You may have heard of the BIP-110; here’s why this fork is not only bad for Bitcoin, but is built on a misunderstanding of what a Bitcoin node is and what it’s good for. And why, because of this misunderstanding, BIP-110 will fail.
This article is a Take it. The views expressed are entirely those of the author and do not reflect those of BTC Inc or Bitcoin Magazine.
BIP-110 is a Bitcoin Development Proposal titled Reduced Data Temporary Softfork. BIP proposes a consensus change in Bitcoin, which attempts to limit the types and amounts of arbitrary data that can be added to valid consensus transactions by limiting the broad range of Bitcoin’s writing capabilities. BIP-110 is led by an anonymous developer known as Dathon Ohm and is widely supported by the Knots community, an alternative Bitcoin implementation led by one of the original Bitcoin Core contributors, Luke Dashjr and his supporters.
The BIP-110 consensus change is headed for a mandatory signing period in the coming weeks and is thus a potential fork of the main consensus rules as implemented in Bitcoin Core. This proposal needs to gain massive support from miners in the coming weeks to change the Bitcoin consensus. As of the time of writing, the signing of the BIP-110 miner stands at less than one percent.
The Knots community, made up largely of Bitcoiners running nodes on machines like Start9 and Umbrella, has come together in Knots to protest a series of development decisions made by Bitcoin Core, the main community for open source development and reference implementation of Bitcoin. Although most of the top Bitcoin developers are against or indifferent to the changes proposed by BIP-110, the movement has gained enough steam to be a constant topic of discussion on social media.
Supporters of BIP-110 believe that by using full Bitcoin nodes that show consensus change, they alone can change Bitcoin. Here are the key concepts being debated, the biggest misconceptions about Bitcoin consensus, what a Bitcoin node is, and why BIP-110 will likely fail.
Strengths and limitations of Bitcoin Node
Much of the disagreement and misunderstanding in this recent culture clash within Bitcoin surrounds the concept of a full Bitcoin node. Activists such as Knut Svanholm, author and podcaster, have raised the role of the full node to higher altitudes perhaps closer to the sun.
Knut recently wrote on Twitter: “Every person on earth is a node in the Bitcoin network. Most to a lesser extent, yes, but every node is first and foremost a person, not a machine. What tools we use to interact with the network (and, by extension, the extent to which they influence the network) depends entirely on the choices we make.”
Statements of this kind are poetically beautiful, philosophically beautiful, romantic, and yet professionally incoherent and meaningless. Knut’s tweet tries to redefine what a ‘Bitcoin node’ means and fails at it, instead cleaning up the value of the term entirely. He might even say that every atom in the universe is a Bitcoin node, since apparently to him the term is all-encompassing.
Knut, although well-intentioned, is wrong. A Bitcoin node is a very specific thing. It is a full copy of all Bitcoin transaction history, block headers and transaction related data. Its purpose is very clear: to allow users to verify the integrity of the Bitcoin supply and transaction history with respect to Bitcoin’s consensus rules.
Bitcoin nodes offer users various benefits, such as privacy. Third-party wallet providers query their copy of the Bitcoin blockchain for the user’s balance and return it to the user through the wallet application. Most mobile wallets work this way, where users request a third-party server for their balances; others, very few, can be connected to a user-managed local Bitcoin node, where public addresses and user balances are not shared with any third-party wallet company.
Another advantage offered to users of Bitcoin nodes is the ability to check if they agree with the rest of the network, staying in sync. When a user mines Bitcoin or contributes any significant amount of hashing power to the Bitcoin proof-of-work network, the node also offers the opportunity to compile a block, choosing which payments go into it. This is only possible if the user has managed to mine a Bitcoin block, which is quite successful today, given the difficulty and steep competition.
Even new types of mining pools such as Ocean, which try to expand the production of block templates, allowing retail miners to have more influence over which transactions enter the chain, still need enough hashing power to win the proof-of-work race, resulting in the occasional block mining and thus limited influence over the blockchain.
Bitcoin nodes also relay transactions across the network, tens of thousands of which communicate through a flood network; this results in a censorship-resistant system where a small number of nodes can find controversial transactions from miners, bypassing any kind of filters, as demonstrated for free by Peter Todd’s relay. Therefore, Bitcoin nodes cannot easily filter which transactions enter the blockchain.
Even a large number of Bitcoin nodes alone cannot, however, change the consensus of Bitcoin. Not without having a large amount of economic activity entering the Bitcoin network through them, as the exchange does on behalf of millions of users. Not without having a protocol and a community of application developers behind them. Not without having a community of investors behind them. Bitcoin is not a node democracy, contrary to popular memes today.
Bitcoin nodes do not give you ‘citizenship’ in the ‘Bitcoin world’. Satoshi Nakamoto was clear about this in the Bitcoin white paper. Bitcoin’s ultimate security and governance structure is this: one CPU cycle, one vote, not one Bitcoin node, one vote. And miners, who use CPU cycles in addition to Bitcoin’s proof of work, are more sensitive to the feelings of investors and the wider developer community, leading to the distribution of a global currency agreement that is very difficult to change.
Bitcoin nodes ultimately let you know when you’re connected to a network with the most collected proof of work and that its consensus rules are followed, but the node itself doesn’t allow you to change the consensus rules. Users who change the consensus rules of their Bitcoin node are, by definition, no longer using Bitcoin. As a result, changing the consensus of Bitcoin as a node runner is very difficult, and that is a feature, not a bug. Bitcoin is the currency of enemies.
History and Bitcoin Consensus Games
Deep work has been done, trying to understand the consensus of Bitcoin, its various pillars and interest groups. Ren Crypto Fish, Steve Lee and Lyn Alden identified six of them in BCAP, an open-ended effort to analyze Bitcoin’s consensus and risk in the development of the protocol. BCAP has identified stakeholders such as Economists, Investors, Media Influencers, Miners and Systems Engineers, as well as users and application developers.
Historically, in the event of a consensus crisis, it is true that Bitcoin nodes have been used to show support for one version of Bitcoin over another. Fork events like the 2017 Bitcoin Cash fork are often cited as examples of economic nodes winning against opposition from miners. The User Activated Soft Fork (UASF) of 2017 faced a lot of opposition in theory; most of the mining pools and their corresponding hashrates support the Segwit2x version of Bitcoin, with many exchanges with companies that have signed the infamous New York Agreement.
A Bitcoin node-backed soft fork won however, eclipsing the Segwit2x version from the contested blockchain altogether. But here’s the thing: while Bitcoin nodes have succeeded technically, they have done so with great support from protocol developers, investors and media influencers: these areas have economic weight and hard consensus. BIP-110, on the other hand, has no protocol developers, and does not have enough investors behind it. Michael Saylor has come out against it, and many industry leaders are also openly opposing it or staying out of the issue altogether.
In fact, during the fork of Bitcoin Cash, the boundaries of Bitcoin trading sites were clearly understood. A Bitcoin node operated by an exchange is orders of magnitude more influential than a retail user, as it introduces large amounts of new activity to the Bitcoin network. A Bitcoin node of a large mining pool has much more influence than that of a single hobby miner, as it often combines blocks and chooses which transactions stay on the blockchain.
Most Bitcoiners outside of exchanges use mobile wallets to access their Bitcoin. Such users and investors can ‘vote’ their money, so to speak, by moving their bitcoins and economic activity elsewhere, either to a wallet that supports their Bitcoin vision, or to their full node. But while users live in mobile wallets that talk to third-party nodes, those users have little individual influence over Bitcoin’s consensus. And most mobile wallets use a Bitcoin core-compatible back end.
The same goes for trading; their users effectively transfer consensus decisions to commercial operators. In some cases, exchanges put consensus issues on a user’s vote, weighted by the sum of all their holdings, and return that decision to end users weighted by capital; we may see this happen again with BIP-110.
Voting of this type has started happening through Foundry today. One of the largest Bitcoin mining pools in the world, Foundry, recently sent an email to its miners letting them know they can vote on a proposal with their hashrate. High enough support could lead to a Foundry signature for BIP-110, although that remains unlikely. Non-voting users will effectively sign against BIP-110, protecting the status quo. So ignoring the topic of BIP-110 would automatically be a victory for Bitcoin Core. Supporters of BIP-110 need to traditionally win over the Foundry hash value, which should vote against the Bitcoin Core developer agreement, the most popular Bitcoin implementation and the most supported codebase.
Today, miners do not show support for BIP-110 in any significant way. In fact, according to some data, this is one of the smallest efforts supported by a soft fork by signing a miner in the history of Bitcoin. Less than 1 percent of the blocks mined in the current difficulty correction period show BIP110.
Concluding thoughts
BIP-110 has so far failed to find consensus among all interested parties within Bitcoin; no developers, investors, miners, or major economic areas support the change of consensus. The result is likely to be a chain split in the coming weeks, which could have significant effects on lightning wallets running on BIP-110 compliant nodes, ultimately resulting in a new, yet smaller blockchain that may need to change the proof of work used to stay alive.
