Is Bitcoin Facing Another Civil War?

Is Bitcoin Facing Another Civil War?

Is Bitcoin Facing Another Civil War?

One of the most uncertain times during Bitcoin’s history was the so-called block size war, where the technical debate over how the network should scale to more users, among other disagreements, led to worries over whether the system would be able to resist protocol changes in the face of mounting pressure from large, corporate interests that had been building on top of it.

In the end, a multi-layer approach to scaling that retains a high degree of decentralization at the base layer was the Schelling point where users landed. And with today’s relatively low level of activity taking place at the base blockchain layer, it’s somewhat unclear what all the fuss was about.

Now, there is another technical disagreement among Bitcoin users in terms of how the system should deal with spam and various other types of unwanted transactions. Of course, defining spam is somewhat paradoxical in a system that is supposed to be permissionless.

Bitcoin Knots, which is led by longtime Bitcoin Core contributor Luke Dashjr, has enabled various automated filters that nodes can use to prevent certain types of unwanted transactions from being relayed around the network. However, those transactions only need a small minority of nodes to support them in order to find their way into new blocks generated by miners. Additionally, perceived “spammers” can simply send their transactions directly to miners who are willing to mine those transactions.

For reference, Bitcoin Core is the node software client that has always been used by the vast majority of users on the Bitcoin network and descends from Satoshi’s original implementation. Bitcoin Knots has also existed and been maintained by Dashjr since 2011, but it has increased in relevance during the recent debate over the use of “spam” filters.

Up to this point, Bitcoin Knots users have not obtained enough network support for the filters they use to sufficiently ward off unwanted transactions. So, they are now proposing a change to the rules of the actual Bitcoin network regarding these unwanted transactions, which is a measure many of their opponents predicted they would be forced into earlier this year.

The types of transactions that the Bitcoin users running Knots would like to see filtered vary, but it is usually related to the addition of arbitrary data to the blockchain. In particular, non-fungible tokens (NFTs) enabled on Bitcoin via the Ordinals Inscriptions protocol have been a key area of debate over the past couple of years.

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While those running Knots would like to take a more aggressive stance against the issue of the Bitcoin blockchain being used for alternative tokens and other use cases unrelated to the bitcoin asset, those who have stuck with Bitcoin Core as their node software client of choice see the idea of targeting certain transactions for filtration as an endless cat and mouse game with the fee market ultimately operating as the long-term mechanism to discourage spam.

To be clear, many proponents of the Bitcoin Core development path also very much dislike it when the Bitcoin blockchain is used for non-bitcoin things. However, they view the current “spam” as a temporary phenomenon related to the lack of adoption of bitcoin as money. In other words, the use of bitcoin as money should outbid the use of the Bitcoin network for other use cases over the long term.

Recently, supporters of the Bitcoin Knots view have become more aggressive and active in their stance against Bitcoin Core’s development decisions. Some parties believe that a recent change in terms of the size of OP_RETURN transactions (which are meant to limit the damage caused by arbitrary data being added to the Bitcoin blockchain that will be relayed by Bitcoin Core nodes) will lead to an explosion of non-bitcoin activity on the network.

Additionally, various people involved with the bitcoin mining pool Ocean have indicated that Bitcoin will die once this change is adopted by most of the network because someone will upload illegal content to the blockchain. This is a claim that is largely disputed by many of the lawyers who work in the Bitcoin industry, as this is a potential issue that has existed for many years prior to the latest release of Bitcoin Core.

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So far, the soft fork proposal from the Bitcoin Knots camp has not been taken seriously outside of those who already run that software client. For example, longtime Bitcoin Core contributor Peter Todd took the entire text of the Bitcoin Improvement Proposal (BIP) associated with the soft fork and put it on the Bitcoin blockchain in a way that would not have been filtered out or deemed an invalid transaction by the new rules implemented by the soft fork.

Former Bitcoin Core contributor and Blockstream co-founder Greg Maxwell asked for the pull request associated with the BIP to be taken down due to it being referenced in fraudulent claims allegedly being made by Ocean’s legal representatives. For now, the pull request has been locked.

In terms of general support among the Bitcoin network, it’s difficult to see where support for this fork proposal currently stands. While some estimates say more than 20% of the nodes on the Bitcoin network are running Bitcoin Knots, the reality is that this doesn’t say much of anything about support from economic nodes or miners, which are the much more relevant factors to consider.

Ocean’s mining pool currently accounts for somewhere around 2% of the overall network hashrate. More than 20% of the hashrate already appears to be accepting of larger OP_RETURN transactions, and the head of mining pool F2Pool came out publicly against the recent soft fork proposal.

If Bitcoin Knots support is indeed rather lackluster in terms of its share of the greater Bitcoin network, then a fork could still be pushed through with minority support. However, additional tweaks could be needed to make sure that the blockchain continued, as Bitcoin’s current mining difficulty level would be too much for the small minority of miners to overcome. Bitcoin Cash had to make similar changes when it originally forked off from the original Bitcoin network.

Discussions have been had regarding practical changes that could be made to disincentivize spam on the network, but this first fork proposal does not appear to be it.





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