Bitcoin governance

Author: Pierre Rochard; Source: Liu Jiaolian

Why do we care?

Bitcoin’s governance is important because Bitcoin is the first to be successful, the most liquid, and the most Well known cryptocurrency. In the words of Michael Goldstein, “Sound currency is the fundamental pillar of civilization, and Bitcoin has regained this powerful tool for social coordination.” If Bitcoin’s governance model is flawed, it will prevent Bitcoin from reaching its full potential. If Bitcoin’s governance model is flawed, Bitcoin stakeholders should work to fix it.

Discussions about Bitcoin governance often focus on who is the final decision-maker, with recurring candidates including miners, nodes, and investors. The purposes and mechanisms of governance are often only hinted at or even disconnected from reality. Perceptions of past governance effectiveness are often based on who “won” or “lost” a specific decision rather than on the adequacy of the decision-making process itself.

What is Bitcoin governance?

Bitcoin’s governance is the process of determining, implementing, and enforcing a set of transaction and block verification rules that individuals adopt to verify their Whether payments received in transactions and blocks meet their subjective definition of "Bitcoin". If two or more people adopt the same set of verification rules, they form a subjective social consensus about "Bitcoin."

What is the purpose of Bitcoin governance?

There are various views on the purpose of Bitcoin governance. What outcomes should governance be optimized for?

Matt Corallo believes that trustlessness is the most important feature of Bitcoin. Matt defines trustless as “when using Bitcoin, you don’t need to trust anything other than the open source software you run.” Without the trustless attribute, all other positive outcomes are compromised.

Daniel Krawisz believes that maximizing the value of Bitcoin is the de facto optimization goal of governance. Daniel said: "The general rule for Bitcoin upgrades [...] is that upgrades that increase the value of Bitcoin will be adopted, while upgrades that do not increase the value of Bitcoin will not be adopted."

< p style="text-align: left;">In the context of Bitcoin governance, these two views reflect the classic disagreement between deontological and consequentialist maxims, respectively. I lean toward Matt's deontological maxim, which focuses on trustlessness. Throughout the history of currency, from ancient coin producers to modern central banks, the result of trusting others to produce currency is an abuse of trust. Compromising on trustlessness may help the Bitcoin price find a local maximum, but at the cost of finding a higher global maximum. Furthermore, there is no evidence that the price of Bitcoin correlates with upgrades to the Bitcoin protocol. Perhaps Bitcoin's fundamental value will be affected by the upgrade, but Bitcoin's liquidity and volatility are low, and the price does not reliably reflect the fundamental value. If we cannot observe the impact of upgrades on the value of Bitcoin, then the consequentialist maxim seems insufficient.

Before evaluating whether the current Bitcoin governance procedures meet the stated goals of maintaining Bitcoin’s trustless nature or increasing Bitcoin’s value, we should try to define the current How the Bitcoin governance process actually works.

How does the current Bitcoin governance process work?

The Bitcoin governance process maintains a set of verification rules. At a high level, this long set of validation rules covers syntax, data structures, resource usage limits, sanity checks, time locks, reconciliation with mempools and master branches, coinbase reward and fee calculations, and block header validation. It will not be easy to modify these rules to the letter.

Most of these rules are inherited from Satoshi Nakamoto. Some rules were added or revised to address vulnerabilities and denial-of-service vulnerabilities. Other rule changes were made to enable innovative new projects. For example, a new CheckSequenceVerify opcode was added to enable new scripts.

Research

Every rule change starts with Research. For example, Segregated Witness (SegWit) started from research on repairing transaction malleability. Transaction tamperability has become a serious issue as it hinders the deployment of the Lightning Network on Bitcoin. Industry and independent researchers worked together to form SegWit.

Critics point to the occasional disconnect between what researchers want to study, what users expect, and what is beneficial about network properties. Furthermore, computer scientists in academia prefer "scientific simulations" to "engineering experiments." This has been a source of tension within the research community.

Proposal

When researchers discover a problem When working on a solution, they share their proposed changes with other protocol developers. Sharing can take the form of an email to the bitcoin-dev mailing list, a formal white paper, and/or a Bitcoin Improvement Proposal (BIP).

Implementation

The researcher who proposed the proposal may be responsible for the Other protocol developers interested in the proposal will implement the proposal in their node software. If researchers are unable to implement the proposal, or if the proposal is not well received by peers, the proposal remains at this stage until abandoned or revised.

While this may give the impression that contributors to the development of the Bitcoin protocol can veto proposals, researchers can explain their reasons to the public, and bypass existing developers. In this case, researchers will be disadvantaged if they lack reputation and credibility.

Another issue during the implementation phase is that if an implementation is generally considered controversial by Bitcoin protocol developers and the broader Bitcoin community, then the reference implementation The maintainer will not merge this implementation. The maintainers of the reference implementation have a deliberate policy of following consensus changes rather than trying to impose those changes. The C++ reference implementation is hosted at github.com/bitcoin/bitcoin and is a direct successor to the Satoshi Nakamoto code base. Due to its maturity and reliability, it remains the most popular Bitcoin node implementation.

To bypass the maintainers of the reference implementation and modify the consensus recklessly, it is as simple as copying the Bitcoin codebase and publishing the proposed changes. This happened with the BIP-148 User Activated Soft Fork (UASF).

Proposals to modify validation rules can be implemented through soft forks or hard forks. Some proposals can only be implemented as a hard fork. From the perspective of pre-fork nodes, soft fork implementations are forward compatible. After adopting the soft fork, the nodes before the fork can continue to verify the consensus rules before the fork without upgrading the software. However, these pre-fork nodes do not verify the rule changes made by the soft fork. From the perspective of the nodes before the fork, hard forks are not forward compatible. Pre-fork nodes will end up on a different network than post-fork nodes.

The impact of hard forks and soft forks on the network and users has always been controversial. Soft forks are considered safer than hard forks because they do not require an explicit opt-in, but this may also be viewed as a form of coercion. If someone disagrees with the soft fork, a hard fork is necessary to overturn it.

Deployment

After the node software is implemented, users must be convinced Use node software. Not all node users are of equal importance. For example, "blockchain explorers" also have greater power because many users rely on their nodes. Additionally, exchanges can decide which validation rule set belongs to which token symbol. Speculative traders, large holders, and other exchanges exert checks and balances on this power of the token symbol.

While individual users may signal on social media that they are using a certain version of the node software, this may be subject to a Sybil attack. The ultimate test of consensus is whether your node software can receive payments that you think are Bitcoins, and you can send payments that the other node's software thinks are Bitcoins.

The soft fork has an on-chain governance feature called BIP-9 version bits with timeouts and delays. This feature measures miner support for soft forks on a rolling basis. Miner support for proposals is used as a proxy measure of broader community support. Unfortunately, this proxy measure may not be accurate due to mining centralization and conflicts of interest between miners and users. On-chain “voting” by miners also perpetuates the myth that Bitcoin is a democracy of miners, with only miners deciding the validity of transactions and blocks. BIP-9 is useful as long as we acknowledge and accept the limitations of proxy measurements.

Execution

Changes to validation rules are performed by fully validating nodes Decentralized peer-to-peer network execution. Nodes use validation rules to independently verify that payments received by their operators belong to valid Bitcoin transactions and are included in valid Bitcoin blocks. Nodes will not propagate transactions and blocks that violate the rules. In fact, nodes will disconnect and ban peers that send invalid transactions and blocks. As StopAndDecrypt says: "Bitcoin is an impenetrable bastion of verification." If everyone decides that the blocks being mined are invalid, miners' coinbase rewards + fees are worthless.

The role of the miner is to provide timestamping functionality and ensure security through proof of work. The hash rate provided comes from the cost of hardware and electricity on the one hand, and from coinbase rewards and fees on the other. Miners are mercenaries, and the timestamp functions they provided in the past were not fully verified by the rules. Due to the centralization of mining, miners cannot be trusted to enforce verification rules themselves.

Is the current Bitcoin governance model leading to more distrust?

In my opinion, the current Bitcoin governance model has prevented the decline of trustlessness. Over the past 5 years, there seems to be no end in sight to the dramatic increase in transactions on the Bitcoin chain. If Bitcoin’s governance model hadn’t resisted last year’s signal from miners to double the maximum block weight, it would have set a precedent for prioritizing the value of transaction throughput over trustlessness.

Has the current Bitcoin governance model led to an upgrade in the value of Bitcoin?

I don’t think it’s possible to establish cause and effect. Bitcoin prices are much higher than they were two years ago, but this appears to be an endogenous process driven by trader psychology rather than technical fundamentals. Regarding fundamentals, it is undeniable that Bitcoin’s governance has achieved consensus changes, and the operation of the Lightning Network relies on consensus changes. I've been trying to build channels and make lightning payments: There's no doubt that the Lightning Network increases the value of Bitcoin.