Exit is not consensus: what BTCers might take from the BIP110 experiment

Curtesy of bch-gareth:

In the aftermath of 1st August 2017, with the deadlock finally broken, there was so much to do on both sides that it was easy to build whatever narrative of events suited our worldview. Some were doing it deliberately, to suit an agenda. But setting history revisionists aside, there were honest attempts to work out cause and effect — and they didn't all reach the same conclusion.

Very briefly, for anyone who wasn't there: after years of failing to find consensus as a single community, the schism produced a chain split. What became Bitcoin Cash forked away, giving the "big blockers" the throughput the "small blockers" didn't want. Related but separate: BTC finally activated SEGWIT by soft fork, fixing transaction malleability and opening the door to the Lightning Network.

One thesis that came out of all this was that UASF BIP148 node runners had forced the miners and the big businesses to back down. It was never the only thesis, because a great deal else was going on:

• SegWit had already shipped in Core in November 2016. The vast majority of miners were running software that could activate it; all that was needed was to signal a version bit. Compliance cost them nothing.

• The most determined opponents of SegWit were the big blockers, and by late July it was clear they were forking off anyway — which removed the substantive objection along with the objectors.

• ViaBTC's futures for the forthcoming big-block coin were trading at a small fraction of BTC. The market was telling miners, in public and in real money, which side carried the revenue risk.

• The New York Agreement had signatories believing a 2MB hard fork would follow three months later. Capitulation on SegWit could be framed as one half of a deal rather than as surrender.

It's plausible that BIP148 determined the *timing*. It's a stretch to say it determined the outcome.

But it was an attractive story — David and Goliath, and we all like that one. And it hardened, over nine years, into both legend and dogma.

The thesis, and what happened when it was tested

Here is Hodlonaut, writing in the hours after Saturday's split:

BIP-148 is celebrated as Bitcoin Independence Day, because it proved that ordinary users, running nodes in their homes, could force the most powerful mining cartels and corporations in the industry to back down. The users had no hashrate, no exchanges, no lobbyists. They had conviction and they had nodes, and that was enough.

BIP-110 ran the same play with the same conviction, a reasoning that was shared by all bitcoiners five years ago (Bitcoin is money and not a grift database), and node support at levels at least comparable to 2017. This time the miners and the corporate layer simply refused to follow. They extended their spam-friendly chain and moved on like nothing happened.

Remember yesterday as Bitcoin Dependence Day.

What changed between 2017 and 2026?

Not the users. They showed up with the same fire.

What changed is everything that grew in the years between. ETFs. Treasury companies. Custodians holding millions of coins for people who will never touch a node. Hashrate concentrated into a handful of pools building templates for the whole world. Capture of the governance of the reference implementation resulting in stark philosophical pivot.

I want to be careful here, this isn't about dunking on the BIP110 advocates. But look at the structure of the argument, because it's the clearest statement of the problem I've seen from that side, and it contains its own answer.

The premise is that the same play was run, with the same conviction, and node support at least comparable to 2017. Take that at face value. Same inputs, opposite outputs. There are only two explanations available.

The first is that new dark forces intervened — that ETFs, treasury companies, custodians and a captured reference implementation conspired or converged to thwart what would otherwise have worked.

The second is simpler: it wasn't the node army that won in 2017 either. Everything else that had been building for the previous months and years did the work, the UASF got the credit, and the movement has spent nine years building an identity on a misattribution. Saturday didn't overturn a proven result. It was the first clean test of an unproven one, and the thesis failed it.

Occam has a view on which of those is more likely. And notice what the "dark forces" list is *made of*: ETFs, treasury companies, custodians, pools with template control. Every single item is an economic actor. The explanation for why nodes lost is a catalogue of economic weight — which is to say, the correct answer. He is one step from the conclusion but it's a conclusion resting on a story about 2017 that wasn't true

"Bitcoin Dependence Day" is a good line. It's also an admission: dependence on economic actors isn't something that happened to Bitcoin in 2024. It was there in the whitepaper, in the incentive structure, from day one. Miners incentivised by rewards and the value of those rewards dependent on the rest of the ecosystem.

One factual note, since the claim is load-bearing: "node support at levels at least comparable to 2017" rests on counts of self-reported user agents from reachable listening nodes. That measures operators, not economic weight, and it's trivially inflatable by anyone who cares to. It is not a poll, and it was never a ballot.

The myth, and how it grew

The idea that non-mining full node runners rule the roost, and that soft forks are how they do it, had been taking root for some time before 2017. Andreas Antonopoulos, an enormously respected Bitcoin advocate, sowed the seed. August 1st appeared to water it.

What happened over the following years was something to behold. Saifedean Ammous added philosophical and economic weight, turning the node runner into something like a monetary priesthood. The "sovereign individual" framing was superimposed as the mechanism. Miners were relegated to hired bouncers who protect whatever the real Bitcoiners tell them to protect. Peer-to-peer quietly became pleb-full-node-runner-to-pleb-full-node-runner.

What got forgotten is that miners, businesses, exchanges, wallet developers, payment processors, and these days the custodians holding the coins behind the ETFs and treasury companies, are peers too. Not always likeable peers. Peers nonetheless.

It isn't that non-mining nodes have no role. It's that after the "victory" of the blocksize war, their role became mythical.

Paradigms are useful right up until they're tested

Almost everything we say about how Bitcoin works is analogy. There is no "mining". There aren't really "addresses", or "coins", or "wallets". These are handles for understanding, and they're fine as long as we remember they're lossy compressions of something else.

"Miners will bow to the superiority of sovereign node runners" is one of those handles. It can serve as the foundation of an entire belief system for as long as it isn't tested — or if, when tested, it turns out to describe reality.

Miners aren't interested in paradigms. They're interested in who will buy their coins and at what price.

And it's worth being clear about what was actually being asked of them, because the intention was never a split. The plan was that miners would fall into line at the flag day — as the story says they did in 2017 — leaving one chain, the compliant one. That makes it a coordination problem. And coordination problems turn on who carries the risk of moving first.

For a miner, signalling early was only safe if nearly everyone else signalled too. Get that wrong and you're producing blocks the rest of the network's hashpower isn't building on, at a difficulty set by that entire network, with no adjustment mechanism to make the arithmetic survivable — for as long as it takes to resolve, if it resolves. On those numbers your revenue only works if the resulting coin trades near parity with what everyone else is selling. Not at 20%. Near parity, because the subsidy dwarfs the fees and there's no difficulty discount to compensate. Declining to signal carried no comparable risk: you carry on mining what everyone else is mining and selling into the market that already exists.

Compare 2017. Signalling SegWit was flipping a version bit on software you were already running — the cost of being early was close to nothing, and the cost of being late was a split weekend and a public futures price telling you which side the revenue risk sat on. In 2026 the incentives were the other way round in both directions.

The threat held out to reluctant miners was that if enough of their competitors complied, their own non-compliant blocks would be rejected. But that is conditional on the coordination having already succeeded. It gives no miner a reason to be among the first, which is to say it gives none of them a reason to move at all. Nobody broke rank, so nobody was ever exposed. The threat was circular by construction.

What could have broken the circle is evidence — something a miner could read that made compliance the revenue-maximising choice irrespective of what the others did. As far as I can see, none was offered. No exchange had committed to crediting deposits only on the compliant side. No futures market existed to price the claim. No fund had been assembled to bid for compliant blocks' coinbases at a rate that would cover the risk of being early.

The instruments all existed, and all had 2017 precedent:

• Exchange commitments to credit deposits only on compliant chains. Even two or three mid-tier venues makes non-compliant blocks harder to monetise.

• A listed futures market before the flag day, so the claim could be priced in public. Note that a movement unwilling to have its claim priced is telling miners what it privately expects the price to be.

• A funded buy floor for fork-chain coinbases. The node-running cohort held coins. A committed bid at near parity is a direct mining subsidy, expressed in the only language miners natively read.

• Coin-weighted commitments to sell non-compliant-chain coins. BTC lacks the opcodes to do this non-custodially, but nothing prevents signed statements from large holders.

• Negotiation with two or three pools for a miner-activated deployment they could own and take credit for, rather than an ultimatum issued from outside.

• Tooling and honest guidance for the split — coin-splitting instructions, and a clear warning that a soft-fork split gives users no clean two-way replay protection, since anything valid under the new rules remains valid on the legacy chain. "Don't move your funds, this is a temporary disruption" was, in that light, considerably more reckless advice than it sounded.

2017 (BIP148)	2026 (BIP110)
Cost to miners of complying	a version bit
Cost to miners of refusing	split chaos, price risk
Face-saving off-ramp	BIP91, NYA
Public price signal	BCC futures
Visible economic backing	modest but real

The reaction tells you more than the fork did

A dearly-held paradigm was obliterated on Saturday, and there are only so many ways to absorb that. Three are now on display, and it's worth noting that none of them is the simple one.

The first is denial. Every legacy block after the trigger height drew a tweet characterising whoever found it as attacking Bitcoin, alongside advice that anyone not yet upgraded was now vulnerable, and warnings that reports of BIP110's death were lies and gaslighting.

The second is vindication-through-capture: it failed, therefore Bitcoin is captured, therefore we were right all along. In its cruder form this is Kratter floating the USA and China, in the persons of Foundry and Antpool, colluding to thwart the fork — which requires believing that the two largest pools on earth finding two consecutive blocks is remarkable rather than the base rate.

The third is the one I quoted at the top, and it's much the most honest of them, which is why it's the most revealing. It grants the numbers, grants that the play was the same, and then explains the different outcome by listing what grew in the intervening years: ETFs, treasury companies, custodians, pools with template control, a captured reference implementation. Every item on that list is an economic actor. The account of why nodes lost is, from first word to last, a catalogue of economic weight — which is the correct answer, arrived at honestly, and then filed under betrayal rather than mechanism. It is one step from the conclusion, and that step is the unbearable one, because taking it means the identity built on 2017 was built on a misreading.

From the miners' side, meanwhile, no conspiracy was needed. They kept doing what they have always done, and the market for their revenue is exactly what it was on Friday.

Exit is not consensus

Here's the whole lesson in two lines.

Running a non-standard node gives you the ability to say "I will not accept those blocks." Many people running it gives many people the ability to say "we will not accept those blocks."

That is a veto over your own participation. It is *exit*. It is not consensus, and it is not governance. It gives you no ability to make anyone else produce blocks for your chain, price your chain, or build on it. Used without the rest of the ecosystem, it gives you precisely one power: the power to fork yourself off the network.

How I know consensus is messy

Because we in Bitcoin Cash failed failed to find community consensus twice more (parted from two more groups whose values were too far from ours to want to reconcile with) after 2017. BSV split away in 2018. The ABC/eCash split came in 2021. Saturday was the fourth fork livestream I've watched go out live.

And then, more importantly, because since then Bitcoin Cash has reached consensus and activated upgrades four years running. Not because we agree about everything — we argue plenty, though peer-to-peer electronic cash for the world remains the north star — and not because it's centrally controlled, whatever the BTC maxi story says. We have no reference implementation; there are several node teams and a lot of people quite willing to hold their corner.

What we've evolved is the CHIP process. Despite the name it's nothing like the BIP process, because it isn't primarily a document format. It's a set of recognised obligations on the champion of a change: write it up, gather and publish statements from stakeholders across the ecosystem, respond to objections in the open, demonstrate that opposition has been addressed rather than outvoted, and reach lock-in by November for activation the following May. The burden of proof sits with the proposer, and "enough people are running my software" is not evidence.

I'm not suggesting BTC adopt it. We've had the luxury of learning this in the quiet backwaters, without the price, the press or the institutional stakes, and there's no guarantee the process holds as we grow, or if someone sets out to sabotage it. But the underlying discipline transfers: consensus is something you assemble by talking to people, including people you don't like and don't respect, and it is slow, unglamorous and political.

If it's going to be money, it's money for everyone, adversaries included. Share a money with people and you share the rulebook with them.

To those walking away

I'm hearing of people are saying today that they're disillusioned with "big Bitcoin" and are selling up. I'd gently point out that a public commitment to sell non-compliant coins, made *before* the flag day, was one of the few instruments that might actually have moved hashpower. Made afterwards, individually, in disappointment, it's just an exit.

And it's a loss. I know passionate BTCers whose frustration through all this has been that BIP110 crowded out the things they consider far more important — the covenant work, CTV, LNHANCE, the primitives that might let Lightning actually scale non-custodially.

I don't ultimately mind which chain delivers peer-to-peer money to the world. BTC still has the majority of the market and an enormous amount of clout. That's an opportunity, and ironic to see it squandered arguing over whose nodes count!

One observation from the other side of the fence, offered without triumphalism: we haven't had the inscription problem to anything like the same degree, and I don't think that's luck. Adding native capability for tokens and contracts gave people who want to do that sort of thing a way that doesn't fight the chain, and we didn't adopt the discounted-witness-plus-Taproot combination that made bulk data storage cheap and convenient. Root causes tend to be more tractable than the wars fought over symptoms.

So: good luck to those staying in and fighting the good fight. The world needs money independent of governments more than ever.

But before any of the practical lessons here can even be considered, I suspect the full node myth has to go — the belief that your sovereign node is the beginning and end of the matter. It's a fine thing to run. It just doesn't hold the power you've been told it does.