Make no mistake. We are witnessing a high-stakes protocol standards battle play out inward existent time. And it is just every bit of import every bit final 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, every bit the dominant value transfer “network effect” leader, battles against upstart cryptocurrency protocols similar Ethereum in addition to Monero. But it also battles amongst itself every bit divergent forces force for either on-chain scaling or off-chain scaling, hard fork or soft fork, SegWit transaction format or master copy transaction format.
The so-called nuclear choice is a prolonged, contested hard fork of the Bitcoin blockchain because it risks splitting the network into ii competing chains, which is to no one’s benefit. Therefore, it should live reserved every bit a planned formality or a final resort for extreme situations rather than a perpetual shape of “live” dispute resolution.
With thus much private in addition to institutional wealth essentially stored on the Bitcoin blockchain, it tin live extremely disconcerting when others seek to “fork” unopen to amongst your money. Chronic forking is non synonymous amongst wealth administration in addition to prudent majuscule 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 work inside the Bitcoin protocol in addition to how users, miners in addition to developers are locked inward a symbiotic trip the calorie-free fantastic toe 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, acre soundless permitting sensible protocol upgrades. Governance is non alone virtually the item method of change-control management, but also virtually how the really method itself is dependent area to change.
Let’s non deploy the nuclear choice for every protocol upgrade.
Open-Source Protocols and Bitcoin
Generally referred to every bit FOSS, or gratis in addition to open-source software, this source code is openly shared thus that people are encouraged to work 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 improve privacy protection.
Open-source governance models, such every bit 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 thus tightly intertwined with money itself. Indeed, every bit the largest distributed computing projection inward the globe amongst self-adjusting computational power, Bitcoin may live the origin unsmooth example of A.I. on the internet.
In “Who Controls the Blockchain?” Patrick Murck confirms that Bitcoin is performance every bit designed:
As a blockchain community grows, it becomes increasingly to a greater extent than hard for stakeholders to scope a consensus on changing network rules. This is past times design, in addition to reinforces the master copy principles of the blockchain’s creators. To alter the rules is to split upwards 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 ane inward particular.
Murck continues:
Bitcoin’s mightiness to resist such populist campaigns demonstrates the success of the blockchain’s governance construction in addition to shows that the ‘governance crisis’ is a faux narrative.
Of class it’s a faux 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 factor 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 ii levels of forking exist. One flat forks the open-source code (code fork), in addition to some other flat forks the blockchain consensus (chain fork). Since at that spot tin alone live ane consensus per native digital token, chain splits are the natural resultant of this. The alone way to avoid potential chain splits inward the hereafter is to bound the change-control procedure to a unmarried implementation, which is non really rubber nor realistic.
“Collaborate or fork” has move the rallying outcry for Bitcoin Core supporters. L.M. Goodman, writer of “Tezos: Influenza A virus subtype 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 whatsoever merges to the code. Even though other projects may live to a greater extent than opened upwards 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 proverb that committers are just passive maintainers simply 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 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 faux appeal to say-so amongst marrow developers. If Bitcoin Core no longer maintains the leading reference implementation for the Bitcoin protocol, it volition live 100 pct due to this intransigence.
Sensitive to the criticisms of glorifying Bitcoin Core, Adam Back of Blockstream lately proposed an choice to freeze the base-layer protocol, but at the minute that volition alone motility all of the politics in addition to game-playing to what exactly the base-layer freeze should seem like. It is a prissy thought for separating the protocol criterion 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 amongst several alternative Bitcoin implementations inward an surroundings 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 blueprint 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 spot should non live ane item implementation to define the Bitcoin protocol:
“All code that impacts consensus is portion of consensus,” Voskuil told Bitcoin Magazine. “But when portion of this code stops the network or does something non nice, it’s called a põrnikas needing a fix, but that create is a alter to consensus. Since bugs are consensus, fixes are forks. As such, a unmarried implementation gives far also much mightiness to its developers. Shutting downward the network acre 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 aid to forestall code centralization.
Politics of Blockchain Forking (or How UASF BIP 148 Will Fail)
Contentious hard forks in addition to soft forks all come upwards downward to hashing power. You tin phrase it differently in addition to yous tin brand believe that two-day zero-balance nodes take hold a fundamental enjoin inward the outcome, but yous cannot alter that basic reality.
A BIP 148 fork volition undoubtedly require mining hash mightiness to succeed or fifty-fifty to resultant inward a minority chain. However, if Segregated Witness (SegWit) had sufficient miner back upwards inward the origin place, the BIP 148 UASF itself would live unnecessary. So, inward that respect, it volition straight off proceed similar a game of chicken waiting to run across if miners back upwards the fork attempt.
Mirroring aspects of mob rule, if the UASF approach plant every bit a way to convey miners unopen to to adopting SegWit, in addition to thus 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 every bit the network is concerned, it’s similar turning off the mightiness 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 whatsoever random user grouping to force their warped agenda via tyranny of the nodes.
The prolific Jimmy Song says that having existent peel inward the game is what matters:
Bitcoin doesn’t aid if yous post service arguments on Reddit. Bitcoin doesn’t aid if yous seat something clever inward your Twitter name. Bitcoin doesn’t aid if yous 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 atomic number 82 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 unopen to 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 as shooting die. If it gets less than ,20% I also wouldn’t live surprised to run across active interference amongst orphaning to forestall transactions from beingness processed.
If on the other paw it gets to a greater extent than than ,40% of the hashrate, the risk for a reorg on the other chain is large plenty that most miners volition probable jump ship, in addition to it volition almost sure as shooting win. At over ,20% block orphaning attacks won’t live effective, every bit it would split upwards the bulk chain hashrate in addition to risk tipping the scale. Which agency that the alone province of affairs where yous volition realistically take hold ii working chains for an extended menses is if yous instruct 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 amongst really niggling at stake expecting the miners to stake everything past times supporting a minority chain. Pretty soon, yous 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] alone inexpensive because they’re non staking anything. But somebody 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 create 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 measurement 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 spot 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 create take hold mightiness if they genuinely refuse a soft-fork dominion change:
… users create take hold power — by invoking an incompatible hard fork. In this case, users volition forcefulness the chain to split upwards 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 genuinely refuse a soft fork dominion change, they ever take hold the mightiness to pause away in addition to reclaim the rules they wish. It may live inconvenient, but the same is truthful past times whatsoever laid on 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’ every bit something that ‘reduces profit,’ it should live clear that the logic of the scheme was intrinsically going to convey us to the signal nosotros observe ourselves today.
Years afterward these ii juggernauts of Bitcoin would observe themselves on contrary 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 live thought of every bit proposing a multifariousness of software carte du jour choices for the users, merchants in addition to miners to take in addition to run. If a software upgrade or acre is deemed unacceptable, in addition to thus developers must move dorsum to piece of work in addition to suit the BIP carte du jour offering. Otherwise, mutiny becomes the alone choice 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 instruct adopted volition live the ones that increment Bitcoin’s value as an investment, such every bit 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 the uncertainty unopen to protocol upgrades. He readily admits that he has been inspired by Tezos and Decred.
Prediction markets take hold also been proposed every bit a method to estimate user in addition to miner preferences through populace forecasting, the theory beingness that these prediction markets would yield the fairest overall consensus for protocol upgrades prior to the actual fork.
The enquiry remains: Is coin-based voting based on allocated hash mightiness superior to the informal signaling method utilized today? Are prediction markets or futures markets a feasible method to estimate consensus in addition to create upwards one's heed critical protocol upgrades?
I’m non optimistic. On-chain voting in addition to “intent” signaling are both non-binding expressions acre prediction in addition to futures markets tin live easily gamed. Therefore, acre Tezos in addition to Decred stand upwards for admirable efforts inward the bespeak for consummate resilient decentralization, I create non retrieve Bitcoin protocol upgrades of the hereafter volition live managed inward this way.
The Bitcoin ecosystem doesn’t require to hit 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 spot is no failure of the market. The non-authoritarian forces at play hither are performance just every bit they should. Protocol upgrades inward a decentralized surroundings are an evolutionary process, in addition to that process has matured to the current six stages of Bitcoin protocol upgrading, amongst some optional variances for BIP 91:
(a) BIP carte du jour 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” pct over a “y” seat out of blocks period;
(d) Block activation period after BIP lock-in, which sets a secondary menses of “x” pct over a “y” seat out of blocks for activation;
(e) Primary difficulty adjustment period (2,016 blocks) where “x” pct 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 origin fork inward Bitcoin in addition to it won’t live the last. If nosotros believe inward the mightiness of Nakamoto consensus and probabilistic security, in addition to thus the surreptitious 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 incertitude 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 concord amongst that. Game theory is live in addition to good inward Bitcoin.
The blueprint of Nakamoto consensus provides the ultimate method for decentralized dispute resolution past times placing that conclusion amongst the hashing mightiness in addition to the built-in incentives against 51 pct attacks. In fact, Tom Harding considers miners to live the alone failsafe inward Bitcoin:
Nakamoto consensus for the win. See yous inward November.
The views expressed inward this op ed are those of its author, Jon Matonis, in addition to create non necessarily reverberate those of Bitcoin Magazine or BTC Media.
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