2017 Was The Year When Everyone (Finally) Learned Bitcoin Isn't Controlled By Miners


Technicians inspect bitcoin mining machines at a mining facility operated by Bitmain Technologies Ltd. in Ordos, Inner Mongolia, China. (Photographer: Qilai Shen/Bloomberg)

In the middle of November, a critical event in the history of Bitcoin was supposed to happen as a number of large Bitcoin companies and miners were going to attempt to get everyone to move over to a new cryptocurrency network with different rules and call it Bitcoin. However, those behind the proposal realized the error in their ways and pulled their support just days before the hard fork attempt was supposed to activate.

For Blockstream CEO Adam Back and the vast majority of individuals involved in the Bitcoin protocol development process, this was the culmination of a years long debate. At a recent Bitcoin conference in Latvia, Back commented on the perceived notion that miners control the rules of the Bitcoin protocol and how it all came to ahead earlier this month with the attempt to move everyone over to a new cryptocurrency network with an increased block weight limit (effectively a limit on the number of transactions that can be processed by the Bitcoin network every ten minutes).

Miner Signalling Was Mistaken as Miner Voting

On a panel that included a number of well-known developers from the Bitcoin ecosystem, the politicization of Bitcoin protocol development eventually came up, and some of the participants on the panel wondered if the current, contentious climate in the Bitcoin ecosystem would make future changes more difficult to implement in a timely fashion.

In Back’s view, this increased politicization of Bitcoin’s consensus rules is partly caused by a misunderstanding of miner signalling, which is outlined in Bitcoin Improvement Proposal (BIP) 9. The idea is that miners will signal their readiness for a soft-forking protocol upgrade before it activates in an attempt to make sure the deployment goes smoothly.

In Bitcoin, soft forks are backwards compatible changes that do not require everyone to upgrade at the same time. In fact, the new features added via this upgrade mechanism are technically optional.

“It’s to say [miners] are ready, but users and businesses should be upgraded first; miner signaling is the last stage,” said Back.

From Back’s perspective, there was a somewhat prevalent view in the Bitcoin community that miners were in charge of whether or not a specific addition would be made to the Bitcoin protocol.

“I think there were a lot of people who genuinely believed that miners decided on the protocol [rules], where it’s actually a complete misunderstanding because it’s the economic nodes — so anybody who runs a full node for their own verification (any business, any investor, whatever) — 100,000 nodes on the network, that’s what defines the consensus rules,” explained Back.

Later in the panel discussion, Back would note that miners can do whatever they want with their hashing power, but users won’t even see the blocks that are mined if they do not follow the consensus rules. In other words, the blocks that are mined are worthless if they don’t follow a rule set that users put value behind.

“People have come to realize that miners are just service providers who provide a security service to whichever chain they want to provide a security service to, and the users and investors are providing the — creating the value for the supply and demand of the coin,” said Back. “Miners just follow that. They follow the profit.”

Source: Forbes


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