The Blocksize War by Jonathan Bier

I can see why this book sits high up in the Bitcoin canon. It's about much more than a dispute over how large bitcoin blocks should be, which turned out to be a heated, multiyear war with all kinds of twists and turns. But it's also about how things aren't always as they seem, about how people foolishly stake their reputations and credibility on the wrong things, and about the importance of thinking long term--really, really long term--about what this "Bitcoin thing" really is and why we shouldn't muck around with it too much.

So many aspects of this debate were absolutely fascinating: 

* One side (the big blockers) routinely failed to see second-order consequences, while the other side (the small blockers) rarely failed not to see them. Frankly, the big blockers were outclassed on nearly every front, as the small blockers had a far more sophisticated understanding of both the technical and economic implications of Bitcoin. Also the small blockers brilliantly channeled both Napoleon (never interrupt your enemy when he is making a mistake) and Sun Tzu (wait by the river long enough, and the bodies of your enemies will float by).

* Long term vs really long term: the large blockers thought they were thinking long term, worrying that without larger blocksizes, fees would be too high for small and high-volume transactions on Bitcoin. But this was limited thinking: it thought of Bitcoin as just another payment processor, when it could be far, far more important as a rigorous, non-debaseable, stateless, uncensorable money. They failed to appreciate how important Bitcoin's stability and "untinkerability" would eventually be, nor did they consider the idea that high-volume transactions would be much better performed on a second layer, with final settlement done on a robust and stable Bitcoin as a base layer. Quite a number of important Bitcoin players (Coinbase CEO Brian Armstrong stands out here in particular) embarrassed themselves here with a lack of vision and a lack of deep understanding of what Bitcoin really is.

* You will come to think quite differently about the small blockers' aggression, mockery and "toxic maximalism": the small blockers were "mean" but they were protecting Bitcoin's most fundamental properties: its decentralization and permanence. The big blockers were centralizers and at times quite dictatorial in their scheming, and I couldn't help but think about some of the lessons from other recent books I've read like Democracy Inc. and The God that Failed. Totalitarianism and centralization always arrive with a smiley face and seemingly good ideas. If you're a totalitarian behind a smiley face, that's totally okay, right? Note also this protip: if you can control the speech of others (by demanding they be less "toxic" for example, or to give a more modern example, censoring them for "hate speech"), you control the playing field upon which ideas are debated. And then, you're just a few small steps away from controlling everything else too. It just goes to show that, sometimes, being nice and collaborative is the wrong move both tactically and strategically.

* Incompetent media coverage: the media coverage of this debate was covered utterly incompetently, not just in the general media (in the "postmodren" era one comes to expect incompetence in the general media), but in crypto industry media too, which should have known better. It's just like media coverage during wartime: it's rarely accurate and never the full truth, and mostly just propaganda parroted from sources with an agenda. There was so much fog and so pathetically little expertise in general media coverage on Bitcoin in those days that it was actually anti-knowledge: it made you dumber.

Author Jonathan Bier has a straightforward, direct and no-nonsense writing style. This isn't Jon Krakauer in Into Thin Air shaping events into a gripping narrative arc, but Bier does what he's supposed to do: tell what happened, distinguish fact from opinion, state what is known and what is not known, and do it all impartially. This is a truly fair author and I respect him for it.

If you're geeking out over Bitcoin and cryptocurrencies, you will really enjoy this book, and it will send you down dozens of different rabbit holes: to videos, talks, presentations and panel discussions (see the bottom of this post for a ton of links to various media from that era). Enjoy!

Notes:
Chapter 1: First Strike
1) Big blockers vs small blockers, with four interrelated issues at stake:

a) the level of block space available in each Bitcoin block
b) how to modify the rules of the Bitcoin protocol
c) the significance of the nodes of ordinary users
d) time preferences: should Bitcoin go for market share right now, thinking of itself as competing against other payment processors? Or should think of itself in far longer term time frames, and think of itself as a highly stable "base layer" on which many more types of things can be built? Should we be thinking decades ahead when making decisions?

2) Mike Hearn and Gavin Andresen launch Bitcoin XT, a hard fork, proposal BIP 101. BIPs required a 75% threshold to pass, and this BIP would also require software upgrades for anyone running a Bitcoin node.

3) Gavin purchased 20,000 Bitcoin for $50 in 2010 and then created a "Bitcoin faucet" (a website to give away the Bitcoin): all people had to do is complete a captcha and then they would be sent around 5 Bitcoin for free. (!) "This greatly contributed to the success of the network in the early days by distributing the coins to a wide number of people."

4) Mike Hearn was a Google employee who worked on bitcoin as part of his "20% free time project" while at the company.

5) The large blocker argument was easy to articulate and seemed very "obvious" whereas the small blocker arguments were somewhat complex, they dealt with second- and third-order effects; the small blocker argument also tended to confuse people who didn't understand Bitcoin well. [There's a major insight lurking in here: sometimes you might think the answer to a debate is clear, but that clearness is either an illusion or it's a cue to go deeper, a cue to indicate you don't fully understand the issue well enough. Things rarely render themselves for you in easy, clear and obvious terms! And by the way, when they do render themselves this way for you it probably indicates you are falling for the Dunning-Kruger effect.] Finally, one of the key meta-arguments--which was really about how easy or hard should it be to "tinker" with Bitcoin--was kind of lost on most of the large blockers.

6) See also the free speech debate on the Reddit subforum r/bitcoin, where discussion of Bitcoin XT was "censored" (per some), but (by other peoples' views) just required to move to its own separate subreddit. This angered a lot of the libertarian and anarcho-capitalist bitcoiners because of their free speech leanings.

7) Note that Bitcoin XT's blocksize proposal was very aggressive locking in large blocksize increases over time, finally reaching 8,000 MB on a fixed schedule over 20 years.

Chapter 2: March to War
8) "At the time [2009 to 2011], Bitcoin was pretty useless, and on the surface the system did not appear to have much value or potential. To be interested in the space, one had to have an imagination. One had to see many steps ahead and conceptualize how the system would develop and change over time." [This again gets to the dangers of needing things to be crystal clear to you before you can make the leap to think about what value they could have. People are very interesting to observe when they collide with Bitcoin: many people go blank (including me initially), but some people can instantly see the tremendous implications of it.]

9) Satoshi added a rule tightening, a softfork, limiting block size to 1 MB on 7/19/2010, prior to this there was no blocksize limit. This is the first softfork or first new rule that had some kind of activation methodology; it went into effect at block 79,400, in September 2010. Satoshi never provided a clear reason for the blocksize limit. (Note also the softfork/hardfork terminology wasn't introduced until April 2012).

10) On Jeff Garzik proposing to remove the limit and increase it: submitting a software patch to remove the 1MB rule, arguing that this would enable Bitcoin "could scale to match PayPal's transaction rate." Satoshi's comments at the time indicated that the blocksize limit was supposed to be a temporary measure, and "was already providing instructions on how to increase it, with a clear plan in place."

11) A few years later, in 2015. Satoshi (may have?) weighed in on the debate, arguing the small blocker position from the standpoint of limiting change to Bitcoin, and even calling the XT fork "pretender Bitcoin": "If two developers can fork Bitcoin and succeed in redefining what 'Bitcoin' is, in the face of widespread technical criticism and through the use of populist tactics, then I will have no choice but to declare Bitcoin a failed project... This present situation has been very disappointing to watch unfold." Most people consider this to be a fake message. 

12) On the value of blockspace and the "fee market death spiral" problem: "...the blocksize limit would prevent fees falling too low, as users would have to bid against each other for space in blocks, which [in the future] would be full. This blocksize limit would therefore create what economists call a producer surplus, which could incentivise miners once the block subsidy ran out." [On thinking of blockspace as a type of scarce real estate, which would be borne out by what's happening today in 2023 with the development of ordinals on Bitcoin.

13) Also a secondary debate on miner policy of "replace by fee" (RBF) versus "first seen safe" (FSS).

14) The blocksize question was arrayed on a few opposing vectors: 

* short-term versus long term

* prioritizing the user experience versus making the system more resilient

* prioritizing growth versus sustainability

* prioritizing pragmatic/business aspects versus sort of more scientific/theoretical approaches to Bitcoin.

15) Note also the P2SH soft fork in 2012 that Gavin Adresen essentially drove forward.

16) Pieter Wuille, a small blocker, proposed BIP 103, which was to increase the block size limit by 17.7% per year until 2063. The author thought Gavin would react to this by offering a counteroffer, but the large blockers regarded this increase to be so small that it was an insult rather than progress. Also large blockers wanted the block size limit to increase faster than demand for blockspace. "Avoiding full blocks was key, otherwise users would have to wait for an unpredictable amount of time for their transactions to confirm. What merchant would adopt Bitcoin as a payment method if it was as unreliable as this?"

17) Small blockers considered full blocks to be a sign of success, not a sign of crisis; they mocked the large blocker argument with "nobody goes there anymore it's too crowded"; further full blocks would eventually be necessary to stop a fee market death spiral once the block subsidy became low. "It was considered vital to always have a surplus of transactions which didn't get in the blocks and were sitting there waiting to be included; that way, miners always had an incentive to build blocks. If there were no full blocks and no surplus transactions, why would a miner even bother mining if there is no revenue?" [This is quite a compelling argument.] The contra-argument here was why wreck the user experience and transaction speed for a problem that may not show up for 20 or 100 years? Also blocks have not been full during the first five years of Bitcoin's existence, which they claimed was what contributed to its success, wouldn't it be risky to change that now?

18) Bitcoin XT: was associated with Mike Hearn and Gavin Andresen; they had too much control of it and it wasn't seen as grassroots.

Chapter 3: Scaling I - Montreal

19) A conference in September of 2015 in Montreal to resolve the conflict face to face rather than on online forums. Gregory Maxwell ("One Meg Greg" as large blockers pejoratively called him) and Gavin Andresen as the key protagonists on the (respectively) small and large blocker side.

20) A short tangent on the author's firm Ruffer investments, which in 2015 was cool to Bitcoin but in 2020 bought $700 million for clients, "a monumental moment for the ecosystem, especially in the UK."

21) When Bitcoin first came out there was no real distinction to between validating nodes and mining nodes, but by 2015 there were now specialized mining farms.

22) Fascinating to see the earnest and principled discussion at this Montreal gathering. The "rough consensus" concept.

Chapter 4: Scaling II - Hong Kong

23) A few months later a the second scaling meeting was held in Hong Kong, chosen due to proximity to China where many of the Bitcoin miners were based (65% of the hash rate was in China at that time); in these days there was a lack of engagement between miners and developers and it was seen as a major problem at the time.

24) Large blocker conspiracy theories about Li Ka-Shing son Richard Li as well as AXA, both largely deranged theories claiming they were involved in plots to cripple Bitcoin and keep the blocksize small.

25) 8 MB blocks would it be a disaster to synchronize according to the miners, also the miners wanted to assert their power, claiming that the decision was mostly theirs; however, it wasn't totally clear whether the miners had this power or not.

26) Roger Ver ("Bitcoin Jesus") was also at this conference; his backstory; note how he had assured people that Mt. Gox was solvent after reviewing "multiple bank statements" but then a few months later its spectacularly failed, damaging his reputation. He was a large blocker as well.

27) Bitcoin XT was pretty much dead after this, although it was the initial catalyst that touched off this whole controversy.

28) "Doesn't Gavin [Andresen] realize that bitcoiners do not like being told what to do?"

29) The author starts to grasp the deeper, underlying issue isn't blocksize per se, but limiting "tinkerability" with the protocol, keeping it stable: "I began to realize that the rules of the network had to be robust. It doesn't matter who is trying to change the rules, or whether it's a good idea or not. If Bitcoin is going to succeed, it had to be really difficult to change the rules."

30) The large blockers didn't believe this was a "change of rules"--they thought it was sticking to the original vision.

Chapter 5: SegWit
31) On "Segregated Witness," a way of increasing the Bitcoin block size via softfork rather than hardfork; the "signature" is typically the largest part of the transaction based on the amount of data. SegWit was a new transaction format where the signature would not need to be included in the old block (which still had a 1 MB limit), effectively this would increase the block size to around 2 MB; also old wallets and new wallets could seamlessly interact with each other. This proposal "was simply so good there were no valid arguments against it." The problem is large blockers who are non-technical didn't really understand SegWit and automatically opposed it, thinking it was a small blocker delaying tactic.

32) SegWit was presented in December 2015, then rolled out ten months later in November of 2016 in Bitcoin core. There was an activation methodology that followed, requiring a 95% agreement of blocks signaling support.

Chapter 6: Lightning Network
33) SegWit set the stage for Lightning; first published in a paper in February 2015, it "works by aggregating multiple payments into a smaller number of Bitcoin transactions. Bitcoin transactions are used to open payment channels which, once set up, facilitate a flow of multiple payments. Entities can have channels with many different counterparties, forming a network of channels. Payments can then find a path along the channels, which are already directly connected to each other, until they reach the final recipient."

34) Doing many smaller transactions on a Layer 2 makes much more sense than doing them on-chain, where all transactions are broadcast to everyone. The Layer 1 functions much better as a base layer of a monetary system, with smaller payments done on a second layer, with the base layer used as a dispute resolution service.

35) The large blockers thought that Bitcoin adoption was all about merchant adoption, they also thought that lightning was unproven and (possibly) would only be useful years in the future: thus from their perspective it was yet another delaying tactic/excuse not to increase the block size limit.

36) The small blockers thought of Bitcoin as a new and highly robust form of money, not a payment system or a business.

37) P77ff in Chapter 6 is a good discussion of the pluses, minuses and concerns about Lightning as early as 2015.

Chapter 7: Bitcoin Classic

38) Alleged DDOS attack on a Bitcoin XT node that took out an entire rural ISP for some number of hours.

39) Brian Armstrong (Coinbase CEO) comes out with a post supporting larger blocks in January 2016. 

40) On the importance of validator nodes to the Bitcoin network, and their importance in enforcing protocol rules; the large blockers did not see validator nodes this way at all.

41) Interesting to hear the author's discussion with large blockers about the nature of who exactly "controls" the network, and what is the nature of the miners' power here.

42) Even experts on both sides of this debate didn't really know the full nature of the 51% attack and what miners might be able to do; many people thought that you could steal user funds with a 51% attack; in reality a miner can only double-spend a transaction where they have a valid signature for two conflicting transactions, this is a very narrow case.

43) Brian Armstrong comes across as a little bit doofish here with his support of Bitcoin XT (which was already DOA at this point), with his deleted tweets, and with his lack of understanding of how Bitcoin really worked. Still bald though!

44) Mike Hearn, frustrated, sells his Bitcoin and rage-quits the protocol, note that Bitcoin's price in those days was around $432. Jesus. 

45) On the launch of Bitcoin Classic on February 10th 2016, which was a one-off jump to 2 MB blocksizes with Gavin Andresen as lead developer. It had a 75% miner activation threshold, same as Bitcoin XT, "a tactical blunder" per the author: With Bitcoin (in contrast) a 95% threshold was used ever since the April 2012 P2SH softfork which had a 55% threshold; the 45% of miners who hadn't upgraded then produced invalid blocks for several months after the activation, which was considered a huge problem.

46) Note the "wipeout" problem with a disputed chain of both large and small blocks; see the fact that the small blockers understood this and the large blockers thought it wasn't a concern ("do not interrupt your enemy when he is making a mistake"), see also the "rolling window problem" for upgrade rules for Bitcoin Classic. Also note that despite many miners saying they would run Classic nodes the actual miner support was fairly low.

47) Brian Armstrong then throws his weight behind Bitcoin Classic, and whines about how hostile and combative Bitcoin core devs were during this period.

48) "From the small blocker perspective, the large blockers wanted larger blocks but didn't understand how Bitcoin worked or how to conduct a hardfork, so they let their frustration out on Bitcoin Core and the development team, a convenient scapegoat." [It's fascinating to watch the behavior of someone who thinks they understand something when they don't; they tend to continue to make catastrophic mistakes, lash out at the wrong enemy, etc.]

Chapter 8: Hong Kong Roundtable

49) This meeting had an agitated vibe and little trust between miners (mostly Chinese miners at this meeting) and developers. Also the leading miners here wanted the hardfork to happen before SegWit but obviously the developers didn't control Bitcoin Core, nor did they have any control over Bitcoin! They could only commit to writing the code.

50) This meeting resulted in an agreed upon text after a multi-day "struggle session" that nobody was happy with.

51) "Bitcoin shared a lot of characteristics with religion, it seemed, and of course religions fork off and split all the time. Except, religions are not financial assets and you can't trade them against each other." [Heh, good point.]

Chapter 9: Faketoshi
52) On Craig Wright: Gavin Andresen announces that he believes Craig Wright is Satoshi Nakamoto, when Andresen announced this in a blog post everyone thought he'd been hacked--and his access to the Bitcoin core software repository was revoked out of concern. (!) Note also that much later he realizes he got fooled by Craig Wright, Andresen's belief in Faketoshi was tremendously harmful to his credibility, and it was also a "self-inflicted wound" to the large blocker movement. 

53) [Note this short snippet where Vitalik Buterin literally crushes Gavin in a panel discussion, explaining within sixty seconds precisely why Craig Wright was not Satoshi Nakamoto.]

54) Note also that the BBC, The Economist and Wired all announced the "discovery" of Satoshi as well; all pathetic, terrible, pitiful journalism (and indicative of what was to come in today's era). See also Newsweek's self-humiliating article from 2014 "The Face of Satoshi Nakamoto" which doxxed Dorian Nakamoto, a completely unrelated person (!) and gave rise to an infinity of Bitcoiner memes like this one: 

55) [By the way: how in the world can the author of that Newsweek article, Leah McGrath Goodman, still be working as a journalist? Horrendous.]

56) Large blockers invited Craig Wright to conferences and social events, but it was clear that he had a limited understanding of Bitcoin. Even Roger Ver was fooled by Faketoshi. 

Chapter 10: The DAO
57) "The DAO was a smart contract built on Ethereum and styled itself as a kind of autonomous investment fund." Ultimately it was "fundamentally flawed on several levels": tokens weren't fungible, the smart contracts didn't always do what people thought they would, etc. 

58) Ethereum as a next-gen, more flexible, more adaptable version of Bitcoin, attracting a lot of the developers from Bitcoin. Note this is also another source of frustration to the large blockers: they saw the small blockers' stubbornness as driving people away and causing Bitcoin to lose market share. "The small blockers did not seem to mind this at all. They were interested in a transformational monetary system; alternative coins claim to do 40,000 transactions per second didn't seem relevant to that objective." This basically caused a lot of large blockers to give up on Bitcoin, leaving the fight, which helped the small blockers as well. [Again, if you don't like anything about Bitcoin, nothing is stopping you from forking or creating your own coin and working on that! You can even take Bitcoin's code and adapt it, use it, etc.]

59) June 17, 2016: the famous DAO hack; a hacker found an exploit and drained ETH into a "child DAO"; the changing of Ethereum's protocol to recover the funds; this response was seen as extremely controversial; also that initial softfork was flawed, so later a hardfork was done.

60) [I love how this guy is such a geek about this stuff!] "The hard fork was scheduled for Wednesday July 20, 2016. Keen not to miss the event, I booked the day and the following day off work. I also purchased a new computer, so that I would have enough local resources to run both Ethereum clients: one upgraded for the hardfork, and one older version."

61) The hardfork actually went wrong and created a separate coin, Ethereum Classic, which actually started to trade on exchanges (!) peaking at more than 50% of the price of Ethereum in July of 2016. Note that Ethereum had wipeout protection so that there were going to be two chains ultimately.

62) Note also Coinbase screwing up with the hardfork and getting exploited with a replay attack, where holders of Ethereum can withdraw twice from an exchange; Coinbase found out about the error and covered client losses with its own balance sheet.

63) During the ETH/ETH Classic and DAO hack controversies the Bitcoin block wars subsided for a while; everybody was watching Ethereum. Also, July 2016, another meeting between Bitcoin miners and developers to work out what they could learn from the Ethereum fracas, it appeared that many miners were increasingly sympathetic to the small blocker worldview: changes to the Bitcoin protocol could be risky, just look at what happened with Ethereum. "The Ethereum split was a pivotal moment in the blocksize war. It handed the initiative to the small blockers" because the miners were now fearful of a similar event happening with Bitcoin, and this presumably would risk their hardware and the value of their mining operations. Suddenly the miners became much more cautious. Also per the author, "Ethereum may have saved Bitcoin."

Chapter 11: Scaling III - Milan

64) Scaling III was October 8th and 9th, 2016. There was little discussion of blocksize at this conference but there was a contingent of large blockers at the event, including a group of people supporting a new hardfork called Bitcoin Unlimited (this will come up in later chapters); at this conference the large blockers had a "free speech" event outside of the conference.

65) The Chinese miners were becoming part of this war, taking sides: some large and some small blockers. [I didn't know how powerful Bitmain was as a miner in those days and how powerful Jihan Wu was as Bitmain's leader.] Jihan Wu and Bitmain were large blockers and this also antagonized other miners because Bitmain had quite a bit of control over the market for components and mining rigs in China.

66) November 2016 was the release of the SegWit softfork activation parameters.

Chapter 12: Bitcoin Unlimited

67) A new hardfork of Bitcoin with a blocksize increase built in, it was complex and "deeply technically flawed" and "another monumental strategic error from the large blockers." It had flexible parameters for the blocksize limit, and miners and users could add or change parameters.

68) The bullet points the author gives from Roger Ver's speech at the Bitcoin Unlimited promotional event in Shenzhen China is a very good articulation of the key facets of the large blocker argument:

* During the early years of Bitcoin, blocks were not full and transactions were cheap; Bitcoin Core has a deliberate strategy of full blocks which is a major economic change
* Low transaction fees made Bitcoin successful up until this point [small blockers here would argue that high transaction fees are fine! It means more security for the network and more security for the very long term of the network once block subsidies run out]
* The intention was always to increase the blocksize limit, but now people are preventing this [I'm not sure Ver is right about this, it wasn't always the case; further "the intention was always to X" isn't a relevant argument: Bitcoin is a consensus network]
* Small blockers don't understand economic code; they understand computer code [this was also not true, in you could argue that a lot of the large blockers understood neither: they were too short term in their economic thinking and didn't deeply understand what Bitcoin could really be]
* Small blockers want Bitcoin to be a high fee interbank settlement network; large blockers want it to be peer-to-peer cash network
* Altcoins will take share if Bitcoin isn't easy and convenient to use [small blockers would argue here "so what? Let them build or use whatever they want"]

69) "I remember thinking how much of a shame it was that Roger was focusing all his energy on this internal conflict, rather than promoting the space to outsiders and new merchants as he had in the past."

70) See also Jerry Chan arguing that the block size will converge on one chain [here he argued that it would be Bitcoin Unlimited] just like in nature you see convergence. [Note that it's also true that Bitcoin had already "converged" to something that was highly functional and probably shouldn't be mucked with!]

71) Note also one unethical aspect of the large blocker argument: they would represent that "Bitcoin Core wanted X" or argue that the rules were imposed from Bitcoin Core; in reality that's not true! The rules were determined by user nodes and they were designed to be difficult to change. Either the large blockers didn't understand this or they made sure to avoid mentioning it because it weakened all of their arguments for change.

72) Bitcoin Unlimited's "sticky gate" problem: scenarios had not been fully thought through, an indicator of the desperation of the large blockers; see also the "median EB attack" which was a critical weakness, along with a variety of other weaknesses.

73) [It's kind of astounding that Roger Ver would support Bitcoin Unlimited, it's somewhat embarrassing. Also remember the name Jerry Chan, he was pretty much a slut for Bitcoin Unlimited as well and probably has little to no credibility. Also again Brian Armstrong supported it too, highly embarrassing.] "None of these individuals seemed particularly interested in the nuances and the new parameters involved. They just wanted larger blocks."

74) Also in March 2017, a DoS bug was introduced into the Bitcoin Unlimited code which caused almost all the Bitcoin Unlimited nodes to crash.

75) A beautiful argument by Meni Rosenfeld: "Bitcoin is voluntary money. People use it because they choose to, not because they are coerced. [Large blockers] are basically saying that if some of us want to use a currency specified by the current Bitcoin Core protocol, it is ok to launch an attack to coax us into using their money instead. Well, no, it's not ok, it is shameful and morally bankrupt. Even if they succeed, what they end up with is fiat money and not Bitcoin."

76) Note also the large blockers had allocated a budget of $100 million to mine empty blocks and attack Bitcoin in order to kill the chain; note also that once that money had been spent, the small blockers could just revive their chain... [This was a pretty embarrassing failure of second-order thinking from the large blockers.]

Chapter 13: Exchanges

77) During the year or so of the blocksize war several large cryptocurrency exchange companies emerged Bitfinex, BitMEX, Poloinex. This is a new vector of the blocksize war and these exchanges were largely persuaded by the small blocker arguments.

78) See also March 17th, 2017, when Bitfinex, Kraken and Bitstamp jointly announced they would not consider Bitcoin Unlimited as Bitcoin, in large part because of replay risk which would directly affect exchanges; clearly they had learned the lessons of Ethereum Classic. Also things were greatly complicated by the fact that some of these exchanges were offering leveraged futures, derivative contracts, etc., which would make a replay problem significantly worse.

79) Also note Bitfinex listed a futures contract for both Bitcoin Unlimited and Bitcoin, a "versus" contract, so people could put real money at risk to monetize one coin over another, and let the market decide. "Bitfinex would go on to list four more chain-split tokens in 2017 for other hardfork proposals." Note that Bitcoin Unlimited never reached more than 20% of the price of Bitcoin and then quickly dropped to 3%, and then by the end of the year it expired worthless because no chain split actually occurred.

Chapter 14: ASICBoost

80) Gregory Maxwell alleges that Bitmain and Jihan Wu gave lied when giving reasons for opposing SegWit; they had discovered a mining optimization shortcut it didn't work with SegWit transactions. In other words their reasons for opposition to SegWit were financial, not the reasons they stated. 

Chapter 15: Dragons' Den

81) Accidental exposure of a Slack channel of small blocker trolls, it included some moderators of the Bitcoin subreddit. "To the large blockers, this was a major scandal, evidence of coordination on the small block side, a link between the Bitcoin subreddit, Bitcoin Core and a propaganda campaign."

82) The author gets inside Dragon's Den, sees a ton of discussion: on who could be convinced to join the small block camp, on producing memes, on what were the most effective ways to use social media, etc. He actually doesn't see anything sinister or particularly bad.

Chapter 16: Litecoin

83) SegWit was activated on Litecoin on January 12th, 2017, by a user-activated softfork (USAF), showing both that it worked and that the problems large blockers feared were nonsense. Note that Litecoin had (has?) a 75% miner activation threshold, not 95% as Bitcoin did. Also it appears Charlie Lee (Litecoin's founder) appears to be a small blocker; note also you could test things out on Litecoin before trying it on Bitcoin [this is perhaps a meaningful part of the Litecoin's value].

84) There were problems with this rollout: the hashrate spiked in April, and it appeared some miners weren't flagging for SegWit but rather blocking its activation; it appeared that this was coming from Jihan Wu and his miners. "It now appeared as if the Bitcoin scaling wars had migrated over to Litecoin."

Chapter 17: User-Activated Soft Fork

85) Anonymous user Shaolinfry formalized a proposal that was a softfork to activate a softfork: basically it would be a proposal that would force miners to flag support for Segwit by a consensus rule which would thereby activate it. This is a user-activated softfork (UASF).

86) This was considered very risky and controversial: it could result in a chain split; at this point the large blocker camp had repeatedly factioned off: to people who believed in Craig Wright/Faketoshi; to people who thought he was a con man; to people who liked Bitcoin Unlimited; to people who hated it; to people who had left to launch new ICOs; to those who stayed with Bitcoin. At this point the small blockers had been far more united, but this UASF was splitting them up as well; see the reaction from Gregory Maxwell, wanting SegWit to be compatible with older nodes and wanting miners and node owners to be able to upgrade on their own schedule, arguing "first do no harm"; that we should not be "the fastest"; that other all coins can do things like this; that  Bitcoin's reputation is based on stability and integrity, a system of money people can count on. etc.

87) Even the coder Peter Wuille, who wrote much of the SegWit code, voted against the UASF proposal.

88) The large blockers didn't know enough about Bitcoin to understand the potential weakness that was exposed this point, they failed to take advantage.

89) [It's fascinating how war can be very iterative; it can fake people out in multiple ways; the small blockers had had so many victories in a row, and the large blockers had faced so many successive defeats that the large blockers didn't see this as an opportunity at all; they simply didn't really understand the ramifications of this UASF. The large blockers were now overestimating the power and influence of the small blockers; again, not understanding the overall backdrop in the fog of war. Absolutely fascinating.]

Chapter 18: New York Agreement
90) Barry Silbert organizes a meeting in New York, resulting in another agreement, an attempt to resolve a stalemate and save face for Jihan Wu; many important signatories, including Gavin Adresen, Roger Ver's company Bitcoin.com and Coinbase. Roger Ver liked it because he thought it would "get rid of Bitcoin Core." Note also there was no small blocker representation here: this "agreement" was written entirely by the large blocker side. This agreement set out a plan to launch SegWit2MB, basically to do both SegWit and a hardfork blocksize increase to 2MB. 

91) The document didn't take into account that Bitcoin users control the protocol. It felt like a threat or ultimatum, or a top-down decision; as if it was Bitcoin XT, Bitcoin Classic and Bitcoin Unlimited all over again "except this time with much more industry support."

92) This SegWit2MB upgrade had all sorts of bugs and problems to it. The lead developer on this upgrade Jeff Garzik did not appear to understand Segwit, this upgrade didn't even include a blocksize limit increase at first.

93) Note that Jeff Garzik wrote a great articulation of this argument/debate. "There are two groups of people which have two different visions for bitcoin. None of these visions is 'wrong'. One group values more things like decentralization, lack of government, censorship resistance, and anonymity. This group thinks that Bitcoin will transform our world in 20-30 years. To reach this goal, it's of utter importance to stick to those values. There is no rush. The other group values more things like reaching one billion users in the next 5 years, or serving real unbanked users today, even if that requires a political agreement now. Both visions have their merits. But they are incompatible."

94) On launch on testnet BTC1 split into two chains and was very buggy. Through July and August 2017 it was extremely difficult to keep track of what was going on, even author Jonathan Bier struggled with interlocking deadlines, activation mechanisms, and different miners flagging support for different softfork rules. Ultimately the UASF was adopted, and if you think about it, it was released to the world by a pseudonymous developer in a way quite consistent with the spirit of Satoshi, and this happened going head-to-head with a multi-billion-dollar enterprise Bitmain and other well-capitalized businesses advocating against it, and yet the small blockers still won here: SegWit had activated.

95) There was still a hardfork that was scheduled to happen in just 3 months after this.

Chapter 19: Bitcoin Cash
96) June 30th, 2017: a large blocker conference in Arnhem in the Netherlands. Amaury Sechet gives a presentation "Back to Basics" on a new hardfork Bitcoin ABC, deliberately arranged to coincide with the UASF deadline; a clean hardfork with a block size limit increase that excluded Segwit supposedly, although it actually did include a lot of Segwit functions; this was finally what the large blockers wanted; it got the name Bitcoin Cash.

97) "We were therefore finally going to have a clean split, and the two sides in this war could peacefully part company."

98) Bitcoin Cash had a potentially fatal flaw because it lowered the difficulty requirement and had a new difficulty adjustment algorithm that "incentivised miners to leave the network and then return when the difficulty adjusted and profitability improved." This meant that there was much more volatility in Bitcoin Cash's network capacity and it affected its reliability as a payment network. Note that significant improvements have been made to BCH's difficulty adjustment algorithm but it still hasn't solved the problem entirely.

99) One of the early block miners added an address in Hong Kong in the third block ever mined of BCH; it was a marketing stunt for a Bitcoin meeting space in Hong Kong; the author (who was in Hong Kong at the time) and another Bitcoiner, Ben Delo, went out searching for the address in the middle of the night to see where it was and what might be there. Awesome geekery. 

100) [I now understand why there's so many Twitter idiots promoting Bitcoin Cash and Bitcoin Satoshi Value still despite the fact that these are clearly not Bitcoin at all, these are just large blockers that still delusionally "believe" in their version of Bitcoin.]

101) Large blockers now "finally had their freedom. They finally had a coin to promote to merchants again." The small blocker strategy "appeared to be to ridicule the new coin as a stupid idea."

102) Note also that every holder of Bitcoin before the split now had an equal amount of Bitcoin and Bitcoin Cash. Note also certain small blockers had a very sophisticated tactical response to Bitcoin Cash: they didn't want it to collapse in price too quickly, because then the large blockers would return to fighting over Bitcoin again; the small blockers would rather have the large blockers just "leave Bitcoin" and have their own coin. "It was therefore considered important to ensure Bitcoin Cash had sufficient 'exit momentum' to make certain that some of these large blockers left for good." Verrrrrry interesting.

103) Exchanges struggled with Bitcoin Cash and efforts to trade it from customers; it wasn't clear if the mining of Bitcoin Cash was secure enough yet for exchanges to accept deposits, etc. "Kraken, in particular, handled the situation extremely poorly."

104) Those exchanges that offered leverage or margin or Bitcoin debt markets had problems because you could (theoretically) have a 3X margin long position and collect four Bitcoin Cash coins for each of your Bitcoin for example; or if you were short Bitcoin at the time of the hardfork you were then automatically short Bitcoin Cash. There were all kinds of asymmetries and arbitrages that could be exploited both within and between exchanges.

105) About a week after Bitcoin Cash's August 1, 2017 launch, Bittrex and other major exchanges finally started to accept Bitcoin Cash deposits, around August 6th 2017. "Up until this point, there was no way for the small blockers to sell their Bitcoin Cash." There were delays but pretty quickly the price instantly plummeted.

106) Note the sophistication of many small blockers in terms of financial ramifications here: because all large blockers (for that matter all Bitcoin Cash holders) would have an equal amount of true Bitcoin, if the price of Bitcoin Cash as a percent of Bitcoin dropped too low, they could in theory cheaply buy up and corner Bitcoin Cash (!) so the idea was to keep the exchange ratio higher (at least for some period of time) to make it more expensive for this to happen. This is why small blockers encouraged fellow small blockers not to sell. "Make them pay" was a popular phrase used to convey the idea. The author finds these developments "absolutely fascinating." [so do I!] "What had been very much a cold war, essentially a battle about communications and politics, was now very much a financialized hot war about investment flow, markets, trading and profits."

Chapter 20: SegWit2x
107) Jeff Garzik really strikes me as a kind of useful idiot in this conflict. He didn't understand the strategic terrain, he made many tactical errors, he also unintentionally did things that helped the small blockers without realizing it, and later committed significant hypocrisies by arguing for small blocker and other positions which were the precise opposite of what he argued against four years earlier. Even the author is saddened by this.

108) The New York Agreement and its rollout of SegWit2x appears dead in the water, signatories to the agreement started defecting based on the argument that the large blockers already had their success now that they had launched their hard fork; plus there was no replay protection for this second part of the New York Agreement. Nobody wanted to do the step second step of this agreement, and clearly the small blockers really out strategized everybody here! Nobody wanted to go through this next step and they all defected from the agreement.

109) Coinbase also abandoned the NYA and said it would regard the SegWit2x coin as a separate coin. Then, two days later, Coinbase put out another blog post contradicting the prior one, and they said "We are going to call the chain with the most accumulated difficulty Bitcoin." This made no sense once you thought about it: Coinbase would pick a coin that would "inherit" the original, and then they'd have an existing order book and an existing ticker, so they'd have to shut down their exchange if one chain grew longer than the other. Also after what point would they determine which chain was "true" Bitcoin? They never revealed that either.

110) The final scaling conference, Scaling IV, took place at Stanford on November 4th and 5th, 2017. The author said it was quiet and calm and "it was clear the war was coming to an end."

Chapter 21: Victory
111) SegWit2x supporters essentially give an unconditional surrender in an email to the SegWit2x mailing list signed by prominent SegWit2x supporters, essentially abandoning phase two of the NYA, this is the point the author marks as the "formal cessation of hostilities." Signers of this email were Mike Belcher Wences Cesares (!! I didn't know he was a large blocker), Jihan Wu, Jeff Garzik, Peter Smith and Eric Voorhees.

112) "It was now, finally, widely accepted that arranging meetings with large corporates in the space and trying to decide on changes to the protocol rules would not work... If one wants to change the protocol rules, one has to persuade and campaign for the support of end users and investors, who need to opt-in to the new rules."

113) [Money quote here] "In some people's minds, the idea of a system controlled by end users is too difficult to grasp. Instead, they look for somebody or some entity who controls the system. Some people cannot fathom the idea of a system which has global consensus, but lacks a leader."

114) Bitcoin Cash's price increased tremendously when SegWit2x's abandonment became known. It went from 8% of Bitcoin's price to 48%, then crashed shortly afterwards. Note that a lot of large blockers had a telegram group called Chain Death (this refers to the potential death of the Bitcoin chain and the rise of Bitcoin Cash as the dominant coin); also a lot of large blockers "purchased more Bitcoin cash at the height of the bubble, hoping it would overtake Bitcoin." The idea here was that Bitcoin Cash would show its superior utility as a medium of exchange, which would make the miners see it as more profitable and ditch Bitcoin for Bitcoin cash. Small blockers (correctly) considered this "sheer idiocy."

115) SegWit2x activation came on November 15th and it was full of bugs. Due to the catastrophic bugs, the SegWit2x chain never existed and no blocks were ever produced.

116) December 17th, 2017: Coinbase had listed Bitcoin Cash, which then traded to $8,500, and Coinbase couldn't handle the demand and experienced large delays, it was a botched listing.

117) Roger Ver likely spent tens of millions of dollars tirelessly promoting Bitcoin Cash for years. "However, in spite of these efforts, the coin never really gained traction compared to Bitcoin." Worse, Bitcoin Cash even had lower on-chain transaction volume than Bitcoin itself, this obliterated the main narrative for Bitcoin Cash in the first place.

118) Bitcoin Cash then had its own hard fork in November of 2018 creating two coins Bitcoin cash and Bitcoin Satoshi Vision--Craig Wright's chosen coin--this was proof that "there was merit in the idea that, in the event of a dispute over the rules, the original rule set is a key schelling point. If one diverts from this philosophy, the risk is that the coin continues to split into smaller and smaller factions. The large blockers were painfully experiencing this firsthand" [as Bitcoin Cash factioned off to Bitcoin Satoshi Vision, and then both coins declined further in price compared to Bitcoin].

119) Even Roger Ver finally gets it at the height of the battle between Bitcoin Cash and Bitcoin Satoshi Vision: "One thing that I guess I have learnt a little bit here, is that the [Bitcoin] Core people previously were really really opposed to any sort of contentious hard fork and I think there is some merit to being afraid of that, because we are seeing right now the damage that can be caused by having a contentious hardfork." 

120) [Note: later in my own research I came to learn that Roger Ver himself said that he sold the vast majority of his Bitcoin in order to buy Bitcoin Cash, referring to how people laughed at him back in the early days of Bitcoin when was "Bitcoin Jesus" and they're laughing at him all over again now because of his belief that Bitcoin Cash is the "real" Bitcoin and the one that will have real value. It's interesting how you can get one call tremendously right, and then lose the vast majority of your potential wealth on an equally confident second call. Most of our calls are luck, most of our calls will be wrong, and it's really, really hard to see the implications of this truth.] 

121) See also here where Roger Ver has some challenges maintaining emotional continence in a feisty discussion on Bitcoin Cash. 

122) As of 2021, Bitcoin Cash trades at about 1% of the price of Bitcoin (as of the date of this post it's well less than 1%).

123) "While there is uncertainty over who was right on the narrow blocksize issue, there is now little doubt when it comes to the broader issue of the flexibility of the consensus rules and how to change them: the small blockers were on the right side of history... The large blockers could have won this war, and they came pretty close. At the start of the conflict, the large blockers had significant support. It was only due to an extraordinary series of events, and several monumental tactical blunders from the large block camp, that crisis was averted and the small blockers succeeded in changing the minds of the community and eventually emerged as resounding victors."

124) The author goes on to posit that this war may only be a "dry run" for some future conflict between government monetary systems and user-driven money, and thus the future battles may be over censorship resistance rather than scaling or blocksize, and the conflict will come from the financial and political establishment with its considerable resources.

To Read:
Jonathan Bier: Reckless: The Story of Cryptocurrency Interest Rates

People to look up and follow in the Bitcoin space:
Adam Back: inventor of hash cash, later CEO of Blockstream
Gregory "Bitcoin Wizard" Maxwell: small blocker, uncompromising, co-founder of Blockstream, strong understanding of many of the fields Bitcoin touched: cryptography, game theory, incentives 

Luke Dashjr: small blocker, Catholic father of seven, strong technical understanding of Bitcoin and a nonlinear and non-consensus thinker
Cory Fields: worked on the Bitcoin foundation
Johnson Lau: co-author of SegWit
Matt Corallo: Blockstream co-founder (Blockstream created the Green Wallet)
Jihan Wu/Micree Zhan: co-founders of Bitmain (later Jihan Wu became a promoters of Bitcoin Cash)
Charlie Lee: inventor of Litecoin 

Bobby Lee: brother of Charlie Lee; founded the BTCC exchange in China
Barry Silbert: early fan of Ethereum Classic; founded Digital Currency Group; won the auction to buy the US-seized Bitcoin from Silk Road [DCG also started Grayscale and also owned Genesis, which blew up into bankruptcy]
Meni Rosenfeld: very good articulation of the problems of Bitcoin Unlimited
Joseph Poon: co-author of the Lightning white paper
Pieter Wuille: wrote a lot of the SegWit code
Jeff Garzik: big blocker, Bitcoin Core developer, key developer on failed proposal BTC1.
Amaury Sechet: big blocker and creator of Bitcoin Cash

Podcasts/Media:
* Adam Back and Gavin Andresen on the blocksize increase: https://www.bitcoin.kn/2015/09/adam-back-gavin-andresen-block-size-increase/ [Holy cow there's a literal gold mine of podcasts on this site up till about 2020]
* Peter Rizun on Blocksize economics: https://diyhpl.us/wiki/transcripts/scalingbitcoin/peter-r/ [see all the other stuff here too about Bitcoin https://diyhpl.us/wiki/transcripts/scalingbitcoin/ ]
* Jeff Garzik's talk at Scaling Montreal: https://diyhpl.us/wiki/transcripts/scalingbitcoin/issues-impacting-block-size-proposals/
* Hong Kong mining panel: https://youtu.be/FknDfW9em9s with extended video here: https://www.youtube.com/live/H-ErmmDQRFs
* Amaury Sechet's talk "Back to the Basics": this is his presentation for what became Bitcoin cash: https://youtu.be/By0w43NQdiY
* Scaling IV presentations Day 1 in SF, includes Bobby Lee's support for SegWit2X https://www.youtube.com/live/LDF8bOEqXt4

* See also Scaling IV Day 2 https://www.youtube.com/live/QkYXPJMqBNk and also the Scaling Bitcoin main Youtube channel: https://www.youtube.com/@ScalingBitcoin