What most of the Bitcoin community should have learned in 2017, it it weren’t obvious before, is that miners do not control the Bitcoin network. So who is in control? Everybody, and nobody.

Tribalism over Block Size

On May 23, 2017, the Digital Currency Group announced in their New York Agreement that they’d formed a majority mining cartel that, at the time, controlled over 83 percent of the hashing power on the Bitcoin network. The 58 mining cartel members from 22 countries around the world also announced that within six months they planned to push through a hardfork referred to as Segwit2x (Segwit2Mb).

For many years there has been and continues to be, a long-standing controversy over block size in the Bitcoin community. The debate is mainly about how to best scale the Bitcoin network, i.e., significantly increase the number of transactions it can handle.

Self-proclaimed ‘big blockers’ believe the best way is simply to increase the block size to handle more transactions in each block; while so-called ‘small blockers’ believe this would erode mining decentralization and block size should remain fixed.

On November 8, eight days before the date of the hardfork, Segwit2x was canceled, because as it turns out, the majority of miners would not commit to mining the new chain for longer than 12 hours. The mining revolt was based on the fact that this mining would be less profitable than continuing to mine on the Bitcoin mainchain. Of course, and outside of economic disincentives, there was nothing stopping Segwit2x from actually going through with a hardfork.

In fact on August 1, 2017, Bitcoin Cash did follow through with a big block hardfork aimed at supplanting Bitcoin. However, aside from artificial pump and dumps and mining difficulty adjustments, trading and mining Bitcoin Cash have remained very unprofitable compared with its Bitcoin ancestor. And predictably, the digital currency commands only a fraction of the users, miners, and market share compared to Bitcoin.

Mining Versus Voting

Before these and other real-world experiments in 2017, there seemed to be a common misconception held by much of the non-technical portion of the community that miner signaling stood for miner voting.

This is not so; miner signaling is only meant as an indication of a miner’s technical readiness to execute a particular software update. Miners vote by choosing which chain to mine on, in so far as actions speak louder than words. The majority of miners will mine on the most profitable blockchain.

“Even until the 2x fork was canceled, people were confused that miners making some kind of verbal show of support would actually be willing to lose ten million dollars per week or something,” said British cryptographer Adam Back. “I mean, clearly that’s economic nonsense.”

At its heart, the Bitcoin protocol was created to be and continues to be, a network that enables the emergence of a large-scale decentralized consensus. Although there were small-scale examples of public ledger systems as far back as 500 AD, Bitcoin was the first invention to achieve this spectacular feat at scale, in recorded history. If you’re interested in learning more about this (and you should be), Andreas Antonopoulos explains it far more eloquently than I can here.

In large part, it’s the full nodes in the network that control the system. These nodes validate the entire blockchain individually so they don’t have to trust any other node’s validation but their own. Together, they form the decentralized consensus network.

To be considered part of the network, each such node must exactly follow the rules outlined in the Bitcoin protocol, or they are simply ignored by the other nodes which do. Each full node votes by validating its copy of the blockchain; the blockchain with the most full node-votes is the single consented public ledger of transactions: the Bitcoin mainchain.

If miners don’t follow the full nodes’ rules exactly, their blocks are ignored, and only miners that exactly follow the full nodes’ consensus rules are rewarded for their contribution to the network.

Behind the Scenes

But who writes the protocol rules that the full nodes must follow? Currently, the developers that write and update the protocol rules are collectively referred to as Bitcoin Core. Bitcoin Core is the group of nearly 500 developers who contribute to the Bitcoin Core repository.

So, do these developers control the Bitcoin protocol? Not precisely; because again, the individual full nodes each decide for themselves which version of the Bitcoin protocol code they will run. If the majority of full nodes choose to run an alternate version of the protocol (to that of Bitcoin Core), then the authors of that alternative version will be the new ‘Bitcoin Core.’

So again, it’s the full nodes that collectively decide what version of the software is the one true Bitcoin protocol. The core developers cannot force any of the other full nodes to run a protocol release against their will, any more than they could force you to run any other software on your personal computer against your will.

Independently, full nodes are free to choose to run whatever software they like, if devs try and push an update to the protocol that the majority of nodes don’t agree with, they merely ignore that update. Any node running a minority version of the protocol is, by definition, not part of the Bitcoin network. Indeed, the majority rules the protocol.

So, the full nodes control Bitcoin. But, who manages the full nodes? Anyone who owns an average, run-of-the-mill computer, and has the desire to do so, may run a full node. So who controls Bitcoin? Everybody and nobody.

This is not to say there won’t be continual attacks on Bitcoin from the most powerful central authorities who won’t let their control slip away without a fight.

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Author: BTCManager.com