The blocksize war was a dispute between 2015 and 2017 over the size of blocks on the Bitcoin blockchain.

The debate, dubbed Bitcoin’s first major “civil war,” split the Bitcoin crypto community and created two camps: “big blockers” who wanted to increase the block size to enable cheaper and faster transactions, and “small blockers” who wanted to keep the 1 MB limit permanently to prioritize Bitcoin’s integrity and security.

1 Background

In the Bitcoin network, transaction data is divided into a series of blocks, and Satoshi added an explicit 1 MB size limit to each block. When Bitcoin was first launched, the currency had almost no value, and only a small number of people were mining new coins. The block size limit did not affect the network at first. Since Satoshi never publicly stated why the 1 MB block size limit was added, many speculated that it was to keep the blockchain small and prevent a large number of spam transactions.

However, as Bitcoin became more popular and the number of transactions increased, blocks began to fill up and the 1 MB size limit began to show some problems. Limiting the size of Bitcoin blocks meant that the number of transactions that could be confirmed on the network was limited. Debates began to emerge in the Bitcoin community: some believed that increasing the block size limit was the solution to the problem, while others worried that doing so would lead to centralization and security issues on the network. These debates split the Bitcoin community into two camps: big blockers and small blockers.

2 Big Blockers and Small Blockers

Big blockers want to modify the original Bitcoin protocol to increase block capacity and handle more transactions. They believe cheaper, faster transactions will make Bitcoin more scalable. While increasing the block size may not be a permanent solution, some believe it will help keep transactions cheaper in the short term and provide more time for the development of potential scaling solutions.

Small blockers want to keep the 1 MB size limit to prioritize Bitcoin's fundamental principles of security and decentralization. Small blockers believe that if the block size increases, it will make it expensive for ordinary users to run a Bitcoin node. This will lead to companies hosting nodes in data centers, which may harm the decentralization of the network. They believe in the resilience of the system and take a long-term approach to increasing Bitcoin's market share.

3. Solutions to increase block size

Bitcoin XT

Bitcoin XT was the first solution introduced by the big blockers. It proposed raising the block limit from 1 MB to 8 MB, and then doubling it every two years until it reached a maximum size of 8 GB in 2036. These changes were incompatible with existing Bitcoin nodes, so the solution required a hard fork, defined as a change to the protocol that was not backwards compatible. Any user running a Bitcoin node would need to upgrade their software to continue using the hard forked chain. The solution was extremely controversial for the small blockers, who felt that a hard fork was too extreme. Although the solution was widely publicized, it failed to gain widespread community support.

SegWit

Developer Pieter Wuille proposed a solution called SegWit (Segregated Witness). This solution proposes to remove transaction signature data from the block to reduce the size of each block, thereby increasing block capacity. This can increase the throughput of the Bitcoin network and reduce transaction fees.

SegWit changes the way block size is calculated, which will effectively result in a small increase in block size to around 2 MB, a concept that is still supported by the majority of the community and championed by small blockers. It will be implemented via a soft fork, meaning the upgrade is compatible with existing nodes. However, SegWit is technically complex, and it requires 95% of miners to express support for the upgrade to activate, a figure that was incredible at the time.

Bitcoin Classic

Bitcoin Classic is a proposal by the big blockers, with Gavin Andresen as lead developer. It is another attempt to increase the block limit to 2 MB via a hard fork. Bitcoin Classic has received widespread support from companies such as Coinbase and various mining pools, and is seen as a more moderate attempt to increase the block size than Bitcoin XT's jump to 8 MB. However, the small blockers opposed the measure, arguing that it would not be supported by miners.

New York Agreement

On May 22, 2017, leaders from 58 cryptocurrency companies and some miners held a meeting where they formulated a two-stage solution: activating SegWit and then doubling the block limit from the initial SegWit proposal. They believed that a combination of a soft fork (SegWit) and a hard fork (increasing the block size) could resolve the conflict, giving each camp part of the solution they had been working towards.

Many in the crypto community viewed the protocol as a corporate takeover of the Bitcoin network. They were angry that there was no mention that Bitcoin users were the ones who controlled the protocol and that user buy-in was needed before changes could be enacted. Small blockers expressed particularly strong opposition to the protocol, noting that they felt unrepresented. After months of contentious debate, the proposal was halted in November 2017, and the second phase of the protocol (increasing the block size via a hard fork) was abandoned entirely.

Bitcoin Cash

Big blockers were not happy with the results of the New York Agreement and still wanted to increase the block size even larger. A group of miners and developers parted ways in July 2017 and launched a Bitcoin hard fork, initially called Bitcoin ABC and eventually renamed Bitcoin Cash.

Bitcoin Cash has a block size of 8 MB and will increase over time, resulting in higher throughput and lower fees. In addition, developers believe that Bitcoin Cash is necessary because it is a payment system.

UASF

The small blockers camp, while smaller and far less funded than the big blockers, has become an increasingly vocal and persuasive group. They are still campaigning for support for SegWit. However, SegWit is far from the 95% miner support required for activation.

Developer Shaolinfry introduced a new strategy called User Activated Soft Fork (UASF User Activated Soft Fork). Traditionally, soft forks are triggered by miners, which gives them control and power over the network.

Shaolinfry’s proposal, called BIP 148, lets users running nodes signal their support for SegWit before an activation date and not accept non-SegWit blocks from miners. If enough nodes signal support for SegWit, miners must accept the upgrade before the activation date or their blocks will be rejected.

The risky idea paid off when SegWit activated on the Bitcoin network in July 2017, with the largest miner Bitmain expressing support and other miners following suit to implement the upgrade. SegWit also laid the foundation for the Lightning Network, a protocol built on top of the Bitcoin blockchain that enables off-chain transactions.

4 Ending

The blocksize war was a technical debate between 2015 and 2017 over scaling the Bitcoin blockchain software. The debate exposed deeper practical and theoretical arguments within the crypto ecosystem, such as who controls the protocol and the long-term plans for Bitcoin's market share. The blocksize war encompassed multiple technical changes and events, including the creation of Bitcoin Cash and the adoption of SegWit.

Reference articles:

https://www.bitstamp.net/learn/crypto-101/what-was-the-blocksize-war/

https://www.coindesk.com/learn/what-is-the-bitcoin-block-size-debate-and-why-does-it-matter/

https://steemit.com/bitcoin/@tobixen/a-brief-history-of-the-bitcoin-block-size-war