*Deep Tide Note: This article introduces an anonymous developer Punk3700’s pioneering work by publishing smart contracts on Bitcoin, which may change the direction of Bitcoin’s development. The technological breakthrough has sparked controversy in the bitcoin community, with some proponents saying the attempt would be a distraction, but there are also a growing number of people who want to build more functionality on top of bitcoin. The article pointed out that the debate within Bitcoin has the potential to turn into a civil war, just like the block size war from 2015 to 2017. *
This weekend, an anonymous developer named Punk3700 made cryptocurrency history by releasing what he calls the first smart contract written in bitcoin. This technical feat—crafted in the custom programming language Solidity—has recently become more common on BTC, known for its tortoise-like development speed. Solidity is the cryptographic coding standard that Vitalik Buterin invented to run decentralized applications on Ethereum.
Punk’s project is also an example of the kind of change that has been troubling many of Bitcoin’s oldest supporters: Bitcoinists see other cryptocurrencies as trying to distract people at best. While Bitcoin is basically good at one thing -- minting and validating a currency without state backing -- Ethereum exists as a virtual computer capable of doing anything (including tarnishing cryptocurrencies reputational Ponzi scheme). So, Bitcoin proponents generally want to involve as little Ethereum as possible.
But about a year after Bitcoin's latest upgrade, Taproot, which made new types of bitcoin transactions possible, developers discovered they could build ethereum-like programs and systems on top of bitcoin. This started with non-fungible tokens (NFTs), which Bitcoin proponents renamed “Inscriptions,” and have taken off recently. Last week, Punk3700 deployed a version of Uniswap on Bitcoin.
Punk3700 calls himself the "New Bitcoin Advocate" and together with his team, has planned a series of projects aimed at redefining the use of Bitcoin. This includes the Metaverse, the AI Lab and the "Ethereum Virtual Machine" or EVM (Trustless Computer), used for Bitcoin, which will power his "subproject" of the digital city.
“We have taken a different approach. We prefer to reuse battle-tested technologies like EVM, battle-tested programming languages developed over years of developer communities like Solidity, and battle-tested dApps like Uniswap and MakerDAO),” Punk3700 said.
While Punk's designs may be grander and more expansive than others, he's not alone, as more and more Bitcoin users want to breathe life into the open-source project following the unexpected success of ordinals. Clearly, there is demand for non-monetary uses of Bitcoin, and more and more Bitcoin users want to build on Bitcoin. At the same time, this unexpected demand for Bitcoin block space (the amount of data that a newly mined block can hold, which people pay for through transaction fees) has caught many off guard.
While the influx of Bitcoin users has benefited the network by increasing its security budget (by increasing the amount of money BTC miners earn processing transactions), many have questions about how the network is being used. Some believe that meme coins and NFTs are outright scams, while others believe that network congestion is hurting Bitcoin’s most-needed adoption — sending remittances. Transaction fees soared above $10 last week, three orders of magnitude higher than the less than $0.01 paid earlier this month. It's not good if you want people in developing countries to see Bitcoin as a payment system.
As the squabble within Bitcoin continues to escalate, some predict the debate could turn into a civil war. It's happened before, from 2015 to 2017, there was a lot of internal antagonism and division. What started as a debate about how the network should scale to handle increased transaction volumes has morphed into a philosophical debate about Bitcoin's ultimate purpose, and political drama about how the open-source project should be governed.
The two camps at the time, known as the big-block faction and the small-block faction, split over a relatively minor technical decision: how many megabytes of data a BTC block should handle.
BigBlocks wants to increase the block size to accommodate more transactions, lower fees, and make everyday payments more feasible. Small blockers are more conservative and do not wish to make irreversible changes to Bitcoin's source code. Larger blocks would allow more people to use Bitcoin, increasing throughput, but would also require a protocol update known as a hard fork (an irreversible, backwards-incompatible code split).
Worse, it is believed that larger blocks may also centralize control of Bitcoin, and eventually someone will have to pay for the added performance (if not the users). While Bitcoin has no CEO, the network can be thought of as a distributed network of users (paying transaction fees and generating demand), miners (expending actual energy to build Bitcoin's blockchain), and node operators (validating the transaction ledger to Make sure everyone is on the same page) management team. Since large blocks are more data-intensive, fewer users will be able to become miners or validators, as fewer users will be able to use the high-end hardware required for large blocks.
This internal battle has turned into a holy war over the popular interpretation of Bitcoin. Developers proposing different bit implementations have reportedly received death threats, bitcoin forums have become venues for propaganda and ostracism, and at one point, a sustained denial-of-service (DoS) attack against a bitcoin fork resulted in a major internet service provider (ISP) paralyzed). In the end, the small block pie won, a victory often described as a victory for decentralization.
“I think small blockers won in a democratic way. Sure, there was a lot of shenanigans happening on r/Bitcoin to influence public opinion, but in the end, the cries for decentralization over TPS (transactions per second) are real. said Eric Wall, chief investment officer at hedge fund Arcane Assets.
Wall supports non-monetary uses of Bitcoin. While Wall has stated that he was an orthodox Bitcoin supporter during the Civil War, enthusiastically supporting scaling the network via a "second layer" rather than larger blocks, he was later somewhat disillusioned with the results.
“The route chosen was more conservative. People who were inclined to try more risky ideas were squeezed out. Bitcoin became rigid, and in five years, Taproot was the only new upgrade that reached the protocol level,” he said.
For years, Wall has called for an infusion of innovation into bitcoin, urging its supporters to consider trialing technology developed on networks such as ethereum. However, Bitcoin supporters like him who are willing to challenge orthodoxy have largely been excommunicated from the Bitcoin church, although he may not consider himself a victim of war.
Today's debates about transaction fees and Bitcoin development differ from the block size wars in one key way: many of the issues surrounding Bitcoin's technical limitations have already been resolved. In 2017, bitcoin proponents could choose between bitcoin or bitcoin cash, the latter offering larger blocks that its founder Roger Ver said fulfilled the original mission of peer-to-peer digital cash. A subsequent fork of Bitcoin Cash, called Bitcoin Smart Vision, was created by a man claiming to be Satoshi Nakamoto - Craig S. Founded by Wright, offering even bigger chunks. However, market participants have clearly decided that the canonical blockchain is the real Bitcoin. This is a vote of confidence in the SmallBlocks plan to scale Bitcoin using second layers and sidechains like Liquid and Lightning.
While today's high fees for on-chain transactions have raised some eyebrows and may prompt people to structure Bitcoin differently, no high-profile figure has yet suggested reinventing the blockchain. However, adoption of Lightning, a Bitcoin-based payment-oriented scaling option, has been low (in part because Bitcoin proponents actively warn that these systems are experimental). Liquid, built by major bitcoin infrastructure firm Blockstream, is even worse.
Similar to the problem of high fees during sustained use, if Bitcoin fails to generate the "fee economics" needed to pay miners, or if most fee-generating activity migrates to the second layer, then the current Bitcoin architecture may also suffer in the long run. There are loopholes.
"Looking back, it's clear that the small block faction needs to win, and their principles are more in line with my point of view, which is to expand the reach of sound money while maintaining decentralization," Bitcoin podcast host, English football club and Bar owner Peter McCormack said in an email. Bitcoin proponents today generally believe that an open market will resolve some murky questions about Bitcoin's long-term security and current scaling limits. Because blockspace, like Bitcoin itself, is a scarce asset with a highly loyal user base, it is expected to become increasingly valuable.
Nic Carter, co-founder of investment firm Castle Island Ventures, said that some Bitcoin proponents today are wrong to reject the network for new types of assets like Ordinal NFT and BRC-20. Given the crypto-liberal foundations of the Bitcoin movement, which can be traced back to economic philosopher Murray Rothbard and the cypherpunk culture of the 1990s, it is unreasonable to demand censorship of these non-economic use cases.
But Bitcoin culture has been rife with voluntary or unnoticed hypocrisy since its inception. Carter has also been dismissed by contemporary “BTC maximalists,” which may be a small but loud segment of the web’s user base. This group is usually defined not by its radical economic beliefs, but by a certain lifestyle developed on social media that includes a great deal of skepticism of authority (pro-Bitcoin politicians are an exception) and distrust of Bitcoin. Coin spread as an obsession for messianic causes. The MicroStrategy chief executive has won over this crowd after turning his internet-era technology company into a publicly traded bitcoin company.
In the view of Bitcoin proponents, the occasional purge of heretical ideas and attacks on critics that violate Bitcoin principles is a consensus formed during the 2015-17 civil war. According to cryptocurrency historian Dr. Paul Dylan-Ennis: "Extremism was formed in the melting pot of block size wars, which introduced a kind of dogmatism and turned into dark ages, which we are only just emerging from." At the time, The scaling debate is often described as being played between “populists” supporting big blocks and scaling Bitcoin’s commercial potential and “elites” protecting its position from the threat of nascent cryptocurrencies. The modern historical understanding of block size wars has dismissed this language in favor of the "democratic" goal of protecting running nodes.
History is written by the victors, and it is now believed that the big blocks are basically a group of money interests in Bitcoin, such as miners and major cryptocurrency payment providers in China. And the Small Blocks are often portrayed as underdogs — made up of bitcoin supporters who want to keep the network closer to its original code base, wary of backwards-incompatible upgrades. There is a certain truth to this statement.
Also, the well-known New York Accord exists (whether rightly or wrongly) in the public imagination, a closed-door meeting at CoinDesk's Consensus conference, when dozens of companies under CoinDesk's parent company Digital Currency Group (DCG) Conspired under the guidance of a protocol update. The topic of discussion for the day was SegWit2x, a hybrid scheme between large and small blocks that doubles the Bitcoin block size to 2MB and activates the Segregated Witness (SegWit) upgrade proposed by Bitcoin core developers, which Improves network throughput by separating signed transaction data from the transaction itself.
SegWit2x eventually died. SegWit itself was implemented via a "user-activated soft fork" (UASF) on August 1, 2017, a day known as Bitcoin Independence Day, a symbol of the friendliness of the Bitcoin community and control over wealthy miners force. This marks the end of Bitcoin’s “first civil war,” Colin Harper writes in an excellent Bitcoin Magazine review: UASF is a feat of technology and social engineering that combines ideas from different sources, Hard forks are avoided and the network is greatly improved. Arcane’s Eric Wall said the incident “permeated” Bitcoin culture and gave significance to the act of running a full node. "It changed the bitcoin discussion forever."
Part of the charm and legacy of SegWit is that many miners and cryptocurrency companies were hesitant to implement the change. For example, Coinbase did not upgrade until February 2018, and processor BitPay did not upgrade until July 2020. Stories like this are brought up again and again on social media through word of mouth, because they reflect a certain self-concept of Bitcoin holders as punks interested in economics and technology.
It is difficult to say whether this spirit has disappeared. Bitcoin as a social technology has changed over the years, especially during the crazy bull run of COVID, attracting a large number of users. Now, it appears to be on the verge of an even bigger shift. But the scars from the last Civil War are real, and the changes this time around are unlikely to be technological. All technologies are "path dependent", and Bitcoin proponents chose their path early on. Whatever the next weird thing to unlock, we need to deal with a blockchain that was designed to be restricted.
I'll leave you with one last bit of history to ponder: SegWit was written before it was implemented, and made its way into Bitcoin's source code before there was a full consensus between users and miners, so to speak with only a few bits. Coin Core developer support. There is a benefit to this debate, a concerted effort to reduce the centralized power of miners. But SegWit is a change that made it into the core version, and if miners hadn't resisted the change, it might have gone unnoticed. Isn’t there another version of the story where Bitcoin purists are wrong and miners want to vote to change Bitcoin’s governance for the better?
Bitcoin was designed for everyone, including your enemies.
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The Block Size War Revisited: How the Bitcoin Civil War Resonates Today
**Written by: **Daniel Kuhn
Compilation: Deep Tide TechFlow
*Deep Tide Note: This article introduces an anonymous developer Punk3700’s pioneering work by publishing smart contracts on Bitcoin, which may change the direction of Bitcoin’s development. The technological breakthrough has sparked controversy in the bitcoin community, with some proponents saying the attempt would be a distraction, but there are also a growing number of people who want to build more functionality on top of bitcoin. The article pointed out that the debate within Bitcoin has the potential to turn into a civil war, just like the block size war from 2015 to 2017. *
This weekend, an anonymous developer named Punk3700 made cryptocurrency history by releasing what he calls the first smart contract written in bitcoin. This technical feat—crafted in the custom programming language Solidity—has recently become more common on BTC, known for its tortoise-like development speed. Solidity is the cryptographic coding standard that Vitalik Buterin invented to run decentralized applications on Ethereum.
Punk’s project is also an example of the kind of change that has been troubling many of Bitcoin’s oldest supporters: Bitcoinists see other cryptocurrencies as trying to distract people at best. While Bitcoin is basically good at one thing -- minting and validating a currency without state backing -- Ethereum exists as a virtual computer capable of doing anything (including tarnishing cryptocurrencies reputational Ponzi scheme). So, Bitcoin proponents generally want to involve as little Ethereum as possible.
But about a year after Bitcoin's latest upgrade, Taproot, which made new types of bitcoin transactions possible, developers discovered they could build ethereum-like programs and systems on top of bitcoin. This started with non-fungible tokens (NFTs), which Bitcoin proponents renamed “Inscriptions,” and have taken off recently. Last week, Punk3700 deployed a version of Uniswap on Bitcoin.
Punk3700 calls himself the "New Bitcoin Advocate" and together with his team, has planned a series of projects aimed at redefining the use of Bitcoin. This includes the Metaverse, the AI Lab and the "Ethereum Virtual Machine" or EVM (Trustless Computer), used for Bitcoin, which will power his "subproject" of the digital city.
“We have taken a different approach. We prefer to reuse battle-tested technologies like EVM, battle-tested programming languages developed over years of developer communities like Solidity, and battle-tested dApps like Uniswap and MakerDAO),” Punk3700 said.
While Punk's designs may be grander and more expansive than others, he's not alone, as more and more Bitcoin users want to breathe life into the open-source project following the unexpected success of ordinals. Clearly, there is demand for non-monetary uses of Bitcoin, and more and more Bitcoin users want to build on Bitcoin. At the same time, this unexpected demand for Bitcoin block space (the amount of data that a newly mined block can hold, which people pay for through transaction fees) has caught many off guard.
While the influx of Bitcoin users has benefited the network by increasing its security budget (by increasing the amount of money BTC miners earn processing transactions), many have questions about how the network is being used. Some believe that meme coins and NFTs are outright scams, while others believe that network congestion is hurting Bitcoin’s most-needed adoption — sending remittances. Transaction fees soared above $10 last week, three orders of magnitude higher than the less than $0.01 paid earlier this month. It's not good if you want people in developing countries to see Bitcoin as a payment system.
As the squabble within Bitcoin continues to escalate, some predict the debate could turn into a civil war. It's happened before, from 2015 to 2017, there was a lot of internal antagonism and division. What started as a debate about how the network should scale to handle increased transaction volumes has morphed into a philosophical debate about Bitcoin's ultimate purpose, and political drama about how the open-source project should be governed.
The two camps at the time, known as the big-block faction and the small-block faction, split over a relatively minor technical decision: how many megabytes of data a BTC block should handle.
BigBlocks wants to increase the block size to accommodate more transactions, lower fees, and make everyday payments more feasible. Small blockers are more conservative and do not wish to make irreversible changes to Bitcoin's source code. Larger blocks would allow more people to use Bitcoin, increasing throughput, but would also require a protocol update known as a hard fork (an irreversible, backwards-incompatible code split).
Worse, it is believed that larger blocks may also centralize control of Bitcoin, and eventually someone will have to pay for the added performance (if not the users). While Bitcoin has no CEO, the network can be thought of as a distributed network of users (paying transaction fees and generating demand), miners (expending actual energy to build Bitcoin's blockchain), and node operators (validating the transaction ledger to Make sure everyone is on the same page) management team. Since large blocks are more data-intensive, fewer users will be able to become miners or validators, as fewer users will be able to use the high-end hardware required for large blocks.
This internal battle has turned into a holy war over the popular interpretation of Bitcoin. Developers proposing different bit implementations have reportedly received death threats, bitcoin forums have become venues for propaganda and ostracism, and at one point, a sustained denial-of-service (DoS) attack against a bitcoin fork resulted in a major internet service provider (ISP) paralyzed). In the end, the small block pie won, a victory often described as a victory for decentralization.
“I think small blockers won in a democratic way. Sure, there was a lot of shenanigans happening on r/Bitcoin to influence public opinion, but in the end, the cries for decentralization over TPS (transactions per second) are real. said Eric Wall, chief investment officer at hedge fund Arcane Assets.
Wall supports non-monetary uses of Bitcoin. While Wall has stated that he was an orthodox Bitcoin supporter during the Civil War, enthusiastically supporting scaling the network via a "second layer" rather than larger blocks, he was later somewhat disillusioned with the results.
“The route chosen was more conservative. People who were inclined to try more risky ideas were squeezed out. Bitcoin became rigid, and in five years, Taproot was the only new upgrade that reached the protocol level,” he said.
For years, Wall has called for an infusion of innovation into bitcoin, urging its supporters to consider trialing technology developed on networks such as ethereum. However, Bitcoin supporters like him who are willing to challenge orthodoxy have largely been excommunicated from the Bitcoin church, although he may not consider himself a victim of war.
Today's debates about transaction fees and Bitcoin development differ from the block size wars in one key way: many of the issues surrounding Bitcoin's technical limitations have already been resolved. In 2017, bitcoin proponents could choose between bitcoin or bitcoin cash, the latter offering larger blocks that its founder Roger Ver said fulfilled the original mission of peer-to-peer digital cash. A subsequent fork of Bitcoin Cash, called Bitcoin Smart Vision, was created by a man claiming to be Satoshi Nakamoto - Craig S. Founded by Wright, offering even bigger chunks. However, market participants have clearly decided that the canonical blockchain is the real Bitcoin. This is a vote of confidence in the SmallBlocks plan to scale Bitcoin using second layers and sidechains like Liquid and Lightning.
While today's high fees for on-chain transactions have raised some eyebrows and may prompt people to structure Bitcoin differently, no high-profile figure has yet suggested reinventing the blockchain. However, adoption of Lightning, a Bitcoin-based payment-oriented scaling option, has been low (in part because Bitcoin proponents actively warn that these systems are experimental). Liquid, built by major bitcoin infrastructure firm Blockstream, is even worse.
Similar to the problem of high fees during sustained use, if Bitcoin fails to generate the "fee economics" needed to pay miners, or if most fee-generating activity migrates to the second layer, then the current Bitcoin architecture may also suffer in the long run. There are loopholes.
"Looking back, it's clear that the small block faction needs to win, and their principles are more in line with my point of view, which is to expand the reach of sound money while maintaining decentralization," Bitcoin podcast host, English football club and Bar owner Peter McCormack said in an email. Bitcoin proponents today generally believe that an open market will resolve some murky questions about Bitcoin's long-term security and current scaling limits. Because blockspace, like Bitcoin itself, is a scarce asset with a highly loyal user base, it is expected to become increasingly valuable.
Nic Carter, co-founder of investment firm Castle Island Ventures, said that some Bitcoin proponents today are wrong to reject the network for new types of assets like Ordinal NFT and BRC-20. Given the crypto-liberal foundations of the Bitcoin movement, which can be traced back to economic philosopher Murray Rothbard and the cypherpunk culture of the 1990s, it is unreasonable to demand censorship of these non-economic use cases.
But Bitcoin culture has been rife with voluntary or unnoticed hypocrisy since its inception. Carter has also been dismissed by contemporary “BTC maximalists,” which may be a small but loud segment of the web’s user base. This group is usually defined not by its radical economic beliefs, but by a certain lifestyle developed on social media that includes a great deal of skepticism of authority (pro-Bitcoin politicians are an exception) and distrust of Bitcoin. Coin spread as an obsession for messianic causes. The MicroStrategy chief executive has won over this crowd after turning his internet-era technology company into a publicly traded bitcoin company.
In the view of Bitcoin proponents, the occasional purge of heretical ideas and attacks on critics that violate Bitcoin principles is a consensus formed during the 2015-17 civil war. According to cryptocurrency historian Dr. Paul Dylan-Ennis: "Extremism was formed in the melting pot of block size wars, which introduced a kind of dogmatism and turned into dark ages, which we are only just emerging from." At the time, The scaling debate is often described as being played between “populists” supporting big blocks and scaling Bitcoin’s commercial potential and “elites” protecting its position from the threat of nascent cryptocurrencies. The modern historical understanding of block size wars has dismissed this language in favor of the "democratic" goal of protecting running nodes.
History is written by the victors, and it is now believed that the big blocks are basically a group of money interests in Bitcoin, such as miners and major cryptocurrency payment providers in China. And the Small Blocks are often portrayed as underdogs — made up of bitcoin supporters who want to keep the network closer to its original code base, wary of backwards-incompatible upgrades. There is a certain truth to this statement.
Also, the well-known New York Accord exists (whether rightly or wrongly) in the public imagination, a closed-door meeting at CoinDesk's Consensus conference, when dozens of companies under CoinDesk's parent company Digital Currency Group (DCG) Conspired under the guidance of a protocol update. The topic of discussion for the day was SegWit2x, a hybrid scheme between large and small blocks that doubles the Bitcoin block size to 2MB and activates the Segregated Witness (SegWit) upgrade proposed by Bitcoin core developers, which Improves network throughput by separating signed transaction data from the transaction itself.
SegWit2x eventually died. SegWit itself was implemented via a "user-activated soft fork" (UASF) on August 1, 2017, a day known as Bitcoin Independence Day, a symbol of the friendliness of the Bitcoin community and control over wealthy miners force. This marks the end of Bitcoin’s “first civil war,” Colin Harper writes in an excellent Bitcoin Magazine review: UASF is a feat of technology and social engineering that combines ideas from different sources, Hard forks are avoided and the network is greatly improved. Arcane’s Eric Wall said the incident “permeated” Bitcoin culture and gave significance to the act of running a full node. "It changed the bitcoin discussion forever."
Part of the charm and legacy of SegWit is that many miners and cryptocurrency companies were hesitant to implement the change. For example, Coinbase did not upgrade until February 2018, and processor BitPay did not upgrade until July 2020. Stories like this are brought up again and again on social media through word of mouth, because they reflect a certain self-concept of Bitcoin holders as punks interested in economics and technology.
It is difficult to say whether this spirit has disappeared. Bitcoin as a social technology has changed over the years, especially during the crazy bull run of COVID, attracting a large number of users. Now, it appears to be on the verge of an even bigger shift. But the scars from the last Civil War are real, and the changes this time around are unlikely to be technological. All technologies are "path dependent", and Bitcoin proponents chose their path early on. Whatever the next weird thing to unlock, we need to deal with a blockchain that was designed to be restricted.
I'll leave you with one last bit of history to ponder: SegWit was written before it was implemented, and made its way into Bitcoin's source code before there was a full consensus between users and miners, so to speak with only a few bits. Coin Core developer support. There is a benefit to this debate, a concerted effort to reduce the centralized power of miners. But SegWit is a change that made it into the core version, and if miners hadn't resisted the change, it might have gone unnoticed. Isn’t there another version of the story where Bitcoin purists are wrong and miners want to vote to change Bitcoin’s governance for the better?
Bitcoin was designed for everyone, including your enemies.