The classic IT panacea of “turning it off and on again,” popularized by the 2006 show The IT Crowd, was recently tried on Solana, a supposedly decentralized smart contract platform.
To be fair, Solana validators didn’t turn the network off per se, it halted on its own. The halting happened due to a flood of transactions, made possible by Solana not having any practical block size limit and no real fee market as a result. On September 14th, Solana was hit with hundreds of thousands of transactions per second, causing its nodes to run out of memory and shut down for 20 hours. The validators then restarted the network in a coordinated effort, with little impact on the network token’s price or its ongoing function.
The Solana case is a prime example of the dangers of prioritizing base layer throughput over decentralization. What makes this event especially frustrating is the fact that the solution for spam attacks of this sort has been applied in Bitcoin since 2010, when Satoshi implemented a 1MB block size limit. Moreover, the arguments in favor of limited base layer throughput with a scalable second layer on top of it have been widely known since at least the 2017 blocksize war. The trivial problem has a trivial solution, but implementing that solution would destroy the network’s value proposition.
The Network Is Young and Similar Things Happened in Bitcoin!
The usual defense given in defense of upstart blockchain platforms is to point out that some obstacles are to be expected in the early days, and this is often accompanied by recounting the fact that Bitcoin also had a fair share of its own problems in the beginning. And indeed that is true for Bitcoin. In August 2010, an overflow bug allowed 184 billion bitcoin to be created, followed by Satoshi’s patch that was quickly adopted by the network. Later in 2013, an incompatibility between a newer and an older version of the Bitcoin core client caused the network to split — a serious problem which was resolved by mining pools quickly downgrading their software. Both problems could be quickly fixed thanks to Bitcoin having a small set of stakeholders at the time — caused by the relative obscurity of Bitcoin, not its centralizing design.
The problem with the likes of Solana is that they aim for complexity and high throughput on its base layer, opening up a Pandora’s box of future problems. These in turn call for quick fixes that need to be centrally coordinated. Complexity and centralization come hand in hand.
Bitcoin had its fair share of problems even though it was quite simple at its base layer. It had a grace period of several years of relative obscurity during which it could solve these issues. Solana, on the other hand, is a VC-backed, multi-billion-dollar project of a complexity that greatly surpasses Bitcoin’s protocol. To believe such a project can become decentralized after overcoming its growing pains is naive. There is no grace period, and the unforeseen problems won’t diminish as the platform gains in popularity. The only way for such projects to survive is to become more centralized with time.
So What? It’s Not Money, After All
The smart contract proponents may argue that decentralization isn’t as crucial to projects that don’t compete with Bitcoin’s value proposition of becoming a non-state money. But then the question to ask is why even bother with a distributed ledger architecture? The true innovation of Bitcoin is to do away with central points of failure, taking its cue from preceding attempts such as Liberty dollar or e-gold, both of which were shut down by the government.
If a network has no need for censorship resistance, it could be run as a cloud-based service. But such a solution wouldn’t attract the same VC and retail interest as the blockchain moniker lures in – the true motivation behind smart contract platforms that choose fast-paced innovation over decentralization.
At the BTC Times, we decided to responsibly cover news about altcoins from time to time, provided that we consider them relevant for Bitcoin or interesting for our readers. The goal of these articles will always be to inform, explain, clarify, debunk, and expose, sticking to the objective facts and qualified technical opinions, and never to promote, advertise, or legitimize “coins”, “tokens”, or other investment propositions.