Can Owning More Bitcoin Change the Rules?

Can owning more Bitcoin change the rules? I've had dozens of comments recently saying, "Absolutely not. Bro has Bitcoin confused with proof-of-stake. Nodes and miners decide, not how much you hold. Owning the majority of coins does nothing." And look, they're right, technically, but technically right and actually right are not the same thing. Because here's the question nobody in those comments is asking. What happens when the people running the nodes are the people holding all the Bitcoin? Not by hacking it, not by breaking it, but simply by holding enough of it. And if your Bitcoin is sat on an exchange or an ETF right now, you might be contributing to this without even realizing it. Because it's already happening. But before I show you how, we need to clear something up first. Let's get our head around what proof-of-stake and proof-of-work actually mean. Because this is where the confusion starts. Proof-of-stake is like a shareholders meeting. The more shares you own, the more votes you get. Own 51% of the shares, you control the company. That's Ethereum. So, if BlackRock owned 51% of Ethereum, they'd basically be running the show. And you'd be trusting your wealth to this guy. Proof-of-work is completely different. Imagine a thousand people in a room all racing to solve a Rubik's Cube. Whoever solves it first gets to write the next page in the room's record book. But everyone else checks whether that page follows the rules. And if it doesn't, they reject it. It doesn't matter if the solver is a billionaire or if he just showed up in his pajamas. He can write the page, he can't change the rules. That checking is what Bitcoin's nodes do. So, the commenters on my channel are right. Owning Bitcoin doesn't give you a vote. Full stop. But here's what none of those comments mention. They all talk about votes, nodes, miners, and they're right about all of it. But Bitcoin doesn't run on votes. It runs on economics. And that changes everything. Okay, so here's where it starts to get interesting. Think of every Bitcoin transaction as a vehicle on a road. Nodes are the toll booths. They check every vehicle meets the rules before letting them through. Miners are the ones building new sections of road. Now, it doesn't matter how many toll booths you build if no roads lead to them. A toll booth in a field is just a very expensive bird table. The toll booths that actually matter are the ones on the busy motorways where the traffic is flowing, where the economy is moving. And people call these economic nodes. And these nodes matter much more than those bird tables. Coinbase processes millions of transactions. Their toll booth is on a six-lane motorway. My node, lovely little country lane, two cars a week, and one of them is me. Both are real toll booths, and both check the rules. But if Coinbase changes the rules at their toll booth, millions of people are now following those new rules, whether they know it or not. If I change the rules at mine, my wife doesn't even notice. So, guess who decides whether a rule change actually sticks. Well, the obvious answer would be whoever controls the busy motorways, right? But if we look back at 2017 with SegWit2x, that's exactly what was tried. And it didn't work. Some of the biggest companies in Bitcoin, Coinbase, BitPay, major miners, got together and tried to push through a rule change that would have doubled Bitcoin's block size. They had the money, the users, the infrastructure, yet it failed spectacularly. Side note on this, if you want to know more about this and the history of Bitcoin's rule changes, I've just reread The Block Size War and would highly recommend it well, to anyone as geeky as me. Turns out having all the money in the world doesn't help when nobody wants to drive on your road. Because in 2017, the traffic was spread across thousands of different routes. Loads of independent toll booths, no single one controlling everything. People were holding their own keys, the economic activity was genuinely distributed. The companies tried to change the motorway rules, but there were so many country lanes carrying real traffic that people just routed around them. That's the detail everyone forgets about that victory. It worked because ordinary people, like you and me, were still on the roads. So, surely these ETFs and big companies owning more and more Bitcoin isn't a threat at all, then. It's been proven in the past that you can't just change the rules. Right? So, here's here's the objection that I can already hear. Even if BlackRock holds over 70% of Bitcoin, they still can't change the rules. Nodes will just reject the invalid blocks and the original chain survives. Technically, that's correct. Actually, now, stay with me here because once you actually see the mechanism, it's actually quite simple. So, I've been really digging I've been really digging into Mastering Bitcoin by Andreas Antonopoulos recently. He's probably one of the most respected technical voices in the Bitcoin space. And now he is very clear about how rule changes actually happen. It's not hacking, it's not voting, it's a software release. So, someone just basically builds a new version of Bitcoin software with different rules baked in. And as Andreas says, "For a hard fork to occur, the competing implementation must be adopted and the new rules activated by miners, wallets, and intermediary nodes." All of those groups coordinated. Now, here's why Bitcoin was designed to make that nearly impossible. Just think about all the independent groups that make Bitcoin work. You have the miners, developers, exchanges, merchants, and ordinary users. Andreas puts it plainly, "Decisions cannot be made unilaterally by any of these constituencies." Just put simply, no single group can bully others. That is the protection, and this is what a lot of the commenters have been saying. But what happens when one entity is the exchange, is the wallets, is the on-ramp, and holds over 70% of the coins? Those independent groups aren't independent anymore. They're all the same boardroom. And now, here is the line that really stopped me. "Because miners can technically change the rules by simple majority, but the one thing stopping them," Andreas again, "Without economic activity, transactions, merchants, wallets, exchanges, the miners will be running a worthless coin with empty blocks." Now, that is the whole protection. It's not votes, not nodes, it's economic activity. Whoever controls where the money flows controls which chain wins. And right now, that activity is still spread across thousands of independent hands. That's why in 2017 worked. But just watch where it's heading. And I'm not talking about this year or next year, I'm talking about where this ends up if the current trajectory continues. So, in the BlackRock scenario, they coordinate, release a new client, and miners will face a choice. Chain A, the original rules, 21 million cap intact, but 10% of the economic activity. And then chain B, new rules, but 90% of the liquidity. The exchanges, the merchants. And miners are not idealists. They're businesses with electricity bills and payroll. They are always going to follow the chain that pays them. So, let's say that they did follow chain B. The original chain still survives, as all of the commenters are saying. And these country lanes will still exist. But what if nobody's on them? What if no exchanges are listing it? No merchants are accepting it? There's no liquidity. The thing that you are holding, technically still Bitcoin, but worth a fraction of the chain BlackRock just became. It's like being the last person holding a currency that nobody accepts anymore. The notes are real, the money is gone. Well, here's what's changed. Right now, over 3 million Bitcoin sit on exchanges and ETFs. That's more than 15% of the total supply. And Bitcoin ETFs only launched in January 2024. That's just 2 years ago. And that number is growing every single month. Have a think about where that's heading. And here's what's really worrying. During this recent crash, I've seen people on Twitter selling their self-custody Bitcoin, taking the tax write-off, or reducing their cost basis, then rebuying through an ETF in a tax-free ISA. They're literally moving their Bitcoin from their own keys to BlackRock's keys, voluntarily, for tax advantage. And look, I get it. Tax-free wrapper is nice and tidy, no hardware wallet to lose down the back of your sofa. I understand the appeal. I really do. But every sat that makes that journey is a vehicle leaving the country lanes and joining the motorway. And I don't think most people even realize what they're doing here. Now, at the moment, 15% it doesn't matter. But project this forward 5, 10, 50 years, whatever. Let's say 70 to 90% of Bitcoin is now in a handful of custodians. Most people just treat Bitcoin like a stock ticker. They never make an on-chain transaction. They never run a root node. In that world, who's running the toll booths on the busy roads? The same handful of companies holding everyone's Bitcoin. If those companies coordinate and say, "We're updating the rules." Maybe it starts small. Passport at every toll booth. It's a bit annoying, but you go along with it because it's the main road. Then one day, it's not a passport. It's the supply cap. And the country lanes, they still work. They still have the original rules. But with only 10% of the traffic and nobody using them, nobody hacked anything. Nobody has broken anything. They just became the motorway. That is exactly what happened to gold, by the way. Gold didn't fail as a store of value because it's bad money. Gold failed because people let someone else hold it. And once the custodians held it, they changed the rules. Sound familiar? So, are the commenters wrong? Half wrong. Owning Bitcoin doesn't give you a vote, but owning it, running a node, and actually using it, that's what keeps the country lanes alive. And there are more and more people that are learning this every single day and more and more people doing this. And look, this isn't anti-ETF. ETFs have brought billions into Bitcoin. But every sat in an ETF is a vehicle leaving the country lanes and joining the motorway. And let me just spell this out. The country lanes are what keep Bitcoin decentralized. The motorways are what centralize it. And as Jeff Booth has said a thousand times, as long as it stays decentralized and secure, as long as it stays decentralized and secure, as long as it stays decentralized and secure, it's measuring price as falling forever. So seriously, what can we actually do to keep it decentralized and secure? Most important one first, self-custody your Bitcoin. Every sat that you hold on an exchange is a sat that someone else controls. Take it off the motorway and put it back on your own road. Second, run a node. That's your toll booth. And honestly, I mean this seriously. If you actually want Bitcoin to remain the first free market in human history, one that helps everyone, not just the ones closest to the money printer, this might be the most important thing you ever do. Your node is your voice. It's you saying, "These are the rules that I agree to, and I'm not changing them because BlackRock told me to." Mine cost less than a night out and it's been far more useful. You can get 5% off a start mine in the description below. And finally, third one, the one I actually think is the most important, as it encourages people to do the previous two steps, actually use Bitcoin. Spend and replace. Yes, you can actually buy things with Bitcoin. I know, revolutionary concept, but keeping on-chain transactions flowing through the independent roads matters because a toll booth with no traffic is just a box in a field. This is literally what stops the rule change in 2017. Ordinary people, like you and me, on ordinary country lanes, refusing to join the motorway. And the good news, it's not too late. But nobody's coming to explain this to you. You're not going to see how to run a Bitcoin node on BBC News at 6. If Bitcoin stays decentralized, it is because of people like you and me choosing to keep it that way. And if you've watched any of my other videos, you know I believe that a genuine free market makes everything better for everyone, not just the ones closer to the money printer. Your children and your children's children could live in a world we can't even fathom under the current monetary system. This is way bigger than number go up. Way bigger than any individual getting rich. I genuinely believe this is the most important thing happening in our lifetime. And let me be honest, I've had two pretty expensive lessons messing up my own Bitcoin security. But after years of getting it wrong, I found a way to secure it with no single point of failure. So that even if someone found my private keys, they still can't access it. I've put the whole thing in a free template, link's in the description. Now, I know this whole centralization thing can feel a bit abstract. Honestly, I found it really hard to get my head around until I saw exactly what happened to gold. The actual stages it went through before it was completely captured. And once I saw it, everything clicked. What's happening with Bitcoin right now isn't theory. This exact attack has already been run on money that was supposed to be separate from the state. And once you see it, you realize this is far more serious than most people let on. That video is right here.