The Bitcoin Scaling Wars



While the Lightning Network is a technical solution that could theoretically facilitate high-frequency Bitcoin transactions, there is still the notion of scaling the main Bitcoin blockchain as the network continues to grow. Between 2016 and 2017, the shareholders of the Bitcoin network — the miners, developers and companies building on it — were embroiled in a tense debate around various routes toward scalability.


While a full exploration of the Bitcoin Scaling Wars, as they’ve been called, is beyond the scope of this guide, the debate can be distilled down to two concepts: the Bitcoin block size and the distribution of power across the network.


Proponents of increasing the block size of the Bitcoin blockchain believed that increasing the number of transactions that can be validated within a block could increase the overall transaction throughput of the network. Critics countered the idea, saying that increasing the block size would greatly increase the data size of the entire network, burden the miners with even more computation demands, inhibit smaller players from effectively mining Bitcoin and centralize power among the established mining monopolies.


In two closed-door roundtables among industry stakeholders, known as the Hong Kong Agreement and New York Agreement, a consensus was reportedly set for the path forward. Yet, on August 1, 2017, the Bitcoin network forked as big-block proponents implemented changes to the codebase and began mining a new chain, now dubbed Bitcoin Cash (BCH). 


The scaling debate brought to light the challenge of a decentralized network in achieving consensus around critical protocol updates when so much value is at stake. With Satoshi’s absence, it was only a matter of time until stakeholders would diverge on the Bitcoin development roadmap.


After Bitcoin forked into BTC and BCH in 2017, more hard forks of Bitcoin surfaced, including Bitcoin Gold (BTG) in late 2017. In late 2018, Bitcoin Cash itself also forked into BCH and Bitcoin SV (BSV).


While the standard for developing open-source software projects has been the Request for Comments proposal system that brought us the internet, the process is further complicated when the software in question is directly facilitating a global monetary system. 


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