uncomfortable about being interviewed. Eventually, however, he told me about an incident in his practice.
A patient had attended for treatment and, on his way out, taken some money left on the reception desk.
What surprised me wasn’t simply that the patient had apparently stolen the money. It was the dentist’s reaction.
He blamed himself for leaving the money where it could be taken. Even more surprisingly, when I asked what would happen if the patient returned, he admitted that he would probably continue treating him.
I was astonished.
If someone walked into a car dealership and drove away with one of the cars, I couldn’t imagine the dealership happily doing business with that person again. So why was this different?
Eventually I realised that the dentist was interpreting the situation through the rules governing his profession.
The General Dental Council had introduced new professional standards the previous year, built around principles including putting patients’ interests first. As dentists, these weren’t abstract ideas. They influenced how we understood our responsibilities towards the people we treated.
The important point for my story is not whether the dentist had correctly interpreted the rules.
It is that he believed the rules constrained his choices.
And that belief changed his behaviour.
I have never forgotten it.
Why do we need rules?
People can’t cooperate at scale without some expectation of how others will behave.
I need some confidence that you won’t steal from me. You need some confidence that I won’t attack you. We both need to understand what happens when one of us breaks the agreement.
Rules create boundaries. They can restrain our worst impulses, make behaviour more predictable and allow people who don’t know one another to cooperate.
But rules introduce another problem.
Who makes them?
And perhaps more importantly: who makes sure the rule-maker obeys them too?
People have wrestled with that question for thousands of years.
When the king became subject to the rules
In my original newsletter, I used Magna Carta as an example.
My description then was rather simplified. I wrote that the nobles of England had finally had enough of King John operating on a whim, so they drew up Magna Carta as a code for how they wanted things to operate in future.
The real history is considerably more interesting.
King John had suffered military defeats in France and imposed increasingly burdensome demands for money upon his barons. Opposition to his rule grew until a group of rebel barons confronted him.
In June 1215, at Runnymede, the two sides reached the agreement known as Magna Carta.
It wasn’t democracy, and it wasn’t originally intended as a declaration of universal human rights. It was largely an attempt by powerful barons to protect their interests against arbitrary royal power.
But embedded within it was an extraordinary principle:
The king was subject to the law too.
Having power did not automatically give you the right to change the rules.
But writing down the rules didn’t end the argument.
Within months, Pope Innocent III annulled Magna Carta. The rebel barons refused to accept this and civil war followed. King John died the following year, and versions of Magna Carta were subsequently reissued under his young son Henry III.
The parties disagreed about the rules, who had the authority to impose them, and who should enforce them.
Yet something survived the conflict: the idea that rules should constrain authority itself.
And when I look at that history now, I find it difficult not to think about Bitcoin.
A new set of rules
When I rediscovered my old newsletter, one passage particularly caught my attention.
In 2021, I wrote that Bitcoin established “a new set of rules.”
I described the multiple participants within Bitcoin as keeping the system balanced and wrote:
“It is a system that is almost impossible to corrupt.”
Reading those words again five years later gave me pause.
I still believe there is something extraordinary about Bitcoin’s rules.
A government can decide to issue more currency. A company can issue more shares. A bank can expand its balance sheet.
But nobody can simply announce that Bitcoin will henceforth have a maximum supply of 42 million coins and expect everybody’s nodes to accept the change.
As I explored in my previous newsletter, Bitcoin distributes different forms of power between developers, maintainers, node operators, miners, businesses and users.
That makes unilateral rule-changing extraordinarily difficult.
But in 2021, I hadn’t properly considered something.
What happens when we disagree about what the rules themselves should be?
Code doesn't eliminate human beings
This is where my experience over the past year has unsettled me.
I had imagined Bitcoin’s programmed rules as an escape from some of the weaknesses of human governance. And in some respects, they are.
Software can enforce a rule without caring whether you are rich, poor, powerful, famous or politically connected. My node doesn’t need to trust a miner. It verifies.
But software doesn’t write itself.
Humans propose changes. Humans review them. Humans choose which software to run. Humans disagree about what Bitcoin should be used for. And humans decide what trade-offs they are prepared to accept.
The controversy surrounding Core 30 has forced me to confront this distinction.
Code can constrain human power without eliminating the human struggle over the code.
Perhaps that should have been obvious. To me, it wasn’t.
Two questions I still haven't resolved
My objections to the direction represented by Core 30 extend beyond one issue.
The first is moral and reputational. I remain concerned about arbitrary data – including potentially illegal or deeply objectionable material – being incorporated into a blockchain whose history is designed to persist.
The second is about decentralisation itself. Running my own Bitcoin infrastructure taught me that independently downloading and verifying the blockchain already demands time, bandwidth, storage and technical effort. If the burden of independent participation keeps growing, at what point does a network that is decentralised in theory become less decentralised in practice?
These are different questions, and both deserve more space than I can give them here.
They also reveal something I didn’t appreciate when I wrote my original article.
Perhaps the challenge isn’t simply to create an incorruptible set of rules.
Perhaps it is to create systems capable of remaining legitimate – and practically accessible – while their participants disagree.
Magna Carta didn’t settle the struggle over power in 1215. It began a much longer one.
Bitcoin hasn’t settled it either. It has created a fascinating new experiment.
So the question I am left with is no longer simply: can rules constrain power?
Clearly they can.
The harder question is:
Who should have the power to change the rules – and what should constrain them when they do?
In my next newsletter, I want to explore my second concern more closely: what decentralisation really means when exercising your independence becomes increasingly demanding
Until next time, enthusiasts!
Victoria
Bitcoin's Reputation
On this episode of the World Crypto Network, I join the panel to discuss recent revelations that affect Bitcoin’s reputation and reflect on how they could shape Bitcoin’s Future.