Bitcoin pulse, guides and news: New Bitcoin asset profile from Messari

Thursday, November 14, 2019

New Bitcoin asset profile from Messari

We've ramped up the profile pages for all of the top crypto assets https://messari.io/asset/bitcoin/profile

Each profile is loaded with a ton of new information from project history, investors, advisors, regulatory information, contributors, roadmap and a whole bunch more.

Our analysts put together a concise overview of Bitcoin governance, among other things:

Model Overview Bitcoin governance is the process by which protocol rules are decided upon, implemented, and enforced. Users (full nodes) adopt new rules according to their subjective views on what Bitcoin is and should be. If two or more individuals adopt the same set of rules, they form an inter-subjective social consensus of what “Bitcoin” is. It is in this respect that many conceptualize Bitcoin as being set by a social contract. Every time rule changes are contemplated, the rules of the contract are decided and renegotiated continuously between stakeholders. Protocol changes are legitimized when users agree to adopt the new changes. Once adopted, the Bitcoin protocol automates the enforcement of the social contract.

Process Overview Protocol development is governed by a proposal process whereby anyone in the open source Bitcoin community can submit Bitcoin Improvement Proposals ("BIPs"). After debate by the community, when consensus has emerged, the Bitcoin Core maintainers merge code changes into Bitcoin Core's GitHub Repository. Once new code has been implemented into the Bitcoin Core specification, users of the network (full nodes) must be persuaded to adopt the new changes. Protocol changes are “ratified” on-chain when the majority of the network adopts the upgrade and doesn’t break consensus.

Once rules are adopted on-chain, all new transactions and block proposals are subject to the agreed upon rules. Full nodes only accept new transactions and block proposals that are valid according to the rules of the Bitcoin protocol. Anything that is not valid will be rejected. Thus, miners must implement the prevailing rules of the network in order to participate in the block creation process.

User Activated Hard Fork 2017's User Activated Soft Fork Event provided an illustrative case study on Bitcoin governance in practice.

As early as 2010, shortly after Satoshi implemented a block limit into Bitcoin, discussions around block size began. These discussions largely stayed in the background until 2017 when tensions within the Bitcoin community rose over rising transaction fees and increasingly divergent opinions on scaling Bitcoin. In May 2017, a meeting between miners, businesses, investors, and core developers took place at the Consensus conference in New York, in what is now referred to as the "New York Agreement". The product of this meeting was an agreement to support SegWit (a soft fork) and a 2MB block size (hard fork).

Known as SegWit2x, this proposal was backed by over 80% of the network’s hash rate. However, despite the desires of miners, users wanted to activate SegWit without the block size increase. This plan was proposed as BIP 148, a Bitcoin Improvement Proposal, from a pseudonymous developer named Shaolinfry. Soon after, users set a date (August 1, 2017) where Bitcoin would soft fork to support SegWit and keep the 1MB block size. Eventually, enough nodes signaled support for it, forcing miners to accept or have their blocks rejected by the network.

Many see this user-activated soft fork (UASF) as a pivotal moment in Bitcoin’s history. The philosophy underpinning the event was that users controlled the network, not miners. The event not only illustrated the balance of power within Bitcoin's network, but also calmed suspicions that parties such as miners, businesses, or Bitcoin Core developers, controlled Bitcoin.

Learn More: Bitcoin Governance Unpacking Bitcoin's Social Contract Who Controls Bitcoin Core? Bitcoin Miners Beware: Invalid Blocks Need Not Apply