Why Bitcoin's Block Size Debate is a Proxy War

Martin Hagelstrom is a bitcoin enthusiast and project executive and consultant working on IT projects at IBM.

In this opinion piece, Hagelstrom argues that the bitcoin community's emphasis on block size in the scaling debate is concealing a larger, more important argument.

Let’s start by agreeing on something: Bitcoin is a genius innovation that regulates both an economy and the technology that governs it. This technology is also decentralized, and that makes the risk of a human screw up affecting the network much less likely.

But bitcoin is far from bulletproof. Right now, bitcoin developers are engaged in a battle over a change in the code that, if implemented and accepted into the network, would increase the data capacity of transaction blocks on the blockchain. Maybe it’s not a trivial modification, but it’s still a coding discussion.

But should we assume it’s non-trivial? What if the block size debate is really just a proxy war to avoid a much more important debate that should be taking place?

Let’s do some recap before I get to that point.

Classic vs Core

On one hand, we have the Bitcoin Core developers who have been maintaining the bitcoin code since the network’s pseudonymous creator, Satoshi Nakamoto, handed over the reins and exited the project. They are the ones who, at the end of the day, decide what functionalities and fixes go into bitcoin and which ones don’t.

They also have a procedure on how the community can propose code changes to the project. Some of these proposals may be difficult to implement or maybe the Core developers don’t agree they’re best for the network.

But don’t forget this is an open-source project, so another team can come and fork (copy the code) and start working on their new version of the code.

This is what happened with Bitcoin Classic, a team of developers including former Core members Gavin Andresen and Bloq CEO Jeff Garzik who are proposing to increase the block size limit to 2 MB, allowing more transactions per block.

Bitcoin Core has done something similar, proposing a change called Segregated Witness that would boost capacity by reducing the space currently used by transaction signatures.

But, the interesting thing about Classic’s approach is that they proposed it very openly to the community and they achieved within two months, in my opinion, a significant change to bitcoin.

Core developers have been pushed to increase their communication strategy with the rest of the community – new website, new Slack channel, participation on podcasts, presence on bitcoin events were they openly explain why they think Bitcoin Classic is not a good idea.

It did not come without some cost (fights, insults, even censure), but I believe that the balance is positive and that the community should thank the Classic team for making that evolution possible.

Payments vs settlement

But going back to the original idea of this post, this debate is being used to avoid the bigger discussion about what is really happening here.

In short, we have one group (Bitcoin Classic) that thinks that bitcoin should always be a payment network, aimed at ultimately replacing traditional payment methods. Then we have another group that thinks of bitcoin as more of a settlement network (Bitcoin Core), and that end users should use sidechains, the Lightning network or other future initiatives that could appear in the future as networks for payment.

So, we have on one hand a thesis for a bitcoin blockchain that would handle more transactions with low fees following a network hard fork, and on the other, a thesis for a bitcoin blockchain that can handle fewer transactions but higher amounts (and as a consequence higher fees).

This is why I have started to call the bitcoin "block size limit debate" a proxy war. We should stop pretending it's about block size and take on that much more profound discussion.

Or, maybe try a different approach, a more decentralized way if you like, that doesn’t let a group of people decide about the future of bitcoin, and instead see what end users do with it.

Sure, we need to make some changes to allow the network to scale, but we don’t want to limit this great innovation at this early stage. It would be like deciding that only one use of the Internet is acceptable in 1993.

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Disclaimer: The opinions expressed here are my own, and do not represent those of my employer.

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