At a recent Bitcoin conference in Latvia, Adam Back (CEO of Blockstream) commented on the perceived notion that the miners control the Bitcoin protocol rules and how everything went ahead earlier this month with the intent to move everyone to a new cryptocurrency network, with a greater weight of block limit.
The signaling of the miner was mistaken as a vote of miners
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.”
The 2x Hard Fork (Or Lack Thereof) Was a Learning Experience
The culmination of this debate over how much control miners have over the protocol rules came to a head with the 2x hard fork portion of the SegWit2x proposal. In the run up to this potential hard fork attempt that ended up being abandoned before the activation block, the supporters of the proposal, such as Bloq CEO Jeff Garzik and BitGo CEO Mike Belshe, pointed to the amount of hashpower signalling support for the change as proof that it will succeed.
However, there were indications — in the form of futures markets, statements from local Bitcoin meetups, and other avenues — that users were not behind the change. The core reasoning behind the abandonment of the 2x hard fork was eventually revealed to be an unwillingness from miners to continue mining the new chain for more than twelve hours after the fork.
“Even until the 2x fork was cancelled, people were confused that miners making some kind of verbal show of support would actually be willing to lose ten million dollars per week or something,” said Back. “I mean, clearly that’s economic nonsense, but it takes experience to see [that].”
More to Learn from a Potential Confidential Transactions Implementation
Near the end of his comments on the matter of miners’ role in potential alterations to Bitcoin’s consensus rules, Back indicated that another learning experience may come if a proposal to add Confidential Transactions to Bitcoin is made.
“That’s a much more interesting discussion to have because it puts it front and center — that people care about fungibility and privacy,” said Back.
The Blockstream CEO went on to add that the key reason miners exist in the Bitcoin system in the first place is to guarantee fungibility. While some miners may decide to censor specific types of transactions, it is likely that there is some miner in the world will eventually include any valid transaction in a block.
“It would be interesting to see miners try and argue against fungibility; that’s their reason for being in the system,” Back concluded.