The ongoing debate between Bitcoin Core and Knots regarding the intended use of Bitcoin and the potential exclusion of non-financial transactions appears to have minimal impact on institutional investors. Alex Thorn, head of research at Galaxy Digital, suggests that the majority of these investors are either unaware of or indifferent to the discussion.
This debate was intensified by the recent Bitcoin Core v30 update, which some critics argue could lead to an increase in "spam" on the blockchain. Proponents of Knots nodes advocate for filtering out such transactions, citing concerns that they could be used by malicious actors to embed inappropriate content into the blockchain. Conversely, Bitcoin Core maintains that implementing restrictions could fragment the network, confuse users, and contradict fundamental principles of the technology.
Investor Awareness and Sentiment
Thorn shared his findings in an X post, detailing a poll he conducted with 25 institutional Bitcoin investors associated with Galaxy. The results indicated that 46% of respondents were unaware of the debate, while an additional 36% expressed either ignorance or ambivalence towards it.
Among the remaining 18% of participants, all indicated a preference for the Bitcoin Core perspective. Thorn elaborated on the sentiment, stating that "Real capital, real investors, service providers, even government officials see no problem at all or are unaware there’s even a debate." He characterized the issue as a hypothetical problem at best, with proposed solutions that do not address the purported concerns.
"Even if it is adopted all their legal theories are mumbo jumbo and the fears about them are ones that everyone got comfortable with years ago during early debates over the legality of permissionless decentralized systems."
Poll Validity and Broader Observations
Addressing questions about the poll's sample size, Thorn acknowledged it was small but asserted that it was representative of his broader observations. He stated that the poll results align with his ongoing conversations with other significant investors, mining leaders, service providers, and government officials over the past several months. He further noted that while he had not directly polled miners, his interactions with major mining operations indicated a similar lack of concern or engagement with the debate.
Potential Outcomes of the Debate
Thorn outlined three potential outcomes for the Bitcoin Core vs. Knots debate, one of which he believes could significantly hinder Bitcoin adoption. The first scenario suggests that the debate will eventually fade into obscurity due to a lack of widespread interest.
The second, and perhaps more likely, outcome is that the fear-mongering surrounding the issue could inadvertently deter individuals from engaging with Bitcoin, while the proposed fork ideas ultimately fail to gain traction.
"A third and exceedingly distant likelihood is that their proposed changes become adopted… but even in that unlikely scenario, their solutions fall short. And because their solutions fall short and they will have scared the world into fearing permissionless systems, Bitcoin adoption will be irreparably harmed."