Question about “the block size war” in 2017

Blockstream employs several Bitcoin Core devs past and present Gregory Maxwell, Dr. Pieter Wuille, Matt Corallo, Jorge Timón, Mark Friedenbach and Dr. Adam Back. Luke dashjr as well..
They kept bitcoin blocks small so blockstream could transmit them.. over satellite, look it up :/
Sounds like a conspiracy theory but that’s what happened, the dumbest shit won the block size war
Source I was in the slack channels watching it go down live, used two accounts to lurk on both sides.
Small blockers always talk about block propagation being a huuuge problem – but block size should be scaled since we have freaking fiber internet everywhere now.
Also, even Satoshi himself said block size should scale.

I can understand and explain both perspectives, and why either approach can arguably lead to centralization.

If blocks are small, this means that more people are capable of downloading the blockchain themselves (using consensus rules to determine which one is valid) and running “full nodes” which they can use to verify for themselves the state of the blockchain without having to just ask other nodes whether certain Bitcoins actually exist.

But, if blocks are small, this limits the number of transactions people can do on the chain itself, meaning users are essentially pushed into layer 2 solutions. Bitcoin doesn’t have the technology to use more complex layer 2 solutions like rollups or validiums, so it ends up being the lightning network, which is basically just state channels. State channels are basically two people putting some amount of money aside such that they can exchange ownership of it in a back-and-fourth sense off-chain, and then settle on-chain to close the channel. If you have a bunch of these, you can create a network which gives people the ability to transact with others by finding a “path” of channels to the other person. The problem with state channels is that state channels do NOT inherently let you send to or receive from anyone – you can only send to or receive from someone for whom a valid path exists. The most straightforward way to ensure that there is a path to everyone you might need to pay is for everyone to form channels with a few centralized lightning nodes, and these centralized nodes form channels with each other. If the majority of lightning transactions end up going through only a few particular nodes, this creates a centralization problem, especially since these nodes could in theory start requiring KYC or censoring transactions.

If we make blocks big, then more transactions can fit onto the blockchain and people can transact with each other on-chain. But then the blockchain becomes prohibitively large in size, meaning only a few people with powerful hardware can afford to download the chain. If you can’t download the chain, you have to trust those that can to give you accurate information about the chain. For example, to know that the Bitcoins you are receiving are actually real, you have to trust the nodes to truthfully tell you whether they are.

In my opinion, the best solution is one with medium blocks and with the type of base layer chain features needed to host layer 2’s that are more advanced than state channels, like rollups and validiums, that DO allow users to transact with any other users. In other words, I like the approach that Ethereum is taking the best.

Also, if we make the base layer validated with zero knowledge proofs and data availability sampling, we can have nodes that are capable of verifying information about the state of the chain without actually knowing all of it, which partially mitigates this issue with large blocks. Block production remains at risk of being centralized, but individual transactions are verified in a decentralized way. Ethereum is also planning to eventually do something similar to this at the base layer.

Now, in my honest opinion, the only thing that actually resulted in the small blockers “winning” and Bitcoin BTC being so much more valuable than Bitcoin Cash has nothing to do with which side is more correct, and everything to do with the fact that Bitcoin BTC kept the title of Bitcoin, while Bitcoin Cash did not. And the reason the small block one kept the title is because they did a soft fork while the other side did a hard fork. The moment you do a hard fork, your chain is now one with different rules, while the “old” one with unmodified rules still exists, and unless everyone agrees to transfer the title, the new one with different rules gets viewed as a different chain carrying a different asset. A soft fork, on the other hand, is more akin to imposing more restrictions on what is actually considered valid, without making any previously disallowed action now valid, such that the old software would necessarily still view it as valid. A soft fork is almost like a 51% attack that censors any transaction that doesn’t additionally conform to certain new rules – without replacing or changing the old rules. From a strategic perspective, if the big blockers wanted to “win” the blocksize wars, they should have pushed for an extension block soft fork instead of a hard fork block size increase.

The fundamental problem isn’t the size of a block, but the fact that a hard fork is required to change it. The ultimate power of the hard fork and how it is governed is still an open question today. There is a great risk in opening that door without having it well guarded

1. Egomaniacs create their own forks and call it the true bitcoin, which happened right after the creation of BCH with BSV (Bitcoin “Satoshi Vision”)
2. Powerful interest groups pushing for changes to benefit themselves. z.B.: Miners demanding the removal of the halving cycles.