Governance of Bitcoin: Bitcoin is dynamic. Bitcoin engineers fix major issues and improve the protocol to prolong its life. Changes to Bitcoin by whom? Bitcoin evolves differently from top-down centralized entities because of its decentralization. Bitcoin’s ‘government’ is unclear. Because it implies leaders represent the masses, unlike Bitcoin. Other blockchain-supported decentralized systems have on-chain voting and leader elections, while Bitcoin does not. The Bitcoin protocol upgrade process is quasi-political because stakeholders compete for influence. Not a democracy, plutocracy, or formal political system. All participants have volition as Bitcoin advances through consensus building, deliberation, and persuasion. As an opt-in system, Bitcoin is defined by user preferences. Importantly, Bitcoiners avoid protocol changes unless necessary. Change will not occur until most participants agree, but those who want to can change.
Developers can systematically decide what improvements are needed and how to apply them as Bitcoin is what its users say it is. The Bitcoin Core client the node community runs is developed here. Like Bitcoin, this program defines Bitcoin protocol rules.
Table of Contents
- What are Bitcoin Improvement Proposals?
- What was the Segwit User Activated Sof Fork (USAF)?
- What is a Bitcoin hard fork?
- Who is in control of Bitcoin?
What are Bitcoin Improvement Proposals?
Bitcoin Improvement Proposals formalize code upgrade implementation. These are drafted, peer-reviewed, publicly debated, and extensively tested to achieve community ‘rough consensus’. Rough consensus is reached when most persons agree that proposed objections are wrong.
After rough consensus, Bitcoin Core integrates a BIP. One of a few ‘core developers’ with ‘commit access’ to the code repository uploads the code to a community-recognized public platform. After the BIP is added to the Bitcoin Core code repository, the network of users (nodes) must install the updated software client. This final stage is crucial since end users decide Bitcoin’s definition.
A stated threshold of nodes must install the upgrade to activate it, and BIPs that significantly change the Bitcoin protocol have a high activation barrier. For instance, BIP 141 (SegWit) mandated a 14-day upgrade signal from 95% of miners. Importantly, most significant BIPs make ‘backwards compatible’ protocol changes. Nodes using the new software are compatible with nodes using the old version (and vice versa). Backwards compatibility lets nodes decide whether to implement a proposal, not developers. A backwards-compatible upgrade is a’soft fork.’
What was the Segwit User Actived Sof Fork (USAF)?
Segwit UASF, a decentralized method for protocol updates, was a turning point in Bitcoin’s history. UASFs let users make modifications, unlike traditional governance models where developers or miners do. This technique requires users to run a version of Bitcoin that enforces rule modifications and communicate their approval through their nodes.
Bitcoin’s most famous UASF was BIP 148 in 2017, which implemented Segregated Witness (SegWit), a protocol upgrade that removes signature data from Bitcoin transactions to increase block size limit. Many network users deployed BIP 148-enforcing software, which forced miners to embrace SegWit, even if some were originally opposed. This grassroots initiative helped SegWit propagate across the network. The decentralized consensus mechanism in Bitcoin allowed the user population to influence and make important protocol improvements, matching with Bitcoin’s decentralized ethos.
What is a Bitcoin hard fork?
BIPs that are incompatible must ‘hard fork.’ Only new nodes work. Every node must use the upgraded version. Two chains won’t interact without community members installing and running the upgraded software. Bitcoin Cash, the greatest Bitcoin fork, began in August 2017 after stakeholders couldn’t agree on scalability.
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Other notable Bitcoin hard forks:
Bitcoin Gold (BTG): Launched in October 2017, Bitcoin Gold decentralized Bitcoin mining using a new proof-of-work algorithm. By repelling pricey ASIC (Application-Specific Integrated Circuits) mining equipment that concentrates electricity, mining became cheaper. Bitcoin Satoshi Vision (BSV) split from Bitcoin Cash in November 2018. Limited block size was Bitcoin SV’s main disagreement. Craig Wright led BSV supporters in requesting larger blocks to improve on-chain transactions, causing a bitter split from Bitcoin Cash.
Bitcoin Diamond boosted block size, privacy, and transaction speed after forking in November 2017. Currency supply changes helped new users. Hard forks fixed Bitcoin’s scalability, mining centralization, transaction privacy, and more. Hard forks haven’t always had Bitcoin Cash’s community support, market value, or utility. Community support, developer expertise, and change viability determine fork success.
Who is in control of Bitcoin?
BIP generation and integration are regulated, while Bitcoin is consensus-based. Users, developers, miners, exchangers, wallet providers, custodians, and independent node operators talk. The power struggle is dynamic and checked to prevent a winner.
Bitcoin’s growth depends on funding, as just 100 developers have contributed to Bitcoin Core. Developers depend on Bitcoin nodes because most of the 80,000 nodes choose their Bitcoin Core software client. Networks reject node consensus-incompatible software. Bitcoiners impact nodes by the millions. Users can switch wallet providers if a node operator runs a Bitcoin version they dislike.
Miners also impact Bitcoin. Miners determine which transactions to include in blocks, hence a group with over 50% hashpower can hijack the network. Protocol evolution may be altered by network takeover, says hypothesis. Nodes and end users are miners’ responsibility. End users and nodes can ignore non-consensus miner blocks. This scenario assures more miners to hash consensus. Block reward economics will motivate more miners. Thus, “renegade” miners will work on a Bitcoin version most consumers no longer consider “real.” Renegade miners can mine Bitcoins on their new chain, but market participants will devalue them, causing them severe economic loss. Economic considerations lead miners to agree. This interaction makes Proof of Work consensus so effective in preventing Bitcoin hijacking.
