When Bitcoin Splits into Sects: Developers Wage a Holy War Over "What Should the Block Contain"

Original Title: Bitcoin faces a new civil war over how its blockchain should be used

Original Author: Jeff John Roberts

Source of the original text:

Compiled by: Daisy, Mars Finance

Bitcoin is facing a new civil war regarding the use of its blockchain.

I recently had the privilege of visiting the charming Swiss mountain town of Lugano. Its charm lies in— as Tether CEO Paolo Ardoino said— this city is “essentially Italian, but managed by the Swiss.” Ardoino is one of the main supporters of the “Plan B” Bitcoin conference, where I hosted a discussion on the growing acceptance of this original cryptocurrency trend by governments around the world.

The atmosphere of the conference was positive and high-spirited—this is not surprising, as everyone present worships Bitcoin—yet it is also evident that there are troubles lurking in paradise. It turns out that the foundational code of Bitcoin is experiencing an increasingly deepening split: the focal point of the controversy is whether the code should be modified to allow the blockchain to accommodate more data unrelated to financial transactions.

The idea of incorporating non-Bitcoin transaction-related data into blocks is not new. In fact, the very first block on the blockchain contained a newspaper headline referencing a bank bailout. However, today, the largest and most influential group of Bitcoin developers—known as “Core”—plans to adjust their software to significantly relax the limits on the amount of non-payment information that can be included in each block.

For the Core camp, this is a simple and pragmatic approach that can both promote new uses for Bitcoin and generate additional fee income for miners at a time when the block reward is only 3.125 bitcoins and is expected to be halved again in 2028. However, a rapidly rising competing faction has completely rejected this plan and launched their own Bitcoin client software - Knots.

The software of this faction is led by an influential Bitcoin developer, who is a devout Catholic. It is said to be named “Knots,” derived from the story of Jesus driving out the money changers from the temple with a “whip of cords.” According to a lawyer from the Knots camp that I interviewed, the necessity of this software lies in protecting the blockchain from what he condemns as spam senders and those promoting “scam-adjacent” projects like Bitcoin NFTs.

If you have ever interacted with Bitcoin supporters online or offline, you will know that they are not known for their diplomacy. This is particularly evident among the early prominent figures in the Bitcoin community — they would attack each other on the stage in Lugano and on X (formerly Twitter). The high-profile representatives of these camps include: Peter Todd and Jameson Lopp from the Core camp, and Nick Szabo and Luke Dashjr from the opposing Knots camp.

The latest split (you can read a useful overview here) evokes memories of the “block size debate” that swept through the entire Bitcoin community from 2015 to 2017. At that time, the “small block faction”—those who advocated keeping Bitcoin blocks at 1MB—ultimately triumphed over their opponents who believed that expanding to 2MB or larger was necessary for commercial viability. The resentment left by this war has not faded to this day.

In the current struggle, Knots is still a smaller faction, but it has become the preferred client for over 20% of Bitcoin node operators. Its rapid popularity is not only due to its stance on scaling blockchain issues but also because people generally believe that the Core camp has become arrogant and detached from the core values of Bitcoin. The Core camp dismisses the Knots faction as “lying troublemakers.”

I have no authority to comment further on this, only to point out: this latest soul-searching battle for Bitcoin once again confirms my view over the years—that Bitcoin is both an incredible technology and a religion. Like any religion, there will always be a split between conservative believers and modernists. Fortunately, there was a moment of unity at the venue in Lugano: it was when the restored statue of Satoshi Nakamoto was unveiled by the lakeshore. Despite the various factions of Bitcoin warring with each other, there is no doubt that they still worship the same deity.