Whats the big innovation with this Bitcoin thing?
Bitcoin has solved the byzantine general problem for computer science, allowing for a trustless payment system with no double spending. But how trustless is it really, if there is a group of individuals who have power to change the core software?
It turns out that nothing is really trustless, but Bitcoin certainly comes close.
This is a continuation of my previous article. In the last article I focused on the permissionless nature of Bitcoin. I had a discussion with someone on Twitter. The main pain point of the discussion was the Bitcoin was not permissionless because not everyone can participate in changing the code.
To clarify this questionable position, read on to learn about how consensus is determined for updates to the bitcoin core protocol.
We will discuss BIPs and highlight their role in the 2017 SegWit update.
Over the years we’ve seen various methods emerge for finding consensus on protocol changes. In particular, BIP-34 in 2012 and BIP-9 in 2015.
BIP stands for Bitcoin Improvement Proposal, and a BIP instance is essentially a document that proposes changes to the core bitcoin technology. They are the standard way of communicating ideas — given that Bitcoin has no formal structure.
How exactly do Bitcoin Improvement Proposals work?
The first BIP was submitted by Amir Taaki in 2011.
The BIPs are assigned a status, as seen in the ‘Status’ column above. It must pass the first editor to become a Draft, from which it can be deferred or Withdrawn by the author, or (more excitingly) accepted or rejected by the community.
As defined in BIP-1: https://github.com/bitcoin/bips/blob/master/bip-0001/process.png
In order for a BIP to become accepted and labeled as Final, each of the following conditions must be met:
- Follows the correct format as specified by BIP-1
- Includes code implementations of the proposed changes to the protocol
- Has 95% support from the last 2,016 miners (~14 days worth of mining with 10 min blocks)
- Miners can vote for or against a BIP by including the appropriate data in their hashed block.
Depending on the BIP “Layer” specification, a BIP acceptance may signal a “soft fork” upgrade wherein the community members (exchanges, companies building payment technologies, exchanges, miners, etc..) must upgrade their versions of the protocol to allow for the newly built functionality.
A notable example is the 2017 Segregated Witness soft fork (see BIP-141 and BIP-148).
One way that the Bitcoin community makes decisions is through Bitcoin Improvement Proposals (BIPs). A BIP is a document that proposes a change to the Bitcoin protocol. Anyone can submit a BIP, and the community then votes on it. If a BIP receives 95% support from the miners, it is considered to be accepted and is implemented into the Bitcoin protocol.
This consensus model ensures that no one person or group has control over the future of Bitcoin. It also allows for the Bitcoin community to evolve and adapt over time.
Here is an example of a successful BIP:
- BIP-141: Segregated Witness (SegWit)
SegWit was a soft fork that was implemented in 2017. It improved the scalability and security of Bitcoin.
Here is a summary of the Bitcoin consensus model:
- Anyone can submit a BIP to propose a change to the Bitcoin protocol.
- The BIP must be approved by an editor.
- The BIP must be voted in with 95% support from the miners.
- The community must upgrade to the new software version.
This consensus model ensures that the Bitcoin community has a say in how the currency is run and that no one person or group has control over its future.
And all of that make Bitcoin the most important innovation out there.
Join the revolution:
Your humble pleb,