Make no mistake. We are witnessing a high-stakes protocol standards battle play out inward existent time. And it is just equally of import equally terminal century’s battle for the internet’s TCP standard.
Current capacity constraints on the Bitcoin blockchain take hold brought us to this impasse.
The Bitcoin protocol, equally the dominant value transfer “network effect” leader, battles against upstart cryptocurrency protocols similar Ethereum in addition to Monero. But it also battles alongside itself equally divergent forces force for either on-chain scaling or off-chain scaling, hard fork or soft fork, SegWit transaction format or master transaction format.
The so-called nuclear alternative is a prolonged, contested hard fork of the Bitcoin blockchain because it risks splitting the network into 2 competing chains, which is to no one’s benefit. Therefore, it should live reserved equally a planned formality or a terminal resort for extreme situations rather than a perpetual shape of “live” dispute resolution.
With hence much private in addition to institutional wealth essentially stored on the Bitcoin blockchain, it tin dismiss live extremely disconcerting when others essay to “fork” to a greater extent than or less alongside your money. Chronic forking is non synonymous alongside wealth administration in addition to prudent working capital missive of the alphabet accumulation, which require stability in addition to predictability. Importantly, smart contracts in addition to non-monetary applications volition also rely upon relative stability since the same native digital token also facilitates the proof-of-work safety model.
This article volition examine how open-source governance was designed to piece of job inside the Bitcoin protocol in addition to how users, miners in addition to developers are locked inward a symbiotic trip the calorie-free fantastic when it comes to potential forks to the immutable consensus. Solutions volition live proposed in addition to analyzed that maintain the decentralized nature of the resulting code in addition to the blockchain consensus, piece soundless permitting sensible protocol upgrades. Governance is non exclusively virtually the item method of change-control management, but also virtually how the really method itself is discipline to change.
Let’s non deploy the nuclear alternative for every protocol upgrade.
Open-Source Protocols and Bitcoin
Generally referred to equally FOSS, or gratis in addition to open-source software, this source code is openly shared hence that people are encouraged to utilisation the software in addition to to voluntarily improve its design, resulting inward decreasing software costs; increasing safety in addition to stability, in addition to flexibility over hardware choice; in addition to amend privacy protection.
Open-source governance models, such equally Linux in addition to BitTorrent, are non novel in addition to they existed prior to the emergence of Bitcoin inward early on 2009; however, they take hold never earlier been hence tightly intertwined with money itself. Indeed, equally the largest distributed computing projection inward the earth alongside self-adjusting computational power, Bitcoin may live the outset unsmooth example of A.I. on the internet.
In “Who Controls the Blockchain?” Patrick Murck confirms that Bitcoin is performance equally designed:
As a blockchain community grows, it becomes increasingly to a greater extent than hard for stakeholders to orbit a consensus on changing network rules. This is past times design, in addition to reinforces the master principles of the blockchain’s creators. To alter the rules is to divide the network, creating a novel blockchain in addition to a novel community. Blockchain networks resist political governance because they are governed past times everyone who [participates] inward them, in addition to past times no i inward particular.
Murck continues:
Bitcoin’s might to resist such populist campaigns demonstrates the success of the blockchain’s governance construction in addition to shows that the ‘governance crisis’ is a imitation narrative.
Of class it’s a imitation narrative, in addition to Murck is right on this point. Bitcoin’s lack of political governance is Bitcoin’s governance model, in addition to forking is a natural intended element of that. “Governance” may live the incorrect discussion for it because nosotros are really talking virtually minimizing potential disruption.
Where Bitcoin differs from other open-source protocols is that 2 levels of forking exist. One aeroplane forks the open-source code (code fork), in addition to some other aeroplane forks the blockchain consensus (chain fork). Since at that topographic point tin dismiss exclusively live i consensus per native digital token, chain splits are the natural outcome of this. The exclusively way to avoid potential chain splits inward the hereafter is to restrain the change-control procedure to a unmarried implementation, which is non really rubber nor realistic.
“Collaborate or fork” has locomote the rallying cry for Bitcoin Core supporters. L.M. Goodman, writer of “Tezos: H5N1 Self-Amending Crypto-Ledger Position Paper,” writes:
Core evolution teams are a potentially unsafe source of centralization.
When it comes to Bitcoin Core, the publicly shared code repository hosts the electrical flow reference implementation, in addition to a little grouping of code committers (or maintainers) regulate whatever merges to the code. Even though other projects may live to a greater extent than opened upward to criticism in addition to newcomers, this full general construction reminds me of a presiding council of elders.
Making hazy claims of a peer-review procedure or maxim that committers are just passive maintainers just creates the facade of decentralized code. The existent peer-review procedure takes house on multiple community in addition to technical forums, some of which are non fifty-fifty frequented past times the developers in addition to Bitcoin Core committers.
The BIP (Bitcoin Improvement Proposal) procedure is sufficient in addition to it’s working for those who select to collaborate on Bitcoin Core. Similar to the RFC (Request for Comments) process at the IETF, BIP debates virtually a proposed implementation tin dismiss render technical documentation useful to developers. However, it is non working for many involved inward Bitcoin protocol evolution due to the advantages of incumbency in addition to the imitation appeal to authorization alongside gist developers. If Bitcoin Core no longer maintains the leading reference implementation for the Bitcoin protocol, it volition live 100 percentage due to this intransigence.
Sensitive to the criticisms of glorifying Bitcoin Core, Adam Back of Blockstream of late proposed an alternative to freeze the base-layer protocol, but at the 2d that volition exclusively motion all of the politics in addition to game-playing to what exactly the base-layer freeze should appear like. It is a overnice thought for separating the protocol measure from a unmarried reference implementation in addition to for transitioning the Bitcoin protocol to an IETF-like structure, although it’s extremely premature for now.
Therefore, past times default, that leaves us alongside several alternative Bitcoin implementations inward an environs of continual forking.
Even Satoshi Nakamoto was critical of multiple consensus implementations inward 2010:
I don’t believe a second, compatible implementation of Bitcoin volition ever live a skillful idea. So much of the pattern depends on all nodes getting just identical results inward lockstep that a 2d implementation would live a menace to the network.
That prevailing standpoint, however, may live changing, which Aaron van Wirdum addresses in “The Long History in addition to Disputed Desirability of Alternative Bitcoin Implementations.” Wirdum cites Eric Voskuil of libbitcoin, who argues that at that topographic point should non live i item implementation to define the Bitcoin protocol:
“All code that impacts consensus is component subdivision of consensus,” Voskuil told Bitcoin Magazine. “But when component subdivision of this code stops the network or does something non nice, it’s called a põrnikas needing a fix, but that cook is a alter to consensus. Since bugs are consensus, fixes are forks. As such, a unmarried implementation gives far likewise much might to its developers. Shutting downwards the network piece some star sleeping accommodation plant out a novel consensus is downright authoritarian.”
Multiple alternative implementations of the Bitcoin protocol strengthen the network in addition to assistance to foreclose code centralization.
Politics of Blockchain Forking (or How UASF BIP 148 Will Fail)
Contentious hard forks in addition to soft forks all come upward downwards to hashing power. You tin dismiss phrase it differently in addition to you lot tin dismiss brand believe that two-day zero-balance nodes take hold a fundamental enjoin inward the outcome, but you lot cannot alter that basic reality.
A BIP 148 fork volition undoubtedly postulate mining hash might to succeed or fifty-fifty to outcome inward a minority chain. However, if Segregated Witness (SegWit) had sufficient miner back upward inward the outset place, the BIP 148 UASF itself would live unnecessary. So, inward that respect, it volition at i time proceed similar a game of chicken waiting to run into if miners back upward the fork attempt.
Mirroring aspects of mob rule, if the UASF approach plant equally a way to convey miners to a greater extent than or less to adopting SegWit, in addition to then the emboldened mob volition deploy the tactic for numerous other protocol upgrades inward the future. Consensus rules should non live slow to alter in addition to they should non live able to alter through uncomplicated bulk dominion on nodes, economical or not. Eventually, these attempts volition run headfirst into the wall of Nakamoto consensus.
As far equally the network is concerned, it’s similar turning off the might to your node.
There is no room for bulk dominion inward Bitcoin. Those who endorse the UASF approach in addition to cleverly insert UASF tags inward their social media handles are endorsing bulk dominion inward Bitcoin. They are providing a phase for whatever random user grouping to force their warped agenda via tyranny of the nodes.
The prolific Jimmy Song says that having existent pare inward the game is what matters:
Bitcoin doesn’t aid if you lot post service arguments on Reddit. Bitcoin doesn’t aid if you lot seat something clever inward your Twitter name. Bitcoin doesn’t aid if you lot educate people, write articles, or brand clever Twitter insults. Bitcoin doesn’t aid virtually your wishes, your feelings or your arguments.
Let’s hold “majority rule” antics out of Bitcoin. There is no protocol status that activates “if nosotros are all united” in addition to that is a skillful thing.
With plenty hashing power, the mob-induced UASF BIP 148 volition Pb to a temporary chain split. However, the probability of a Bitcoin minority chain surviving for really long is extremely depression due to the lengthy difficulty re-targeting menses of 2,016 blocks. Unlike the Ethereum/Ethereum Classic fork, that is a long fourth dimension for miners to invest inward a chain of uncertainty.
Responding to a Reddit post service for newbies who are scared of losing money to a greater extent than or less the 1st of August due to UASF, ArmchairCryptologist explains:
Your advice is sound, but realistically, the most probable scenario is that the UASF either wins or dies. If it gets less than ,12% of the hashrate, it volition non live able to activate Segwit inward time, in addition to it volition almost sure enough die. If it gets less than ,20% I also wouldn’t live surprised to run into active interference alongside orphaning to foreclose transactions from beingness processed.
If on the other paw it gets to a greater extent than than ,40% of the hashrate, the gamble for a reorg on the other chain is large plenty that most miners volition probable saltation ship, in addition to it volition almost sure enough win. At over ,20% block orphaning attacks won’t live effective, equally it would divide the bulk chain hashrate in addition to jeopardy tipping the scale. Which agency that the exclusively province of affairs where you lot volition realistically take hold 2 working chains for an extended menses is if you lot larn betwixt ,20% in addition to ,40% of the hashrate for the UASF.
The collectivist UASF BIP 148 strategy volition ultimately neglect in addition to that’s a skillful thing. It is driven primarily past times those alongside really lilliputian at stake expecting the miners to stake everything past times supporting a minority chain. Pretty soon, you lot run out of other people’s money. This commenter on Reddit understands:
The entire premise was that it was really inexpensive to switch, but really expensive to stay. That’s when I realized the folly of it all; [it’s] exclusively inexpensive because they’re non staking anything. But soul has to stake something.
And that’s what is going to cause it to fail. That in addition to the lack of replay protection. People similar this guy flip it around in addition to genuinely believe the mining problem will live solved past times massively increased value. If they produce somehow seat plenty pressure level on exchanges that listing UASF, despite the lack of replay protection, in addition to if nosotros take his logic a measuring further, UASFers are going to live pushing everyone to “buy, buy, buy” UASF in addition to “sell, sell, sell” Legacy Coin. But without replay protection, they’re going to live obliterated past times a few smart people who realize at that topographic point are huge gains to live had.
Alphonse Pace has an excellent paper describing chain splits in addition to their resolution. He walks us through compatible, incompatible in addition to semi-compatible hard forks, arguing that users produce take hold might if they really turn down a soft-fork dominion change:
… users produce take hold power — by invoking an incompatible hard fork. In this case, users volition forcefulness the chain to divide past times introducing a novel ruleset (which may include a proof-of-work change, but does non require one). This ensures users ever take hold an escape from a miner-imposed ruleset that they reject. This way, if the economic scheme in addition to users really turn down a soft fork dominion change, they ever take hold the might to pause away in addition to reclaim the rules they wish. It may live inconvenient, but the same is truthful past times whatever assault past times the miners on users.
The Future of Coordinating Protocol Upgrades
What grouping determines the large decisions inward Bitcoin’s direction? Ilogy doubts that it is the developers:
Theymos almost completely foresaw what is happening today. Why? Because Theymos has a deep agreement of Bitcoin in addition to he was able to connect the dots in addition to recognize that the logic of the scheme leads inevitably to this conclusion. Once nosotros add together to the equation the fact that restricting on-chain scaling was ever going to live perceived past times the ‘generators’ equally something that ‘reduces profit,’ it should live clear that the logic of the scheme was intrinsically going to convey us to the indicate nosotros uncovering ourselves today.
Years after these 2 juggernauts of Bitcoin would uncovering themselves on reverse ends of the debate. But what is interesting, what they both recognized, was that ultimately large decisions inward Bitcoin’s administration would live determined past times the powerful actors inward the space, non past times the average user and, to a greater extent than importantly, non past times the developers.
The developer role tin dismiss live thought of equally proposing a diversity of software carte choices for the users, merchants in addition to miners to take in addition to run. If a software upgrade or land is deemed unacceptable, in addition to then developers must locomote dorsum to piece of job in addition to accommodate the BIP carte offering. Otherwise, mutiny becomes the exclusively alternative for dissatisfied miners.
In “Who Controls Bitcoin?” Daniel Krawisz says that the investors wield the most power, in addition to because of that, miners follow investors. Therefore, the protocol upgrades probable to larn adopted volition live the ones that increment Bitcoin’s value as an investment, such equally anonymity improvements beingness favored over attempts at making Bitcoin easier to regulate.
In the future, miner coordination via a Bitcoin DAO (decentralized autonomous organization) on the blockchain could live the key to smoothen in addition to uneventful forking. Self-governing ratification would allow various stakeholders to coordinate protocol upgrades on-chain, reducing the likelihood of software propagation battles that perpetually fork the codebase.
Attorney Adam Vaziri of Diacle supports a scheme of DAO voting past times Bitcoin miners to take away the uncertainty to a greater extent than or less protocol upgrades. He readily admits that he has been inspired by Tezos and Decred.
Prediction markets take hold also been proposed equally a method to approximate user in addition to miner preferences through world forecasting, the theory beingness that these prediction markets would yield the fairest overall consensus for protocol upgrades prior to the actual fork.
The query remains: Is coin-based voting based on allocated hash might superior to the informal signaling method utilized today? Are prediction markets or futures markets a feasible method to approximate consensus in addition to create upward one's hear critical protocol upgrades?
I’m non optimistic. On-chain voting in addition to “intent” signaling are both non-binding expressions piece prediction in addition to futures markets tin dismiss live easily gamed. Therefore, piece Tezos in addition to Decred stand upward for admirable efforts inward the request for consummate resilient decentralization, I produce non call back Bitcoin protocol upgrades of the hereafter volition live managed inward this way.
The Bitcoin ecosystem doesn’t postulate to accomplish a social consensus prior to making changes to the protocol. What has clearly emerged from the events of this summertime is that Bitcoin has demonstrated an fifty-fifty stronger grade of immutability.
There is no failure of governance in addition to at that topographic point is no failure of the market. The non-authoritarian forces at play hither are performance just equally they should. Protocol upgrades inward a decentralized environs are an evolutionary process, in addition to that process has matured to the current six stages of Bitcoin protocol upgrading, alongside some optional variances for BIP 91:
(a) BIP carte choices competing for mindshare, strategic appropriateness in addition to technical rigor;
(b) Informal intent signaling based on miners inserting text into the coinbase for each block mined;
(c) Block signaling period where miners formally signal a designated “bit” trigger for BIP lock-in, based on “x” percentage over a “y” seat out of blocks period;
(d) Block activation period after BIP lock-in, which sets a secondary menses of “x” percentage over a “y” seat out of blocks for activation;
(e) Primary difficulty adjustment period (2,016 blocks) where “x” percentage of miners must signal for the upgrade to lock in;
(f) Secondary difficulty adjustment period (2,016 blocks) required for the protocol upgrade to activate on the network.
Conclusion
This would non live the outset fork inward Bitcoin in addition to it won’t live the last. If nosotros believe inward the might of Nakamoto consensus and probabilistic security, in addition to then the hush-hush to uneventful protocol upgrades is smoother in addition to to a greater extent than reliable signaling past times miners.
July has been a tough calendar month for Bitcoin, but it has also been pivotal. Even though I dubiousness the probability of success for UASF BIP 148, some may enjoin that the threat of the reckless UASF on August 1 played a role inward the rapid timeline for SegWit2x/BIP 91, in addition to I concur alongside that. Game theory is live in addition to good inward Bitcoin.
The pattern of Nakamoto consensus provides the ultimate method for decentralized dispute resolution past times placing that determination alongside the hashing might in addition to the built-in incentives against 51 percentage attacks. In fact, Tom Harding considers miners to live the exclusively failsafe inward Bitcoin:
Nakamoto consensus for the win. See you lot inward November.
The views expressed inward this op ed are those of its author, Jon Matonis, in addition to produce non necessarily reverberate those of Bitcoin Magazine or BTC Media.
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