Nitesh ₿: How Does Bitcoin Consensus Work? Part 1 - Atlanta BitDevs - (EVNT005)

Bitcoin is difficult to change. How do we reach consensus to change it? Nitesh walks us through the first half of the Bitcoin Consensus Analysis Project paper, providing an in-depth analysis of Bitcoin’s consensus mechanism and the complexities surrounding protocol upgrades. He discusses the challenges of implementing changes in a decentralized network, the difference between soft forks and hard forks, and various activation methods like Flag Day, BIP 34, BIP 9, and BIP 8. Nitesh also outlines the different stakeholders in the Bitcoin ecosystem—including economic nodes, investors, media influencers, miners, protocol developers, users, and application developers—and their respective incentives and influence on the network.

Chapters

• 00:00 Introduction to Bitcoin Soft Forks
• 00:35 Event Recording and Sponsors
• 02:09 Meet the Speaker: Nitesh
• 02:52 Understanding Bitcoin Consensus
• 05:38 Consensus Rules in Bitcoin
• 08:51 Soft Forks vs Hard Forks
• 14:25 Activating a Soft Fork
• 20:25 Voting Systems in Bitcoin: BIP 34 and BIP 9
• 21:44 Introducing BIP 8: Community-Driven Upgrades
• 23:08 User Activated Soft Forks (UASF) and User Resisted Soft Forks (URSF)
• 24:27 Human Factors in Bitcoin Changes
• 25:31 Stakeholders in Bitcoin: Economic Nodes and Investors
• 33:09 Influence of Media and Miners on Bitcoin
• 36:17 Role of Protocol Developers
• 41:34 Users and Application Developers
• 42:58 Conclusion and Next Steps

Links

• Nitesh
  • X
  • Nostr
• Bitcoin Consensus Analysis Project

Transcript

Nitesh: [00:00:00] Everybody who wants a soft fork or does not want a soft fork. obviously has incentives behind it, right?

Because for someone, Bitcoin is freedom money for someone, bitcoin is number go up. For someone Bitcoin is they don't want to use the fiat system and they just want to like transact only in Bitcoin, live on Bitcoin standard. For someone they're investor. They follow government rules. They only buy ETFs.

It, it is just, just different things for different sets of people.

Stephen DeLorme: This podcast episode is an event recording. If you're listening to the audio version, you might be missing some context from the speaker's visuals. You can find the video version at atlbitlab. com. That's A T L B I T L A B dot com. There might also be audience questions or other background chatter that's not audible.

Look, event recordings are never perfect, but we're sharing it here because we think you're going to find something valuable in [00:01:00] it. Let's talk a little bit about our sponsors first, and then we'll get onto the show.

This episode is sponsored by ATL BitLab. ATL BitLab is Atlanta's freedom tech hacker space. We have co working desks, conference rooms, event space, maker tools, and tons of coffee. There is a very active community here in the lab. Every Wednesday night is Bitcoin night here in Atlanta. We also have meetups for cybersecurity, artificial intelligence, decentralized identity, product design, and more.

We offer day passes and nomad passes for people who need to use the lab only occasionally, as well as memberships for people who plan to use the lab more regularly, such as myself. One of the best things about having a BitLab membership isn't the amenities, it's the people. Surrounding yourself with the community helps you learn faster and helps you build better.

Your creativity becomes amplified when you work in this space. That's what I think at least. If you're interested in becoming a member or supporting the space, please visit us at atlbitlab. com. [00:02:00] That's A T L B I T L A B dot com. All right, on to our show.

Nitesh: Hey everyone, I'm Nitesh. I'm a software engineer. I work on Bitcoin stuff every day. I work here at the lab. Um, so today we're gonna talk about, uh, this long article that was written by a bunch of smart people. Uh, some names you might be familiar with, some probably not. But essentially, um, the, the reason why this article was written was Over the past, yes, probably more than two, three years now, uh, there's a lot of, um, controversy about upgrades in Bitcoin.

So, if, if you, if you're familiar with Bitcoin, and you run the Bitcoin software, it [00:03:00] is, like, it's not an open secret that, you know, Bitcoin is really, really hard to change. Like, if you want to add a new feature, or pull a new feature out of Bitcoin, It takes a long time, like, and because Bitcoin is a decentralized network, there's a bunch of people who have voice on and opinions on what happens inside of Bitcoin.

So, um, these people could be, you know, influencers, they could be large businessmen, investors, people who own exchanges. Us here are sitting in this room could be anyone, right? So the idea behind this, this article or paper is, is that how do all these sets of people come together in order to come to consensus so that we can like push Bitcoin forward in terms of making change to Bitcoin?

Um, [00:04:00] but I'm not really gonna like go through this article. I have made slides because Obviously, nobody's gonna read all that. Um, so, analyzing Bitcoin consensus. The risks of protocol upgrades. So, like I said, this bunch of people who came together, wrote this article, because they believe that it, there is a lot of controversy about how, you know, how, you know, you make changes to Bitcoin, you propose, and then people will hate you, sometimes you even get death threats.

Because you propose a certain change and try to push for that change. And it's, it's happened to quite, quite some debts who basically stopped working on Bitcoin because they proposed to change, they pushed it too hard, the community did not understand or hated it or whatever, or probably it's bad. Um, and you know, people get mad.

So, all right, um, what are we gonna talk about today? So some basic overview. We're gonna talk about what consensus is. We're gonna talk about [00:05:00] what soft, soft forks and hard forks is. And then we're gonna talk about how we can activate a fork in Bitcoin, basically activate a change in Bitcoin. And then we are gonna talk about state of mind, which basically means what your state of mind is in terms of like where you stand what for supporting versus not supporting a new change.

And then we are gonna talk about stakeholders who are basically. Categories of people who, who are in different sectors of the Bitcoin industry. Like I said, they could be businessmen, or people in this room, or media influencers, podcasters, anyone, or devs. Right. Okay. So what are cons? What is consensus and what is consensus rules in Bitcoin?

So at the bare minimum, like most of us know that, you know, there are only 21 million Bitcoin. That is a consensus rule, right? Everybody agrees that, you know, there are only 21 million Bitcoin and there'll ever exist. And, you know, a [00:06:00] block's mine approximately every 10 minutes and the size of the block is four megabytes and things like that.

But where is all this stuff written? So, this link, if you go, this pile of garbage, which is called C++, Um, which nobody likes. Yeah, I can see. Alright, So, this is where you, the consensus tools of Bitcoin are written in. Now, it's not written in English, it's written in C++. the reason Bitcoin does not have a spec, when I asked a few core devs why is all this not written in English and only written in C++, they told me English can be misinterpreted, but code cannot be.

So that's why it is written in C++ and not in English. Um, at least that's the answer they gave me. Anyway, so, for example, um, where is this? [00:07:00] so max block size, for example, if you know the maximum block size on Bitcoin is four megabytes, that means you can only cram four megabytes worth of transactions in, in a block.

Um, and then the coinbase maturity, so every time you mine a block, my new Bitcoin will created, and the coinbase transaction which generates new Bitcoin cannot be spent for up to a hundred blocks. Now that is a consensus rule. So these kind of consensus rules are written inside of maybe you want this one or this one?

Oh, there you go. Uh, yeah. This says once one Bitcoin is a hundred million Satoshis. That's a consensus So The maximum number of Satoshis that can ever exist. So 21 million Bitcoin into 100 million satoshis, right? So this, all this stuff is written. In C++ in this GitHub repo called Bitcoin, This is what, when somebody says you're running Bitcoin software, this is essentially what you're running in your, [00:08:00] in your computer at home, in a Raspberry Pi or a MacBook or whatever.

Right? So, essentially, these are a set of rules that everybody has agreed that will, Everybody has agreed saying this will be Bitcoin. That is essentially what consensus rules are and what consensus means. All right. So, some of the most, you know, popular consensus rules is, for example, a block validation.

It includes how the block should be, what the size of the block is, um, you know, the proof of work that goes into the block. And for example, for example, transaction validations, you know, how our transactions should be structured, what inputs are, what outputs are, and things like that. And including chain selection, we, you know, when I, I'll, we'll get to the technical details uh, of all of this.

First, okay, before we go into the actual topic of software versus hard works, We first have to understand in the world of [00:09:00] software, what are braking changes and what are backwards compatible changes, right? What a breaking change basically means is, if you make a change, that means people, you make a change and push new code.

That means people who upgrade to your new code have to go fix their old code to start supporting your new piece of code that you pushed. What's what Backwards compatible means you push a new feature, but people can just upgrade and not, not worry about Their existing software just runs fine.

They don't have to worry about anything. right. I can give you like a really, really basic example. right. So this is. Really, a really simple piece of code. It says, add numbers, right? Let's say the entire world does not know how to add two numbers. Everybody uses my code, right? Everybody uses Nitesh's code to add two numbers. right? Simple. It says, there's a function, it takes in a number A, it takes in number B, returns a [00:10:00] number.

If either A or B is undefined, I'll say Fuck something wrong. If it's not, then I'll return A plus B. And I'll print it out, right? That's all it is. Now, if I run this, I'll say sum of numbers is nine, right? Great. But, one morning, I wake up and say, Hey, I don't want to support two numbers anymore. I wanna start supporting adding fee numbers.

Right? So what I do? I go, C,

number, and, uh,

All right

Now, now my code only support adding three numbers. So everybody who was using my code in the past, Now has to go fix their code of adding numbers, right? This is a breaking change. Now if I run this, I'll say, Fuck, something went wrong, right? Now, this, this, like I said, is a breaking change. But how do I make this backwards compatible?[00:11:00]

I go and say C equals zero. All right, problem solve. And now I run it. Now the code works again. Right? But this is backwards compatible. So I push. I'm still supporting adding three numbers. I could like Say five plus four, comm at three, and then he'll say nine. but if I remove three, it'll still work. Right? So this essentially is what is backwards compatible versus what is a breaking change.

This is like a very stupid simple example, but you get the idea, right? The same thing applies in Bitcoin, right? What's, when somebody says what a soft fork was as a hard work is, a soft fork is when you push new code to Bitcoin, And then somebody upgrades, or then, or the part of the network upgrades, that means you don't have to worry about anything.

Everything that was running previously will just run fine, as long as there are no bugs. What a hard fork is, you push a new [00:12:00] software update, and then a part of the network upgrades, it'll behave differently for them, and the other half of the network that didn't upgrade, it'll behave differently for them, because the code is different and it's not backwards compatible, right?

That's what this table basically says, right? soft forks. they're backwards compatible. it's optional to upgrade. You don't upgrade, is fine. Hard for and upgrade is required in Bitcoin terms because if the network, the whole network does not upgrade, we'll have something called a chain split.

Where half the network will say, this is Bitcoin, and the other half will say, I don't know, Ethereum is Bitcoin, or Bitcoin Cash is Bitcoin, or some other fork of Bitcoin is Bitcoin, which it okay, soft forks. it tightens existing rules, or adds new rules. Hard forks, it changes or relaxes existing rules.

What? Like, relaxing a rule. Instead of 21 million, we had magically have 42 [00:13:00] million bitcoin. Right? That's relaxing. Tighten. Um, instead of a four megabyte block size, we have a two megabyte block size, Right?

Um, this is a graph historically on how long it takes by version of Bitcoin code, The, the C++ code that I showed you takes to upgrade from one version to the other in terms of weeks, right? Initially, when Bitcoin first started, like way back when version 0.10, it only used to take less than 50 weeks to upgrade, but in general, if you see, it's trending upwards.

The time it takes for people to upgrade their nodes. That means, back then, usually only software engineer used to run No, Like mostly, people who are technical. Now a lot of people run nodes. Now, a lot of people just plug in their notes and forget it. Sometimes it's running for two years straight and they probably never looked at it.

So the time it takes for someone to upgrade their nodes is getting [00:14:00] longer and longer. So, it's really risky. to make breaking changes because people in general don't upgrade their software very frequently. So the last time Bitcoin had a breaking change this is a hard work, was in 2011 or 2010. right? It was really long time ago.

Since then, we have not broken anything in terms of consensus. Alright? we're talking about soft forks. How do we act? activate a software, right? This primarily is three ways to do it. The first one is called flag day. It's like the oldest way to activate a software. It's super simple. You make a flag saying on this block height, a software gets activated.

It gets activated or does not get activated. That's it. It's like super simple. Um, so basically all nodes, you know, start upgrading minors, you know, start. Signaling There's, there's not really a signaling mechanism. [00:15:00] So on that certain day, um, basically all nodes just transition from the old version to the new version.

That's basically it. The problem with flag day is. Um, there is no flexibility in terms of operating. So, for example, something goes wrong, you cannot like roll back. Like, for example, if slowly the network slash starts adopting, and then somebody notices an issue, you can stop and then just go back and say, we're not doing this.

But the problem with flag day upgrades, for example, is on that day, everybody upgrades, and then you're screwed if something goes wrong. right?

Audience: So the principle is, you download the upgrade ahead of time, but there's a certain date where it goes live.

Nitesh: It's, It goes live, that's it. You you set a block height and it just goes live.

Enough people, if enough nodes upgrade and enough blocks are following the new version, it's just live on the new version. right? Next, web 34. [00:16:00] This is a slightly, um, I wouldn't say complex, but it's an improved mechanism over Flag Day. The way this is done is, Inside a Bitcoin block,

Let me open mempool.space.

All right, does this show

block, does this show a block header? Uh, sorry, Mind block. this show details of a block? Show like the, the version number?

Alright. This is the version number of the block, right? Uh, shows hex, but imagine it's 1, 2, 3, whatever. doesn't matter. So what BIP 34 does is. All miners who start running the new piece of software We'll bump this version number. Let's say it was version one. they'll bump it to version two [00:17:00] saying we are supporting this new software proposal.

I don't know. It could be, that's, it could be hard for, for example, or software, But essentially, they will just bump the version number from one to two or two to three, whatever, and say, After that, okay, so once they bump the version number, you track the, you track up to a thousand blocks and at least 75 of the nodes.

Should, um, sorry. At least 75% of the last 1000 blocks should be signaling this new version number. If it, if that does not happen, then the activation fails and you're back to where you would, if it does happen, then you sign, then you wait another thousand blocks and then. At least 95 of the thousand blocks, which means 950 blocks, should signal the new version.

And then it is successfully activated. So the [00:18:00] first 75%, you can bump the version, and then it's still like old blocks and new blocks are accepted by the network. The next thousand blocks, the 950 blocks, or whenever the first nine 50 es. After that, the old version is no longer supported by by the network. The blocks get rejected.

Right? So, this is how BIP 34 works. It works pretty well. The only downside to BIP 34 is, um, you cannot signal multiple soft forks if you want. Like, for example, you are trying to activate three different soft forks at the same time. And then, but most of the minors only want to activate, like, one of them. They don't like the other two.

Right? You can either signal all of them, or, like, none of them. Like, you can't, like, specifically point, saying, I'm signaling for this one. So when you bump the version number, it means you are basically saying, I'm [00:19:00] signaling for whatever piece of code that you're running at that point. of time, It works pretty well, but that was, and at least from my understanding, that was the only downside.

The upgraded version to that is BIP nine. What BIP nine does is, instead of like, this, instead of like bumping the whole number, they bump like bits of the number, like partial parts of the number, So you bump, let's say this becomes zero one, and that means It signals one software. And this zero tube signals something else.

zero, three signals something else. They bump, like, version bits of it. and then there's no 75 in this. This is simply the 95 rule, where over a period of 2016 blocks, If 95 of the hatcher is signaling towards something, that means that thing gets activated. The most recent one that we did like this was taper, right? this is just the differences is [00:20:00] explaining. This is like be 34, like you just bump version 1, 2, 3, and four, right? This, these, these were like the different softwares that we activated with BIP 34. Um, and then this is the nine, and then it's ab B, like you, like I said, you bump the version bits and not the whole version.

All right, Any questions so far? I know this is getting technical.

Audience: So It's basically a voting system in some respect?

Nitesh: It is a voting Okay, so the problem with BIP 34 and BIP 9 is, regular humans don't really have a vote in it. The miners basically decide what happens. Because they're the ones who are signaling and then producing the blocks and then publishing. And because all this is backwards compatible, all the nodes on the network will either start accepting the block saying, oh, this is a new block, or the nodes will not just not understand the new version and say, oh, this is cool, and let's say, okay.

[00:21:00] If it was breaking, if it was a hard fork, the nodes will not understand it. Because it's backwards compatible, all no will say, okay, cool. Right? So the problem with The these two bes is, The miners almost have full control for software to get activated. Like, tomorrow morning, miners could like, decide and activate a software from Bitcoin if they wanted to.

They generally don't do it because they'll get a lot of shit up, shit for it, but they could if they want. And that is why

Audience: What was the last hard fork?

Nitesh: Sorry?

Audience: What was the last hard fork?

Nitesh: The last hard fork? Yeah. Uh, I think we activated OP_NOP.

And that

Audience: Required everyone to shift.

Nitesh: Yeah, but back then there was like 10 people running a node. So, because miners have so much power, uh, I think Luke, Luke's probably Luke Dash Junior came up with BIP 8. BIP 8 is for the community as a together to activate a software or reject the software. [00:22:00] Um, what BIP 8 does is, um, along with your node software, You run another piece of software on the side that talk to your accepts or rejects blocks, right?

So if you want to activate a new software, and then the min and you just wanna do it as a network, the miners, you know, are still not signaling, but then they still produce the block template. And then they obviously mine the block and then send it out, right? But the more nodes start rejecting the it's bad for the miners because the network will split.

So they will also start upgrading and then start showing support. That's basically the concept of BIP 8, where the Where, again, it's basically you set a height and then this, at, at this height, we say it basically activates and then a bunch of people upgrade. But the only difference is the, the, the, um, the [00:23:00] process of upgrades starts with users stuff, miners, right?

Because they start upgrading their nodes and start, start rejecting blocks by miners. It also works the opposite way, which is, um, which is, it's called UASF and U-R-S-F. UASF is user activated soft fork, and URSF is user resisted soft fork. URSF is, if the miners try to, you know, start activating a software, all bunch of users can run this side application that looks for that block that version bit or whatever the miners put in for signaling and you can start rejecting blocks and that's bad for the network You don't to rejected because when you broadcast a transaction or you know, when a new block gets mined, you want all the nodes to like.

have the new block because that's how you sync to the blockchain. That's just how it

Audience: (inaudible)

Nitesh: Right. [00:24:00] Um, but I suppose if there's like 50 people reject, like half of the network rejecting blocks, it's, would it, maybe it'll create a change, but I'm not very sure. Would it?

That's fair. Yeah. But I guess the block propagation will stop. A lot of nodes might not, might not, you know, start listening for blocks and stuff like that.

Okay. Now, the technical stuff is done. Now, this is all the non-technical stuff. This is related to the human beings, right? All the stuff that we spoke before is about changing Bitcoin. But, as human beings, where do we stand in terms of changing, right? As the, the, the paper Categorizes into six state of minds.

You, you are passionate for the change, you're supportive of it, you're apathetic or undecided, you're unaware of what is going [00:25:00] on, you're not supportive, but you don't really care either, you're just not supportive. And six is you, you don't like it and you actually spend resources and power to fight against it.

Right? These people usually, according to the authors of this paper, fall in these six categories. And the two that are highlighted in read are where most people are. They are. Either undecided or they have no clue, right, um, about what the change is. all the people who are in bitcoin are categorized into these six sections of people, economic nodes, which are basically large exchanges, coinbase, finance, all these things, investors, your Michael Sailors, Media influencers, your podcasters, miners, are your miners, mining pools, protocol devs, who work, actually work on the Bitcoin Core software, users and [00:26:00] application devs is us.

Simple. First economic nodes. Um,

so before we get into this, these six set of people, everybody who wants a soft fork or does not want a soft fork. obviously has incentives behind it, right?

Because for someone, Bitcoin is freedom money for someone. Bitcoin is number go up for someone. Uh, Bitcoin is they don't want to use the fiat system and they just want to like. Transact only in Bitcoin, live on Bitcoin standard for someone. they're investor. They follow government rules. They only buy ETFs.

It, it is just, just different things for different sets of people. Right? So for these people, um, you don't know who they are. Brian Armstrong and Cz Binance, um, for them, um, they're, they have obviously have power. They can define what a fork is [00:27:00] in the sense that because most of the Bitcoin activity run happens on these exchanges, what the ticker symbol they decide is, could be what Bitcoin could be, right?

And it's, it's just because most of the volume happens on exchanges. Like no, 90 don't, like 90% of people don't trade peer-to-peer, or they don't go to an OTC desk. They go to one of these large exchanges to buy and sub. Um, they also run these massive nodes. For example, they, they don't like a software, they start rejecting those blocks.

That could be a problem, um, for example, they don't like a fork and then a fork happens. They they have all the user's funds and they don't like that fork, they can start dumping all those coins on the market and they don't even have to tell you. Um, and their incentives are, they want more trading to happen on their platforms.

And, you know, they have to comply with regulation and stuff like that. [00:28:00] Investors. Sure.

Yeah, I mean, if, if you don't want a fork to succeed, they could say, Oh, this fork is Bitcoin and this fork is not Bitcoin. So our, our coins are this fork and not that fork or something like they could, they, they, They could exert enough power in terms of what their nodes can do.

But the, I think the most important part of this is they can set that they, you know, they can sell the forks that they don't like, they can dump. So

um, next Investors, they, well, again, if you don't know, this guy is Michael Saylor. He talks a lot on TV. Um, this guy is Larry Fink. He's the CEO of BlackRock, who steals all our lands. Uh, our lands, land, like farmlands and land. They just buy a lot of. Yeah, they they buy a lot of real estate.[00:29:00]

Um, well buying a lot of them. Um, anyway,

What powers do they have? They have influence on price. If Michael Seller buys a lot of Bitcoin, everybody gets excited and say, Hey, And then everybody buys Bitcoin and the price goes up. same thing happened when BlackRock said, We are starting an et tf Bunch of capital poured in,

Bitcoin price went up.

Audience: Make the distinction between, say, BlackRock, BlackRock also that they could sell. They could, yeah. How

Nitesh: Um, I think the way they, so, okay, so for Brock, they are not a custodian.

Their coins are sitting on Coinbase. [00:30:00] Coinbase is cus custodian their funds, so they're like different sectors of people. They're relying on Coinbase, so they're not the ones who are making decisions. They nodes are not, though, they don't even wanna know, probably their nodes are not making any calls on what this fork is or that fork is.

They could influence Coinbase to do it,

Audience: so this is the value of like holding your own coins, is that it gives them the less, influence, right? Sure. Yeah.

Nitesh: Um, I guess mo at least the investor side, they have more influence on the price of Bitcoin versus what actually happens with forks and at least. My understanding of it. Um, so anyway, um, again, the powers, these guys, obviously they can influence the price because they have a lot of money.

Um, so they can, like, for example, they can say, oh, this software is good because. Like 10 years from now the [00:31:00] futures market say it's this software could like make the Bitcoin price go higher We can pump the price higher because this fork or something gives some feature that helps the price go up. or Something like that Um, They could also fund core devs, the Bitcoin protocol devs, to like, you know, say You know, let's build this or let's build that uh, Because they have the money to do it and why do they do it the the biggest thing is number go up For example MicroStrategy is a publicly traded company They have a lot of Bitcoin if the price of Bitcoin goes up their stock price goes up their, Their shareholders are happy.

Their CEO is happy. So um, Their incentives is number go up they would ideally like to stick to the store the concept of store of value of Bitcoin because It helps the price go up. And then obviously, their very compliant with the, with the government.[00:32:00]

Um, so this little chart basically shows, um, how somebody can react when react to a fork in the sense that, like, for example, somebody who self custodys their Bitcoin, for example, if I Like don't like a fork and I want to sell my coins or whatever I can act very quickly, right? I can immediately move my coins and then do whatever I want with it as you go down the list it gets harder and harder for somebody else to move their coins Um, because you know For example, a publicly traded company needs approvals from board of directors and their meeting only happens at 9:00 AM on a Monday, right? They have to wait. They can't like just, you know, just magically move coins. And then the same thing with large ETFs. ETFs only trade Monday to Friday, what, 9:00 AM to 5:00 PM or nine 30 to 5:00 PM or [00:33:00] whatever, right? So it's, it gets harder and harder for somebody's ability to act when a software happens or it's gonna happen or something.

Media influencers. Um, all right. this guy, his name is Adam Back. he's the CEO of blockchain. Peter McCormack, big Podcaster, Preston Pysh big Podcaster. Uh, not saying they're bad and good, but just put some photos. Um, again, the, the power that media influencers have is If you remember that slide where the state of mind, where, you know, there's two sectors of people who are either undecided or just unaware, right?

These sets of people have the ability to change the mind of especially those segments, right? Because. That is where you consume your Bitcoin content from. You watch the news, you listen to podcasts, and then based on what they say [00:34:00] or what, you know, if, if Adam back likes a proposal and then you really like the guy, you just tend to like the proposal.

That's just how we work, right? Um, So then, you know, they, their, their powers could be, they can like change They can change your narrative. They can distort like a support, like, for example, because he has so much pull, he, he can say, Oh, um, you know, we don't like this software, but Blockstream built this better version of the same thing.

So we should probably support this thing, right? He could totally do that. And then he could, they can even censor positions of other stakeholders, like. For example, you know, they don't like a software, they, you know, hypothetically, let's say Twitter does not like a software, they could like censor information about that software, for example, Um, but on the flip side, they can be great educators.

Um, Incentives, obviously, they generate more engagement, they get more following, they make more money. Uh, [00:35:00] They also ideally want to make, maintain more credibility in the community. Um, All these people, especially these two, Um, they'll have sponsors for their podcasts and all that stuff, right? So they try and act in the best interest of the people who are paying them money.

Miners. Um, these are the people who are mining these blocks, who are, who have massive data centers of machines that spend a bunch of energy to mine Bitcoin blocks, right? That's how Bitcoin is secure. Um, these people have their own incentives, right? They wanna make as much money as possible from this block reward.

Like I told before. Whenever in a new block gets mined, this goes to the, this goes to the miners, right? This is the new Bitcoin that's created, along with transaction fee that goes to the miners. They want to get as much [00:36:00] of this as possible. Um, and, um, they obviously want the network to be as stable as possible.

Because if something goes wrong, they're screwed.

Protocol devs, these guys are the ones who write these awesome C++ code, right? Um, his name is Luke, and she's Gloria. Um, they maintain the Bitcoin core software. Uh, they can propose and implement new changes. Um, this one's interesting to me because what we believe as Bitcoin is mostly this one repo that you see here, 99 of Bitcoin that software is running out there is just this, right?

So people who work on this have a very high influence on [00:37:00] what happens in the network, right? At least they have a lot of say. I mean, People are willing to listen to people who are like working on this. Um, so because there is only one client, they also have the power to veto, right? Saying, oh, we don't like this work server. we're not even gonna bother working on it.

And because there's no other client, if we don't work on it, you're screwed because nobody else is gonna work on it. Nobody's even if you work on it, nobody's gonna run your software. So they kind of have this power, right? Um, the incentives are, you know, they want to improve Bitcoin.

they'll obviously wanna maintain their reputation, um, you know, but they could also be incentivized by sponsorships. Now, a lot of pro, like some of these people have jobs, but some of them, um, you know, they're just sponsored by various companies. could be ETFs, large high net worth people. So they could also be influenced by the people who are paying them.

Audience: Oh, sorry.

Nitesh: [00:38:00] Yeah, go ahead.

and, we'll,

Audience: (inaudlble)

Nitesh: You basically have to contribute long enough. to. and then, uh, there's like a process where they, you know, eventually bump you up to being a code maintainer where you actually have access to push into the code directly.

Right now, maybe they're like four or five, I don't know how many are like, actively working,

Right? Yeah. [00:39:00] You said seven?

Audience: Yeah, there's maintainers,

Nitesh: Seven maintainers? Okay, cool.

Audience: Alright.

Nitesh: Oh, Jordan, sorry.

(Jordan): Sponsorships, (inaudlble)

Nitesh: think they're they're not that much of a problem. Uh, for I can give you an example. For example, worked on an implementation of Bitcoin's fork and added bit 300 for, um, who's the bit 300 guy? Uh, Paul Starz. right?

So, he paid Luke to work on implementing drive change. And he, I mean, he, to be fair, he was very transparent, transparent about it. But, he got paid, right? He was in, got paid to do it. So you can like pay someone to like push a soft fork or build one and then, you know, actively push towards, you know, push, you know, push your influence on the [00:40:00] community saying, Hey, I'm a code, code maintainer.

This soft fork is awesome Maybe 'cause they have so much pull. More people tend to listen to them and things like that.

Audience: Because I think that's a lot of people are confused And how like these people don't work for companies per

Nitesh: some do some don't

Audience: but even when they do If they're largely granted then they're getting financial reimbursement for the work that they're on project

Nitesh: right

Audience: like open sats. Right.

Nitesh: Uh, Okay, so for grants, like the, the, I think grants, are, I'm, I'm not, I, I could be wrong, but in my opinion, grants, because they're just given so that these people are actively maintaining Bitcoin core and not per se of like pushing the software.

So it's just like, you know, you're doing. Community work, so get some, [00:41:00] pay, get paid for it. But, I think when it comes to pushing software, the the money we're talking about is much larger and stuff.

Uh, so who they are is public knowledge, but they could be, inno, like anonymous. Like, you can see the contributors on, on, on Bitcoin and then you can li literally, some people have pictures, you know who they are, they can be conferences.

Some people are anonymous, they don't show their faces, really. So, it's public who they are, but they, you know, not necessarily public where they live.

Next one is us. Uh, Um, So users and application desks, like all us in this room, right? Um, what powers do we have? We yell on Twitter and everywhere else, right? And then, what can, what else can we do?

We threaten to exit and mass sell Bitcoin. To your point, like, maybe most, a lot of people have, uh, you know, more Bitcoin in [00:42:00] south custody versus, like, the custodians have. And then if, I don't know, all of us, like, get together and say, hey, we don't like this fork, We all sell, we'll mass exit. Maybe the price will go down to zero and, I don't know, Bitcoin will die.

So, I this is The power that we have, right? Um, obviously, uh, for some reason, the paper, like, combines, like, users and application devs together, but that's fine. But the application devs could have slightly more influence in the sense that they're working on some application. Like a wallet or something that improves, you know, makes faster Bitcoin transactions or whatever.

And a certain software can help them. And then, you know, they're also really influential in the community. So they can, you know, push a certain software and things like that. But in general, this is what users and application devs can do.

Alright,

and the next part is when [00:43:00] Stephen's gonna talk about it. How do all these people like, reach consensus to activate a software?

So, you gotta wait for that for March 5th. That's it.

Stephen DeLorme: Hey, thanks for listening. I hope you enjoyed this episode. If you want to learn more about anything that we discussed, you can look for links in the show notes that should be in your podcast player, or you can go to atlbitlab. com slash podcast on a final note. If you found this information useful and you want to help support us, you can always send us a tip in Bitcoin.

Your support really helps us that we can keep bringing you content like this. All right. Catch you later. [00:44:00] [00:45:00]