What Is Bitcoin Governance?
Since Bitcoin and the network are not static, developers are constantly working on improvements, fixes, security upgrades, and any changes that will benefit the network and the currency.
However, with millions of users across the globe, how are changes decided? And by whom?
Due to the decentralized nature of Bitcoin, there isn’t a pool of people at the top who meet, vote on decisions, and then delegate the work to those in the correct department like what would happen at a centralized company.
So, things are handled a little differently.
Consensus Building
Ironically, the term governance doesn’t apply to Bitcoin, at all. Governance means “the action or manner of governing a state, organization, etc.” Which is, technically, the opposite of the process which happens on the network.
While some blockchain-supported decentralized systems do integrate formal governance processes such as the ability to vote for proposals on-chain or elect leaders, Bitcoin has nothing of this nature.
There isn’t a democracy as such in Bitcoin, rather it’s all done by consensus building. This means that persuasion and deliberation are used, and essential, but all those involved still retain their own free will and can even opt out of participating if they want to.
Don’t Fix What Isn’t Broken
The default position for the majority of the community is that protocols should not change unless they have to. Changes will not be done without good reason and if someone wants to make a change but they don’t have the agreement of the vast majority then either this change doesn’t happen or this individual/group can make the changes separately by creating a fork.
Bitcoin Improvement Proposals
Through the use of Bitcoin Improvement Proposals (BIPs), Bitcoin’s code upgrade can be formalized. These are drafted, peer-reviewed, publicly debated, and rigorously tested towards the goal of establishing what’s known as a Rough Consensus among the community.
When the majority of people are in agreement or agree that any objections are not relevant or correct, then the Rough Consensus is achieved.
The next step after this agreement is integrating a BIP into the Bitcoin software client implementation known as Bitcoin Core.
There are a small number of “core developers” constantly working on the network and one of these developers will be in charge of integrating the BIP.
These developers are all able to upload code to a particular public platform that the community recognizes so the developer(s) cannot change anything without other people knowing about it.
After this happens, it’s time for the final step. This is where the nodes (network of users) have to install a new version of the software client. This final step is so essential because it means that end users retain ultimate control over what Bitcoin is.
The installed upgrade is only said to be activated when a defined threshold of nodes installs it. Added to this, the activation for BIPs that make material changes to the Bitcoin protocol is set extremely high, often requiring more than 90% of the network’s miners to carry out the upgrade over a set number of days.
Backward Compatible Changes
Backward compatible changes are also known as a soft fork. This is where nodes have the final say as to whether a new change will happen rather than the developers. Most BIPs have backward compatible changes in their protocol and can be a benefit to the nodes only running the previous version.
Non-Backwards Compatible Changes
When backward compatible changes are not in the BIP, the only option is to implement them via a hard fork.
With a hard fork, only nodes that run the new version are compatible with each other. Therefore, the whole community of nodes has to agree to use the new version.
If anyone doesn’t agree with this, then two separate chains are created which will no longer communicate with one another.
Bitcoin Cash is the largest and most well-known version of a hard fork. Back in August 2017, not all the nodes in the Bitcoin ecosystem could agree on methods for scaling the cryptocurrency.
As a result, certain developers and miners initiated a hard fork, thereby effectively creating a whole new currency - Bitcoin Cash (BCH).
Bitcoin Cash had its specifications and blockchain, as well as one essential and major difference from Bitcoin. The block size.
With BCH, the block size had increased to 8MB. This increase meant the verification process was faster. It also had an adjustable level of difficulty which ensured the chain’s transaction verification speed no matter how many miners were on it.
Governance Protects Everyone
While cryptocurrency is not regulated by any authority or outside third party, the key changes and decisions are regulated within the community.
Bitcoin governance is in place to ensure that Bitcoin is always heading in the right direction, achieving what it set out to achieve and making the crypto the best it can be.
Changes aren’t always a bad thing but it’s good to know that if bad ideas do pop up, they won’t be implemented on the network!
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