Vitaliks new article: Reflections on the Bitcoin block size war

1 months ago
This article is approximately 3919 words,and reading the entire article takes about 5 minutes
The big blockers are right on the central point that blocks need to be bigger, best accomplished by a simple, clean hard fork as Satoshi described.

Original author: Vitalik Buterin, founder of Ethereum

Original translation: Cat brother, Wu talks about blockchain

I recently finished reading (or rather, listening to) two major historical books documenting the great Bitcoin block size wars of the 2010s, representing two opposing viewpoints:

  • Jonathan Bier’s The Blocksize War, which tells the story from the perspective of those who support small blocks

  • Roger Ver and Steve Pattersons Hijacking Bitcoin tells the story from the perspective of those who support large blocks

Vitaliks new article: Reflections on the Bitcoin block size war

It was fascinating to read these two history books that chronicle events that I personally experienced and was involved in to some degree. While I was well aware of most of what happened and both sides’ accounts of the nature of the conflict, there were some interesting details that I either didn’t know about or had completely forgotten, and it was fun to see the situation in a new light. At the time, I was a “pro-big-block” person, though I was a pragmatic moderate blocker who opposed extreme growth or absolutist statements that fees should never rise significantly. Do I still support my views now? I look forward to seeing and finding out.

How do small blockers view the blocksize war, as told by Jonathan Bier?

The original debate in the block size war centered around a simple question: Should Bitcoin hard fork to increase the block size limit from the then-current 1 MB to a higher value, allowing Bitcoin to process more transactions and thus lower fees, but at the cost of making it harder and more expensive to run and validate nodes on the blockchain network?

Vitaliks new article: Reflections on the Bitcoin block size war

“[If the block size was much larger], you’d need a large data center to run a node, and you wouldn’t be able to run it anonymously.” — This is a key argument made in a video sponsored by Peter Todd advocating for keeping the block size small.

The impression I get from Biers book is that while small blockers do care about this specific issue, and prefer to be conservative and only increase the block size a little to ensure that running a node is still easy, they are more concerned about the higher-level issue of how protocol-level issues determine the outcome. In their view, protocol changes (especially hard forks) should be very rare and require a high degree of consensus among the protocols users.

Bitcoin is not trying to compete with payment processors—there are already plenty of those. Instead, Bitcoin is trying to be something more unique and special: an entirely new type of money that is not controlled by a central organization and a central bank. If Bitcoin were to start having a highly active governance structure (which would be necessary to handle controversial adjustments to the block size parameter) or become susceptible to coordinated manipulation by miners, exchanges, or other large companies, it would lose this valuable unique advantage forever.

In Bier’s telling, big blockers cause the most discomfort to small blockers precisely because they often try to bring together a relatively small number of big players to legitimize and push for their preferred changes — something that runs directly counter to small blocker views on how governance should be conducted.

Vitaliks new article: Reflections on the Bitcoin block size war

The New York Agreement was signed in 2017 by major bitcoin exchanges, payment processors, miners and other companies. Small blockers see it as a key example of an attempt to shift bitcoin from user rule to corporate rule.

In Roger Ver’s narrative, how do the big blockers view the block size war?

Big blockers usually focus on one key specific question: What exactly should Bitcoin be? Should it be a store of value - digital gold, or a means of payment - digital cash? For them, it was clear from the beginning that the original vision, and the vision that all big blockers agree on, was digital cash. This is even explicitly mentioned in the white paper!

Vitaliks new article: Reflections on the Bitcoin block size war

The big block faction also often cites two other works of Satoshi Nakamoto:

1. The Simplified Payment Verification section of the white paper, which discusses how when blocks become very large, individual users can use Merkle proofs to verify that their payments are included without having to verify the entire chain.

2. A passage on Bitcointalk advocating a gradual increase in block size via hard forks:

Vitaliks new article: Reflections on the Bitcoin block size war

For them, the shift from a focus on digital cash to digital gold was a pivot that was agreed upon by a small but tight-knit group of core developers who then felt that because they had discussed the issue internally and reached a conclusion, they had the right to impose their views on the entire project.

Small blockers do propose solutions where Bitcoin can be both cash and gold — that is, Bitcoin becomes a “first layer” focused on being gold, while “second layer” protocols built on top of Bitcoin, like the Lightning Network, provide cheap payments that don’t require using the blockchain for every transaction. However, these solutions are so inadequate in practice that Ver devotes several chapters to criticizing them in depth. For example, even if everyone switched to the Lightning Network, the block size would eventually need to be increased to accommodate hundreds of millions of users. Furthermore, trustlessly receiving coins on the Lightning Network requires having an online node, and to ensure your coins aren’t stolen, you need to check the chain once a week. These complexities, Ver argues, will inevitably push users to interact with the Lightning Network in a centralized way.

What is the key difference in their views?

Ver’s description of the specific debate is consistent with the small blockers: both sides agree that the small blockers value the ease of running a node more, while the big blockers value low transaction fees more. They both acknowledge that reasonable differences in beliefs are a key factor in the debate.

But Bier and Ver describe most of the deeper issues very differently. For Bier, small blockers represent users against a small but powerful group of miners and exchanges that seek to control the blockchain network for their own benefit. Small blockers keep Bitcoin decentralized by ensuring that regular users can run nodes and validate the blockchain network. For Ver, big blockers represent users against a small group of self-appointed high priests and venture-backed companies (i.e. Blockstream) that profit from second-layer solutions that are necessary for the small-block roadmap. Big blockers keep Bitcoin decentralized by ensuring that users can continue to afford on-chain transaction fees without relying on centralized second-layer infrastructure.

The closest I see to agreeing on the terms of the debate is that Biers book acknowledges that many big blockers are well-intentioned, and even acknowledges their legitimate dissatisfaction with forum moderators who support small blocks blocking opposing views, but frequently criticizes big blockers for incompetence, while Vers book is more inclined to attribute malicious intent and even conspiracy theories to small blockers, but rarely criticizes their ability. This reflects a common political trope I have heard on many occasions, that is, the right thinks the left is naive, and the left thinks the right is evil.

How did I feel about the blocksize war? How do I feel about it now?

Vitaliks new article: Reflections on the Bitcoin block size war

Room 77, a restaurant in Berlin that used to accept Bitcoin, was the center of the Bitcoin District, where a large number of restaurants accept Bitcoin. Unfortunately, the dream of Bitcoin payments faded in the second half of the decade, and I think rising fees were a key reason.

In my personal experience with the Bitcoin block size wars, I have generally sided with the big blockers. My support for the big blockers centers on a few key points:

A key purpose of Bitcoin is digital cash, and high fees could kill this use case. While second-layer protocols could theoretically offer lower fees, the whole concept has not been fully tested, and it would be irresponsible for small blockers to stick to the small block roadmap when they know little about the actual effects of the Lightning Network. Today, actual experience with the Lightning Network makes the pessimistic view more common.

I am not convinced by the “meta-level” arguments of the small blockers. The small blockers often claim that “Bitcoin should be controlled by users” and that “users do not support big blocks”, but they have never been willing to explicitly define who “users” are or how to measure user willingness. The big blockers implicitly propose at least three different ways to calculate users: computing power, public statements from prominent companies, and social media discussions, and the small blockers deny each of them. The big blockers did not organize the New York Agreement because they like “groups”, but because the small blockers insist that any controversial changes require consensus among “users”, and signing a statement from major stakeholders is the only practical way that the big blockers believe is feasible.

Segregated Witness was a proposal for a slightly increased blocksize adopted by the small blockers that was unnecessarily complex relative to a simple hard fork increase. The small blockers eventually developed a “soft forks are good, hard forks are bad” mantra (which I strongly disagree with), and designed their blocksize increase proposal to accommodate this rule, though Bier admits that this introduced significant complexity that many big blockers could not understand the proposal. I feel that the small blockers were not just being “cautious”, they were arbitrarily choosing between different types of caution, choosing one (no hard fork) at the expense of another (keeping the code and specs clean and simple) because it suited their agenda. Eventually, the big blockers also gave up on “clean and simple” and moved on to ideas like Bitcoin Unlimited’s adaptive blocksize increase, which Bier (rightfully) heavily criticized.

Smallblock is indeed engaging in very uncool social media censorship to impose their views, culminating in Theymos’ infamous quote: “If 90% of /r/Bitcoin users find these policies intolerable, then I want 90% of /r/Bitcoin users to leave.” p.s.: “/r/” is Reddit’s way of saying subreddits.

Vitaliks new article: Reflections on the Bitcoin block size war

Even relatively modest posts supporting large blocks were often deleted. Custom CSS was used to make these deleted posts invisible.

Ver’s book focuses on points 1 and 4, and part of point 3, while also offering some theories of misconduct related to financial motivations — namely that the small blockers founded a company called Blockstream that would build second-layer protocols on top of Bitcoin, while simultaneously advocating the idea that Bitcoin’s first layer should remain restricted, thus necessitating these commercial second-layer networks. Ver doesn’t focus too much on the philosophy of how Bitcoin should be governed, because for him, the answer “Bitcoin is governed by miners” is satisfactory. This is something I disagree with both the small blockers and the big blockers, and I think that both the vague “we refuse to actually define user consensus” and the extreme “miners should control everything because they have aligned incentives” are unreasonable.

At the same time, I remember being extremely disappointed with the big blockers on some key points, which resonate in Biers book. The worst point (both mine and Bier agree) was that the big blockers were never willing to agree to any realistic block size limit principle. A common view was that block size is determined by the market - meaning that miners should decide the block size they want, and other miners can choose to accept or reject those blocks. I strongly disagreed with this and pointed out that this mechanism was an extreme distortion of the concept of the market. Ultimately, when the big blockers split into their own independent chain (Bitcoin Cash), they finally abandoned this view and set a block size limit of 32MB.

At the time, I actually did have a principled approach to deciding the block size limit. To quote one of my posts from 2018:

“Bitcoin maximizes the predictability of the cost of reading the blockchain while bearing the cost of writing to the blockchain with the lowest possible predictability, resulting in very good performance on the former metric and catastrophic performance on the latter. Ethereum’s current governance model achieves a medium predictability between the two.”

I later repeated this idea in a tweet in 2022. Essentially, the philosophy is this: we should balance increasing the cost of writing to the chain (i.e. transaction fees) with the cost of reading from the chain (i.e. software requirements for nodes). Ideally, if demand for using the blockchain increases 100x, we should split the pain in half and have 10x more blocks and 10x more fees (transaction fees have a demand elasticity close to 1, so this is mostly feasible in practice).

Vitaliks new article: Reflections on the Bitcoin block size war

Ethereum does in fact take a medium block approach: since its launch in 2015, the capacity of the chain has increased by roughly 5.3x (perhaps 7x if calldata repricing and blobs are included), while fees have increased from almost nothing to a significant but not too high level.

However, this compromise-oriented (or concavity) approach was never accepted by either faction; it may have felt too centrally planned to one, too vague to the other. I think the big blockers are more at fault here than the small blockers; the small blockers were willing to increase the blocksize modestly at the beginning (such as Adam Backs 2/4/8 plan), but the big blockers were unwilling to compromise, quickly moving from advocating a single increase to a specific large number to an overall philosophy that almost any non-trivial limit on the blocksize is illegal.

The big blockers also began advocating that miners should be in control of Bitcoin — a philosophy Bier effectively criticized, noting that miners would likely quickly abandon their views if they tried to modify the protocol rules to do something other than increase the block size, such as giving themselves more rewards.

One of the main criticisms of the big blockers in Bier’s book is their repeated displays of incompetence. Bitcoin Classic is poorly coded, Bitcoin Unlimited is unnecessarily complex, for a long time they did not include erasure protection and did not seem to understand that this choice greatly weakened their chances of success (!!), and they have serious security vulnerabilities. They loudly call for multiple implementations of the Bitcoin software — a principle I agree with and that Ethereum has also adopted — but their “alternative clients” are really just forks of Bitcoin Core that change a few lines of code to implement the block size increase. In Bier’s narrative, their repeated missteps in code and economics led to more and more supporters leaving over time. They were further discredited by the fact that major big blockers believed Craig Wright’s false claims to be Satoshi Nakamoto.

Vitaliks new article: Reflections on the Bitcoin block size war

Craig Wright, a fraud pretending to be Satoshi Nakamoto. He often uses legal threats to take down criticism, which is why MyFork is the largest online copy of the Cult of Craig repository, which documents the evidence that he is a fraud. Unfortunately, many big blockers fell for Craig because Craig catered to the big blockers claims and said what the big blockers wanted to hear.

Overall, from reading both books, I found myself agreeing more often with Ver on the macro issues, but more often with Bier on the specifics. It seems to me that the big blockers are right on the central point that blocks need to be bigger, preferably via a simple, clean hard fork as Satoshi described, but the small blockers make fewer embarrassing technical mistakes and have fewer instances where their positions lead to ridiculous results.

The block size war is a one-sided capability trap

The overall impression I got from reading both books is a political tragedy that I find all too familiar in a variety of contexts, including cryptocurrencies, companies, and national politics:

One side monopolizes all the capable people but uses its power to promote narrow and biased views; the other side correctly recognizes the problem but is immersed in the focus of opposition and fails to develop the technical ability to implement its own plan.

In many of these cases, the first group is criticized as being authoritarian, but when you ask their (usually many) supporters why they support it, their response is that the other side only complains; if they actually came to power they would fail completely within a few days.

To some extent, this wasn’t the opposition’s fault: it’s hard to get good at execution without a platform to execute on and experience building. But what was particularly evident in the blocksize debate was that the big blockers didn’t seem to realize the need to be competent in execution at all — they thought they could win simply by being right about the blocksize issue. The big blockers ultimately paid a heavy price for their focus on opposing rather than building: even when they forked into their own chain (Bitcoin Cash), they split twice more in a short period of time before the community finally stabilized.

I call this problem the one-sided capacity trap. It seems to be the fundamental problem facing anyone trying to build a political entity, project, or community that they hope is democratic or pluralistic. Smart people want to work with other smart people. If two different groups are roughly evenly matched, people will tend to choose the side that is more consistent with their values, and this balance can be stable. But if the tendency is too one-sided, it will enter a different equilibrium state and it seems difficult to recover. To some extent, the opposition can mitigate the one-sided capacity trap by being aware of the problem and consciously cultivating capacity. Often, opposition movements do not even get to this point. But sometimes it is not enough to just be aware of the problem. We would benefit greatly from stronger and more in-depth ways to prevent and escape the one-sided capacity trap.

Less conflict, more technology

While reading both books, one inconvenient omission stood out more than anything else: the term “ZK-SNARK” is completely absent from either book. There is little excuse for this: even by the mid-2010s, ZK-SNARKs and their potential for scalability (and privacy) were widely known. Zcash launched in October 2016. Gregory Maxwell briefly explored the scalability implications of ZK-SNARKs in 2013, but they seem to have been completely absent from discussions of Bitcoin’s future roadmap.

The ultimate way to ease political tensions is not compromise, but new technology: discovering radical new ways to give both sides more of what they want at the same time. We’ve seen several instances of this in Ethereum. A few examples that come to mind are:

Justin Drake pushes for BLS aggregation to enable Ethereum’s proof-of-stake to handle more validators, thereby reducing the minimum staked balance from 1500 to 32 with little downside. Recent progress on signature consolidation is expected to push this further.

EIP-7702 implements the goals of ERC-3074 in a way that is significantly more compatible with smart contract wallets, helping to ease a long-standing controversy.

Multidimensional Gas, starting with its implementation on blobs, has helped increase Ethereum’s ability to accommodate rollup data without increasing the worst-case block size, thereby minimizing security risks.

When an ecosystem stops embracing new technologies, it inevitably stagnates and becomes more contentious: political debates about “I get 10 more apples” vs. “you get 10 more apples” are inherently less contentious than debates about “I give up 10 apples” vs. “you give up 10 apples.” Losses are more painful than gains, and people are more willing to break their shared political rules to avoid losses. This is a key reason why I’m very uncomfortable with degrowth and the idea that “we can’t solve society’s problems with technology”: there are pretty good reasons to believe that fighting over who gets more, rather than fighting over who loses less, is indeed better for social harmony.

Vitaliks new article: Reflections on the Bitcoin block size war

In economic theory, there is no difference between the two prisoners dilemmas: the game on the right can be seen as the game on the left plus an independent (unrelated) step in which the players lose four points no matter how they act. But in human psychology, the two games can be very different.

A key question for Bitcoin’s future is whether it can become a technologically forward-looking ecosystem. The development of Inscriptions and later BitVM created new possibilities for second layers, improving upon what Lightning could do. Hopefully, Udi Wertheimer’s theory is correct that ETH getting an ETF means the end of Saylorism and a renewed recognition that Bitcoin needs to improve technologically.

Why do I care about this issue?

I care about analyzing Bitcoin’s successes and failures not to disparage Bitcoin and elevate Ethereum. In fact, as someone who enjoys understanding social and political issues, I think one of the things about Bitcoin is that it’s sociologically complex enough to generate such rich and interesting internal debates and divisions that two entire books could be written about them. Rather, I care about analyzing these issues because Ethereum and other digital (and even physical) communities I care about have a lot to learn from understanding what happened, what went well, and what could be done better.

Ethereum’s focus on client diversity stems from observing Bitcoin’s failures due to having only one client team. Its version of a second-layer solution stems from understanding how Bitcoin’s limitations lead to limitations on what trust properties a second layer can have on top of it. More broadly, Ethereum’s explicit attempt to foster a diverse ecosystem is largely an effort to avoid the one-sided capability trap.

Another example that comes to mind is the Net Nation movement. Net Nations are a new digital separation strategy that allows communities with similar values to build their visions of the cultural and technological future, somewhat free from the constraints of mainstream society. But the experience of Bitcoin Cash (after it forked) shows that movements that solve problems by forking have a common failure mode: they may split again and again and never truly work together. The lessons of the Bitcoin Cash experience extend far beyond Bitcoin Cash itself. Like rebellious cryptocurrencies, rebellious Net Nations need to learn how to actually execute and build, not just throw parties, share vibes, and tweet memes comparing modern brutalism to 16th century European architecture. Zuzalu is part of my own attempt to drive this change.

I recommend reading Bier’s The Blocksize War and Patterson and Ver’s Hijacking Bitcoin to understand a defining moment in Bitcoin’s history. In particular, I recommend reading both books with a mindset that isn’t just focused on Bitcoin — rather, this was the first truly high-stakes civil war for a “digital nation,” and these experiences offer important lessons for other digital nations we’ll be building in the coming decades.

Original article, author:吴说。Reprint/Content Collaboration/For Reporting, Please Contact;Illegal reprinting must be punished by law.

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