Vitalik talks about the Bitcoin block size debate: Bitcoin needs technical improvements

Author: Vitalik Buterin

Compiled by: Karen, Foresight News

Recently, I finished (listened to) two major historical books about the Bitcoin block size debate of the 2010s, which represent two extremes on this topic:

• Jonathan Bier's The Blocksize War, which tells the story from the perspective of the pro-small-block camp;
• Roger Ver and Steve Patterson's Hijacking Bitcoin, which tells the story from the perspective of the pro-big-block camp.

Revisiting the history of these events that I experienced firsthand, and even participated in to some extent, is truly fascinating.

Although I have a good understanding of most of the events that occurred and the views of both sides regarding the nature of the conflict, there are still some interesting details that I either did not know or have completely forgotten. This article will look at the situation from a fresh perspective.

Previously, I supported the "big blockers," but I was more of a pragmatic medium-block supporter, opposing extreme increases in block size or the absolute claim that transaction fees should never significantly exceed zero. So, do I still support my previous viewpoint? I look forward to observing and finding out the answer.

Jonathan Bier: How the Small Blockers View the Block Size War

The original debate in the block size war revolved around a simple question: Should Bitcoin undergo a hard fork to raise the block size limit from its then 1MB to a higher value, allowing Bitcoin to handle more transactions and reduce the cost per transaction, at the cost of making running and validating nodes more difficult and expensive?

Bier's book left me with the impression that while the small blockers do care about this specific aspect, they tend to take a conservative approach, only slightly increasing the block size to ensure that running nodes remains easy. However, they are more concerned with the more general meta-level question of how such protocol-level issues are decided.

In their view, changes to the protocol (especially "hard forks") should be very rare and require a high level of consensus among protocol users.

Bitcoin is not trying to compete with payment processors—there are already many of those. Instead, Bitcoin is trying to become something unique: a new type of currency that is not controlled by central authorities or central banks.

If Bitcoin were to develop a highly active governance structure (which would require controversial adjustments to the block size parameter) or become susceptible to coordinated manipulation by miners, exchanges, or other large companies, it would forever lose this valuable unique advantage.

In Bier's description, the big blockers often try to gather a relatively small number of large participants to legitimize and push for the changes they favor—this is in stark contrast to the small blockers' view of governance.

In 2017, major Bitcoin exchanges, payment processors, miners, and other companies signed the New York Agreement. The small blockers viewed this as a significant example of an attempt to shift Bitcoin from user governance to corporate cabal governance.

Roger Ver: How the Big Blockers View the Block Size War

Big blockers typically focus on a key potential object-level question: What should Bitcoin be? Should it be a store of value—digital gold—or a means of payment—digital cash? For them, it has been clear from the beginning that Bitcoin's original vision, which all big blockers agree on, is to become digital cash. The Bitcoin white paper even states this!

Big blockers also frequently cite two other things written by Satoshi Nakamoto:

1. The simplified payment verification section of the white paper, which discusses how individual users can use Merkle proofs to verify whether their payments are included once blocks become very large, without needing to verify the entire chain.

2. Comments advocating for a gradual increase in block size through hard forks quoted on Bitcointalk:

For them, the shift from focusing on digital cash to digital gold is a critical turning point, which is agreed upon by a small group of closely-knit core developers who believe they have thought through the issue and come to an internal conclusion, thus feeling entitled to impose their views on the entire project.

The small blockers do propose some solutions that would allow Bitcoin to be both cash and gold—namely, Bitcoin as a Layer 1 focused on being gold, while Layer 2 protocols built on Bitcoin, such as the Lightning Network, provide cheap payment methods without needing to use the blockchain for every transaction. However, these solutions are severely lacking in practice, and Roger Ver criticizes these proposals in several chapters. For example, even if everyone switched to the Lightning Network, a larger block size would ultimately still be needed to accommodate hundreds of millions of users. Additionally, using the Lightning Network without trusting receiving tokens requires having an online node, and ensuring that tokens are not stolen requires checking the blockchain weekly. Roger Ver believes that these complexities will inevitably drive users to interact with the Lightning Network in a centralized manner.

What Are the Main Differences in Their Views?

Roger Ver's description of the objective-level debate aligns with that of the small blockers: both sides agree that the small blockers place more emphasis on the convenience of running nodes, while the big blockers prioritize low transaction fees.

Both sides acknowledge that there are reasonable differences in beliefs, and this difference is a key factor driving the debate.

However, Bier and Ver's descriptions of the deeper issues are starkly different. For Bier, the small blockers represent users opposing a group of powerful miners and exchanges trying to control the blockchain for their own benefit. The small blockers maintain Bitcoin's decentralization by ensuring that ordinary users can run nodes and validate the blockchain.

For Ver, the big blockers represent users opposing a group of powerful self-appointed authorities (high priests) and venture capital-funded companies (i.e., Blockstream) that profit by building the Layer 2 solutions necessary for the small block roadmap. The big blockers maintain Bitcoin's decentralization by ensuring that users can continue to afford on-chain transactions without relying on centralized second-layer infrastructure.

In my view, the closest both sides come to "reaching consensus on the matters of debate" is that Bier's book acknowledges that many big blockers are well-intentioned and even admits that they have reasonable complaints about the censorship of dissenting opinions by forum administrators supporting small blocks, while often criticizing the big blockers for their lack of capability; whereas Ver's book is more willing to attribute malicious intent or even conspiracy theories to the small blockers, but rarely criticizes their capabilities. This echoes a common political saying I have heard multiple times: "The right thinks the left is naive, while the left thinks the right is evil."

How did I view the block size war back then? And how do I view it now?

Room 77 in Berlin once accepted Bitcoin payments and was the center of the Berlin Bitcoin Kiez, where many restaurants accepted Bitcoin payments. Unfortunately, the dream of Bitcoin as a payment method gradually faded in the latter half of this decade, and I believe the rise in transaction fees is a key reason for that.

When I personally experienced the Bitcoin block size war, I supported the big blockers. My support for the big block side focused on several key points:

1. One of Bitcoin's original key commitments was as digital cash, and high fees could stifle that use. While Layer 2 protocols could theoretically offer lower fees, the entire concept has not been adequately tested, and the small blockers insisted on the small block roadmap without nearly understanding how the Lightning Network performs in practice, which is extremely irresponsible. Nowadays, practical experiences regarding the Lightning Network have made its prospects seem more pessimistic.

2. I do not believe in the small blockers' "meta-level" rhetoric. The small blockers often argue that "Bitcoin should be controlled by users" and that "users do not support big blocks," but they are never willing to clearly define who "users" are or how to measure their will. The big blockers implicitly propose at least three different ways to calculate the number of users: hash power, public statements from well-known companies, and social media discussions, while the small blockers condemn each method.

3. Compared to simply hard forking to increase the block size, the small blockers' "Segregated Witness" proposal aims to increase block size but is overly complicated and unnecessary. The small blockers ultimately adopted a religious view that "soft forks are good, hard forks are bad" (which I strongly oppose) and designed methods to increase block size that conform to this rule, even though Bier acknowledges that this would lead to significantly increased complexity, making it difficult for many big blockers to understand the proposal.

I feel that the small blockers are not merely "supporting caution"; they arbitrarily choose between different types of caution, opting for one (no hard forks) at the expense of another (keeping clean, simple code and specifications) because it suits their agenda. Ultimately, the big blockers also abandoned the idea of "clean and simple" and adopted ideas like Bitcoin Unlimited's adaptive block size increase, which Bier (rightfully) harshly criticizes.

4. The small blockers did engage in very unethical censorship on social media to push their views, ultimately leading to Theymos's infamous remark: "If 90% of /r/Bitcoin users find these policies intolerable, then I hope that 90% of /r/Bitcoin users leave."

Even relatively mild posts supporting big blocks would often be deleted.

Ver's book primarily focuses on the first and fourth points, touches on the third point, and theorizes about the misconduct of economic incentives—namely, that the small blockers established a company called Blockstream to build Layer 2 protocols on top of Bitcoin while promoting the idea that the first layer of Bitcoin should remain constrained, making these commercial Layer 2 networks necessary.

Ver does not delve much into the philosophy of how Bitcoin should be governed, as for him, the answer that "Bitcoin is governed by miners" is sufficiently satisfying.

This is where I find myself disagreeing with both sides: I find both the extreme view of "we reject the vague consensus of users as defined practically" and "miners should control everything because they have consistent incentives" to be unreasonable.

At the same time, I feel very frustrated with some key points of the big blockers, which also resonate with Bier's book. The worst point (according to both Bier and me) is that the big blockers have never been willing to agree on any realistic limiting principles for how big blocks should develop. A common viewpoint is that "block size is determined by the market"—which means that miners can create blocks of any size as needed, while other miners can choose to accept or reject those blocks. I strongly oppose this and point out that calling such a mechanism a "market" is an extreme distortion of the concept of "market." Ultimately, when the big blockers split off their own independent chain (Bitcoin Cash), they abandoned this viewpoint and set a block size limit of 32MB.

At that time, I actually had a principled reasoning method regarding how to determine the block size limit. Quoting a post from 2018: Bitcoin favors maximum predictability of the cost of reading the blockchain, but at the cost of minimal predictability of the cost of writing to the blockchain (i.e., transaction fees). It is foreseeable that the outcomes in the former metric are very healthy, while the outcomes in the latter metric are disastrous. Ethereum, with its current governance model, favors moderate predictability for both.

I later reiterated this point in a tweet in 2022. Essentially, the idea is: we should strike a balance between increasing the cost of writing to the chain (i.e., transaction fees) and the cost of reading the chain (i.e., the software requirements for blockchain nodes). Ideally, if the demand for using the blockchain increases by 100 times, we should allow the block size to increase by 10 times and fees to increase by 10 times (the demand elasticity for transaction fees is close enough to 1 for this approach to be effective in practice).

Ethereum has actually adopted a medium-block approach: since its launch in 2015, the chain's capacity has increased by about 5.3 times (possibly up to 7 times when accounting for call data repricing and blobs), while fees have increased from almost nothing to a significant but not excessively high level.

However, this compromise-oriented approach has never gained widespread recognition from either side; perhaps for one side, it feels too "central-planny," while for the other side, it feels too "wishy-washy." Here, I feel that the big blockers should bear more responsibility than the small blockers; the small blockers were initially open to moderate increases in block size (e.g., Adam Back's 2/4/8 plan), while the big blockers were unwilling to compromise, quickly shifting from advocating a single increase to specific larger values, and then to the overall philosophy that any non-trivial block size limit is illegal.

The big blockers also began to advocate that miners should control Bitcoin, to which Bier effectively criticized, pointing out that if miners attempt to change the protocol rules for other purposes (such as increasing their own profits), they are likely to quickly abandon their views.

Bier's main criticism of the big blockers is their repeated display of incompetence. The code quality of Bitcoin Classic was poor, Bitcoin Unlimited was overly complex, and for a long time, they did not include wipeout protection measures, seemingly unaware that this choice greatly harmed their chances of success, and they had serious security vulnerabilities. They loudly called for the principle of multiple Bitcoin software implementations—which is a principle I agree with and that Ethereum adopted—but their "alternative clients" were essentially just modifications of Bitcoin Core to achieve block size increases. According to Bier's narrative, their repeated mistakes in both code and economics ultimately led them to gradually lose more and more supporters.

The main big blockers were deceived by Craig Wright's fraudulent impersonation of Satoshi Nakamoto, which further damaged their credibility.

Craig Wright is a fraud who impersonates Satoshi Nakamoto. He often uses legal threats to suppress criticism, which is why my fork is the largest online copy in the Cult of Craig repository, which documents the evidence of his impersonation. Unfortunately, many big blockers were misled by Craig's tricks because Craig catered to the big blockers' stance.

Overall, after reading both books, I find myself agreeing more with Ver's views on the broader issues, but agreeing more with Bier's views on individual details.

In my view, the big blockers are correct on the core issue that blocks need to be larger, preferably achieved through the clean and simple hard fork described by Satoshi Nakamoto, but the small blockers have made far fewer embarrassing technical mistakes, and if you try to draw logical conclusions, the positions that lead to absurd results will be reduced.

In my view, the big blockers are correct on the key issue that blocks need to be larger, and it is best to achieve this through a clean and simple hard fork as described by Satoshi Nakamoto. However, the small blockers have made far fewer embarrassing technical mistakes.

The Block Size War is a One-Sided Capability Trap

Through reading these two books, the comprehensive picture I draw is one of a political tragedy, which I feel I have seen repeatedly in various contexts, including cryptocurrency, corporate, and national politics:

"One side monopolizes all capable individuals but uses its power to push narrow and biased views; the other side correctly recognizes the existence of a problem but is too focused on opposition to develop its own technical execution capabilities."

In many similar situations, the first faction is criticized as authoritarian, but when you ask their (often very numerous) supporters why they support them, their answer is that the other side only complains; if they really gained power, they would completely fail within days.

To some extent, this is not entirely the opposition's fault: without a platform and experience, it is difficult to become proficient in execution. However, in the specific block size debate, the big blockers seem to have fundamentally failed to recognize the necessity of execution capability—they believe that merely being correct on the block size issue is enough to win.

The big blockers ultimately paid a heavy price for opposing overbuilding in various ways: even after they split off their own chain (Bitcoin Cash), they ended up splitting again twice before the community stabilized.

I call this issue a one-sided capability trap. It seems to be a fundamental problem for anyone trying to build a political entity, project, or community that hopes for democracy or diversity. Smart people want to work with other smart people.

If two independent groups are roughly equal in strength, people will tend to choose the side that aligns more with their values, stabilizing the balance. But if the bias toward one side is too severe, it will shift to a different balance state, and making it shift back again seems very difficult.

To some extent, as long as the opposition recognizes the existence of the problem and consciously enhances its capabilities, the one-sided capability trap can be alleviated. Often, opposition movements do not even take this step.

But sometimes merely recognizing the problem is not enough. If we have stronger and deeper methods to prevent and escape one-sided capability traps, we would benefit immensely.

Reducing Conflict, Enhancing Technology

One extremely obvious omission in both books is that the term "ZK-SNARK" does not appear at all. There is not much excuse for this: even in the mid-2010s, people were well aware of the potential of ZK-SNARKs for scalability (and privacy). Zcash was released in October 2016. Gregory Maxwell slightly explored the scalability implications of ZK-SNARKs in 2013, but it seems to have been entirely overlooked in discussions about Bitcoin's future roadmap.

The ultimate way to alleviate political tensions is not through compromise, but through the emergence of new technologies: discovering fundamentally new methods that can simultaneously meet the needs of both sides. In Ethereum, we have witnessed several such examples. A few examples that come to mind are:

1. Justin Drake's push for BLS aggregation, enabling Ethereum's proof of stake to handle more validators and thus reducing the minimum staking balance from 1500 to 32, with almost no side effects. Recently, work on signature aggregation is expected to further advance this progress.

2. EIP-7702 achieves the goals of ERC-3074 in a way that is more forward-compatible with smart contract wallets, thus helping to ease long-standing disputes.

3. Multi-dimensional Gas, starting from its implementation of blobs, has helped increase Ethereum's capacity to store Rollup data without increasing the worst-case block size, thereby minimizing security risks.

When an ecosystem stops accepting new technologies, it inevitably stagnates and becomes more contentious: political debates conducted between "I get 10 more apples" and "you get 10 more apples" are clearly less conflictual than debates between "I give up 10 apples" and "you give up 10 apples."

The pain of loss is more intense than the pleasure of gain, and people are more willing to "break" their shared political community to avoid loss. This is a key reason why I feel uneasy about ideas like "degrowth" and "we cannot use technology to solve social problems": there is considerable reason to believe that fighting over who gains more rather than who loses less is indeed better for social harmony.

In economic theory, there is no distinction between these two prisoner dilemmas: the game on the right can be seen as the game on the left plus a separate (insignificant) step, and regardless of how both sides act, they will lose four units. But in human psychology, these two games may be vastly different.

A key question for the future development of Bitcoin is whether it can become a technology-oriented ecosystem. The developments of Inscriptions and later BitVM provide new possibilities for Layer 2 and improve the functionality of the Lightning Network. I hope Udi Wertheimer's theory is correct, that ETH gaining an ETF means the demise of Saylorism and a renewed recognition that Bitcoin needs technical improvements.

Why Do I Care About This?

I care about studying the successes and failures of Bitcoin not because I want to belittle Bitcoin to elevate Ethereum; in fact, as someone who enjoys trying to understand social and political issues, I find that one characteristic of Bitcoin is its sociological complexity is high enough that its internal debates and schisms are so rich and engaging that you could write two complete books about them.

On the contrary, I care about analyzing these issues because Ethereum and other digital (and even physical) communities that I care about can learn a lot by understanding what happened, what was done well, and what could be improved.

Ethereum's focus on client diversity stems from the observation of the failures brought about by Bitcoin having only one client team. Ethereum explicitly attempts to cultivate a diverse ecosystem, primarily to avoid one-sided capability traps.

Another example that comes to mind is the network state movement. Network states allow communities with shared values to operate somewhat independently of mainstream society and build their own visions for future culture and technology.

However, the experience of (post-fork) Bitcoin Cash shows that movements organized around solving problems through forks have a common failure pattern: they may ultimately split again and again without ever truly managing to cooperate. The lessons brought by the experience of Bitcoin Cash extend far beyond Bitcoin Cash itself.

Like rebellious cryptocurrencies, rebellious network states need to learn to truly execute and build, rather than just hosting parties, expressing opinions, and sharing memes comparing modernist architecture with 16th-century European architecture on Twitter. Zuzalu is, to some extent, my own attempt to initiate change in this direction.

I recommend reading Bier's The Blocksize War and Patterson and Ver's Hijacking Bitcoin to understand a decisive moment in Bitcoin's history.

I suggest that when reading these two books, one should approach them with the mindset that this is not just about Bitcoin, but view it as the first truly high-stakes "digital nation" civil war, and that these experiences are very important for the other digital nations we will build in the coming decades.