It’s not a straightforward path whenever a change is on the horizon for Bitcoin. To understand how these changes occur, we can look at past network evolutions, such as SegWit, and see this process is often contentious, multifaceted, and community-driven.
With booming protocols like Runes and Ordinals impacting Bitcoin’s day-to-day use, focusing on how Bitcoin may become more programmatically malleable is becoming a hot topic. In this vein, upcoming proposals to augment Bitcoin’s script can lay the groundwork for the network’s next step forward into another era of Blockchain innovation.
#How Bitcoin Deals With Change
Bitcoin is software, but with no one officially in charge, who decides what gets done to upgrade that code? It is a slow process, where everyone in the community determines the worthiness of potential network changes through exhaustive public discourse. While it may seem tedious, the plodding nature of Bitcoin’s evolution is intentional, forcing any possible alterations to Bitcoin to be openly dissected under the microscope of public analysis before they are considered for integration.
Anyone can present worthwhile ideas as a Bitcoin Improvement Proposal (BIP). Several channels exist to discuss such proposals, which generally begin as unofficial suggestions before moving ahead as an official BIP. With sufficient percolation and structure, a BIP ascends the ranks when a BIP Editor assigns it a number.
Recently, the number of BIP Editors was expanded to six to reduce potential inefficiencies. These include Luke Dashjr, Bryan Bishop (Kanzure), Murch, Ruben Somsen, Olaoluwa Osuntokun (Roasbeef), and Jon Atack.
BIPs may provide new specifications for Bitcoin’s consensus model or unilateral standards to promote interoperability, while others offer process guidelines that govern the overall BIP format and rollout.
Depending on what they propose, BIPs can have different downstream effects. A fork is a BIP that would change the network’s consensus model. As Bitcoin relies on numerous separate participants, each upholding the network’s rules, any proposal to alter the network’s consensus is heavily scrutinized before adoption. Even so, such forks require node operators to opt in and accept the new ruleset before they are considered adopted.
If a BIP does offer to change Bitcoin’s consensus, it often allows for reverse compatibility support for previous network versions. This allows nodes operating the legacy system to continue participating in the Bitcoin network while others adopt the new rules without resulting in a network fracture.
This detail is unique to Bitcoin. Software from over ten years ago still can work to run a Bitcoin node today, whereas newer networks constantly undergo upgrades, requiring users to stay updated with all incoming changes to ensure they can still participate.
BIPs that promote new standards often accompany those that alter Bitcoin’s consensus. They offer no changes to the network’s code but provide interoperability standards for any software that connects to it. Some standards require all nodes to opt in for them to be viable, while others are optional and do not require universal adoption to function.
In summary, before an idea can be considered for a BIP, it must survive public scrutiny. Once it is drafted and proposed as a BIP, if it is deemed viable, it will be assigned a number. However, regardless of the type, only when Bitcoin network participants adopt a BIP is it considered active, and some BIPs require all participants to accept it for this to be the case. These decentralized layers make the BIP implementation process robust and democratic, ensuring that changes reflect the values of the community.
#A Case Study: SegWit And User-Activated Soft Forks
On Bitcoin, User-Activated Soft Forks (UASF) express the base-level nature of Bitcoin's overall governance model. One such network proposal, Segregated Witness (SegWit), gained mainnet adoption through UASF.
#Initial Proposal
Originally proposed as BIP 141 by Bitcoin Core developer Pieter Wuille in December 2015, SegWit addressed critical network issues at the time, including transaction malleability, and the 1-megabyte block size limitation. SegWit made changes to transaction data storage for greater network efficiency and paved the way for scaling solutions like the Lightning Network.
SegWit did not launch without a fair share of controversy—the hotly debated issue set off an intense years-long era of debate in the Bitcoin community, known as The Block Size Wars. Some factions of the Bitcoin community resisted the proposed change to network architecture citing potential increases in complexity, bugs, or that the original protocol’s integrity might be compromised. Additionally, concerns brewed over differing economic interests could impact miners' revenue.
#Grassroots Adoption
The contention around SegWit led to the grassroots advocacy of UASF that would see the community coordinate and enforce the proposed changes. Any node operator that upgraded their software would in effect signal their readiness to enforce the rules on a specific date, regardless of miner support.
Set to activate on August 1, 2017, the community continued to debated over whether to integrate SegWit as the deadline drew near. The UASF provided a more democratic means to discern the necessity of the change, aligning with the interests of Bitcoin’s broader community over those of miners or a minority of powerful stakeholders.
#Activation And Impact
With pressure mounting as the UASF cutoff date approached miner support for SegWit increased. Ultimately, SegWit was locked in and activated without a contentious hard fork on August 23, 2017, as a result of the UASF movement.
The activation of SegWit via UASF was a significant point in Bitcoin network history, demonstrating how community-driven action and decentralized consensus may work in synergy to drive unilateral network upgrades. It set a precedent for future protocol integrations to come, where users, miners, and developers must collaborate and work together and negotiate to drive progress.
SegWit’s arrival also saw the adoption of BIP 142, a standards proposal that offers no code changes, although it was considered part of the upgrade, and instead provides a universal format for SegWit addresses.
#Ongoing Update Activations
While SegWit’s activation may have been contentious, it paved the way for future updates to Bitcoin that were not so fractious. Taproot is an example of such an update—it was nearly unanimously adopted via a soft fork in 2021. Taproot was a trifecta of BIPs that enabled a more efficient and privacy-friendly Schnorr signature method and integrated the Tapscript scripting language, increasing the network’s computational capacity.
Just as the groundwork for Taproot was laid by SegWit, so too did Taproot provide a platform for greater functionality on Bitcoin, as it made possible innovations on Bitcoin such as Ordinals.
Bitcoin’s updates and the protocols built upon it represent the branching nature of its evolution, with some network additions setting in motion the criteria for future ones, but all dependent upon a decentralized adoption process for official ratification. As a result of this process, whatever direction the network takes is likely to be the continued subject of fierce debate, and will undoubtedly be long foreseen by all.
