You obviously don't understand Bitcoin if you think that the protocol can be captured by regulators. What the fuck are you even talking about?
Please explain to me how you plan to onboard 1 billion users. It will be layers or custodians. Without permissionless sidechains with no federation the only way to scale is with custodians who are BY NATURE regulated... I'm not saying L1 will every be captured, though it's technically possible it's physically and economically infeasible, the capture would occur on scaling layers, if people only have access to the protocol through a centralized custodian I see that as a failure of peer to peer electronic cash.
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You said the obvious direction of this protocol is regulatory capture. The protocol is usually defined as the L1 Bitcoin Network. I said that's impossible, which is true.
If Bitcoin grows to 1 billion users, then innovation is warranted. Innovation for the sake of innovation does not make sense. Especially when the future is unknown. Also if I had a gun to my head right now I'd say a combination of Lightning, Fedimints and ETF's, all of which don't require a soft fork.
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Lightning needed segwit. I guess I am more worried about the regulatory capture for new users in the future, like after the US confiscated gold etc, sure rich families and hoarders had some they could access but the avg person saw their wealth inflated away... without self custody scaling solutions the bitcoiners of tomorrow would be stuck with bitcoin certificates in some bizzaro bitcoin backed fiat illusion. A 51% attack is temporary L1 capture it is far from impossible for a state to accomplish... also a state coercing mining pools to censor would be regulatory capture, very difficult, not impossible.
I don't think lightning scales and fedi is custodial, I don't see it working long term, maybe for very tiny communities and edge cases but the masses are almost surely to get stuck with wallstreet compliant BS without other layers. Hopefully we can figure some other way to create trustless 2wp if we can't upgrade further
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A solution in search of a problem
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