The Bitcoin Block Size Debate is Quite a ‘Devil in the Details’ Discussion Amongst BTC Community


Bitcoin's network is massive, which is hardly surprising, considering the fact that it has constantly been growing in the last ten years. Its strength, or at least a large part of it, is defined by a number of participating machines which are tasked with validating transactions. In addition, Bitcoin's very own code has been highly calibrated, with specific variables being set throughout the network's ten years of development.

These settings are extremely important for the coin's network to continue functioning as it has been doing so far. If anything in the Bitcoin code were to be changed for any reason, there would be massive consequences. As a result, proposing any kind of change in its ecosystem has not been met with a lot of approval in the past, which is likely going to remain the case.

However, this does not mean that everyone accepts the Bitcoin network as it is, and there are still proposals to introduce changes. One such change, with very interesting implications, was proposed by Luke Dashjr, one of the Bitcoin Core developers. Dashjr proposed to reduce the size of blocks, which is currently at 1MB. However, he believes that the blocks should be brought down to the only 300KB in size, which would decrease the costs of participating in the network, and potentially attract new adopters to join it.

Proposals to change the size of blocks were made in the past, but everyone was always looking to increase them so that more transactions can fit into it. This proposal goes in a completely opposite direction, which is what makes it so interesting. Furthermore, this kind of change could be delivered via a soft fork, although it will not be performed unless a large enough part of the community supports the idea.

What Does This Mean?

Before we explain what consequences such a change might bring, let's first make sure that everyone is on the same page when it comes to terminology.

Bitcoin is a P2P (Peer-to-Peer) electronic cash system which was created on a new type of technology called the blockchain. The blockchain is a chain of blocks, as the name suggests, with each block being a collection of transactions made with Bitcoin. All of the transactions get validated and stored on the blockchain as immutable pieces of data.

These transactions are being processed by advanced computers called miners. However, there is a limit to how many transactions can fit into each bloc, which is known as the block's size limit. In Bitcoin's case, each block can only contain up to 1MB of transaction data. While it is not confirmed why this is the case, one theory says that this particular limit was set so that the blockchain would not be flooded with spam.

Another important aspect of the process is full nodes, which act as storage devices for the blockchain. Basically, each of them keeps a copy of the entire Bitcoin blockchain, and they are all connected to one another, ensuring that the information stored on each node is the same as the info stored on others. After ten years of processing transactions, the blockchain has grown to be extremely big, currently amounting to over 200GB of data, which can be quite resource-intensive.

In order for Dashjr's idea of lowering the block size to become a reality, those running the nodes are the ones who need to be convinced, as they need to agree to do so. As for the miners, they would eventually follow after they start noticing that their blocks are being rejected by the system for being too big.

Other solutions for changing the size of the blocks were introduced in the past, such as technology called Segregated Witness, which has the ability to stretch the size of blocks to as much as 4MB. Another solution is the Bitcoin Lightning Network, which would allow traders to make smaller transactions directly, without the need to record them on the blockchain.

What Would Happen If Smaller Blocks Were Introduced?

By now, you should have a relatively clear idea who does what in the Bitcoin network. Another thing to note is that the network is heavily decentralized, which is one of the reasons why Bitcoin has the largest value in the crypto space. However, the high entry barriers ultimately serve as a kind of centralizing factor, as it filters the participants, allowing only those with a lot of resources to join.

Having larger blocks would allow more transactions to be processed at once, making the network faster, but it would also mean that full nodes could only be run in data centers. This would defeat the original purpose of the network, which is to remain decentralized and prevent any kind of central authority to hold all the power.

This is where Dashjr entered, with the idea of introducing smaller blocks, and he urged the nodes to enforce the change between August 1st and December 31st of the current year. Since he proposed it, the idea received support from several high-profile figures in the crypto world, as the change would make running the full nodes easier, particularly for those who wish to run a full node but cannot afford to “go wild” with the hardware and bandwidth.

What If The Blocks Remain Unchanged?

If Bitcoin's blockchain continues to grow in size at this rate, at some point, users may be turning to additional solutions which might make the network more centralized. The reduction of the block sizes aims to prevent this and avoid such a situation.

However, there are also those who see the change as a “minor tweak,” such as Bitcoin Core's former developer, Peter Todd. Todd also sees the soft fork as a potentially huge disruption. He also claims that systems need to have certain safety margins in order to work properly, and when it comes to Bitcoin, that includes the network's ability to handle itself, even under pressure.

A lot of others were also unconvinced, stating that the chain would remain smaller for a longer period of time if the change were to take place, but the question of how it might impact Bitcoin's decentralization still remains. It appears that the idea simply doesn't have enough support in order for it to push through.

The ones who would benefit from the smaller blocks are miners, as they would still be receiving equal rewards for every block (12.5 BTC), and blocks of smaller sizes would ensure that more of them can be solved.

For now, the size of Bitcoin's blocks remains a touchy subject, as many view it as controversial, particularly after the hash wars of mid-November 2018, when Bitcoin Cash had a hard fork which resulted in a blockchain split and gave birth to Bitcoin SV. The incident is also believed to be responsible for the second market crash in 2018, while the price of Bitcoin dropped from $6,300 to $3,200, and it still struggles to grow above $4,000.

So, while the idea of changing the block sizes does have its positive and negative consequences, it is still quite controversial as a topic, and even a bit taboo, which is why it did not receive enough support to become a reality.

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