Revisiting the Block Size War: How Bitcoin's Civil War Still Resonates Today
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Revisiting the Block Size War: How Bitcoin's Civil War Still Resonates Today
Bitcoin is designed for everyone, including your enemies.
Navigating Web3 tides with focused insightsWritten by: Daniel Kuhn
Translated by: TechFlow
TechFlow Note: This article introduces an unprecedented innovation by an anonymous developer, Punk3700, who deployed smart contracts on Bitcoin—potentially altering its developmental trajectory. This technical breakthrough has sparked controversy within the Bitcoin community; while some supporters believe such attempts are distractions, an increasing number hope to build more functionality atop Bitcoin. The article warns that internal debates could escalate into a civil war similar to the block size debate between 2015 and 2017.
Over the weekend, an anonymous developer named Punk3700 made cryptocurrency history by releasing what he claims is the first smart contract written in Bitcoin. This technical feat—crafted using Solidity, a custom programming language—has recently become increasingly common on BTC, a network long known for its turtle-like development pace. Solidity is the standard language in crypto coding, invented by Vitalik Buterin to run decentralized applications on Ethereum.
Punk’s project exemplifies a shift that has unsettled many of Bitcoin’s longest-standing supporters: Bitcoiners have traditionally viewed efforts by other cryptocurrencies as at best distractions. While Bitcoin excels primarily at one thing—minting and validating a currency without state backing—Ethereum exists as a virtual computer capable of doing nearly anything (including running Ponzi schemes that tarnish crypto's reputation). Thus, Bitcoin purists typically prefer minimal association with Ethereum.
However, roughly a year after Bitcoin’s latest upgrade, Taproot—which enabled new types of Bitcoin transactions—developers discovered they could build Ethereum-like programs and systems directly on Bitcoin. This began with non-fungible tokens (NFTs), which Bitcoin supporters rebranded as “inscriptions,” and has since accelerated rapidly. Last week, Punk3700 deployed a version of Uniswap on Bitcoin.
Self-identifying as a “neo-Bitcoiner,” Punk3700, along with his team, is planning a series of projects aimed at redefining Bitcoin’s utility. These include a metaverse, an artificial intelligence lab, and an “Ethereum Virtual Machine” (EVM), or Trustless Computer, for Bitcoin, which would power the “sub-projects” of his digital city.
“We’ve taken a different approach. We prefer to reuse battle-tested technologies (like EVM), battle-tested programming languages shaped over years by developer communities (like Solidity), and proven dApps (like Uniswap and MakerDAO),” said Punk3700.
Although Punk’s vision may be broader and more ambitious than others’, he isn’t alone. Following the unexpected success of ordinals, an increasing number of Bitcoin users want to breathe life into this open-source project. Clearly, there is demand for non-monetary uses of Bitcoin, and more users are eager to build on it. Meanwhile, this unexpected surge in demand for Bitcoin block space—the amount of data newly mined blocks can hold, paid for via transaction fees—has caught many off guard.
While the influx of Bitcoin users benefits the network by increasing its security budget (via higher earnings for BTC miners processing transactions), many question how the network is being used. Some view meme coins and NFTs as outright scams, while others argue network congestion harms Bitcoin’s most essential use case—sending remittances. Last week, transaction fees spiked above $10, a three-order-of-magnitude increase from the less than $0.01 fees paid earlier this month. That’s problematic if you hope people in developing countries will adopt Bitcoin as a payment system.
As internal disputes intensify, some predict this debate could evolve into a full-blown civil war. It’s happened before—from 2015 to 2017, the community was rife with hostility and division. What began as a debate over how to scale the network to handle growing transaction volume evolved into a philosophical dispute about Bitcoin’s ultimate purpose and a political drama over governance of the open-source project.
The two camps were then known as the big-blockers and small-blockers, divided over a relatively minor technical decision: how many megabytes of data a BTC block should process.
The big-blockers wanted to increase block size to accommodate more transactions, lower fees, and make everyday payments more viable. The small-blockers took a more conservative stance, resisting irreversible changes to Bitcoin’s source code. Larger blocks would enable greater Bitcoin usage and throughput but require a protocol update called a hard fork—an irreversible, backward-incompatible split in the code.
Worse still, larger blocks were believed to risk centralizing control over Bitcoin, as someone would ultimately have to pay for increased performance (if not the users). Although Bitcoin has no CEO, the network can be seen as governed by a distributed management team composed of users (who pay transaction fees and drive demand), miners (who expend real energy building Bitcoin’s blockchain), and node operators (who validate the transaction ledger to ensure consensus). Because larger blocks are more data-intensive, fewer users would be able to become miners or validators, as fewer would possess the high-end hardware required.
This internal conflict turned into a holy war over Bitcoin’s public interpretation. Developers proposing alternative implementations reportedly received death threats, Bitcoin forums became arenas for propaganda and ostracism, and at one point, sustained denial-of-service (DoS) attacks targeting a Bitcoin fork knocked out a major internet service provider (ISP). Ultimately, the small-blockers won—a victory often described as a triumph for decentralization.
“I think the small-blockers won democratically. Sure, there was plenty of trolling on r/Bitcoin to influence public opinion, but ultimately, the call for decentralization over TPS (transactions per second) was genuine,” said Eric Wall, chief investment officer at hedge fund Arcane Assets.
Wall supports non-monetary uses of Bitcoin. Though he once identified as an orthodox Bitcoiner during the civil war—passionately advocating for scaling the network through “Layer 2” solutions rather than larger blocks—he later became somewhat disillusioned with the outcome.
He said: “The chosen path was more conservative. Those inclined toward riskier ideas were pushed aside. Bitcoin became rigid—Taproot was the only major protocol-level upgrade in five years.”
For years, Wall has called for injecting innovation back into Bitcoin and urged supporters to consider adopting technologies developed on networks like Ethereum. Yet, Bitcoiners willing to challenge orthodoxy have largely been excommunicated from the Bitcoin church—even if he doesn’t see himself as a casualty of the war.
Today’s debates over transaction fees and Bitcoin development differ critically from the block size war: many of the technical constraints previously debated have now been resolved. In 2017, Bitcoin supporters could choose between Bitcoin and Bitcoin Cash, which offered larger blocks and whose founder, Roger Ver, claimed fulfilled the original mission of peer-to-peer digital cash. A subsequent fork of Bitcoin Cash, called Bitcoin SV (Satoshi Vision), created by someone claiming to be Satoshi Nakamoto—Craig S. Wright—also provided larger blocks. However, market participants decisively determined that the canonical blockchain was the true Bitcoin. This served as a vote of confidence in the small-blockers’ plan to scale Bitcoin using Layer 2 solutions and sidechains like Liquid and Lightning.
While today’s high on-chain transaction fees raise concerns and may prompt different approaches to building on Bitcoin, no prominent figures currently advocate a complete overhaul of the blockchain. Still, adoption of Lightning—the payment-focused Layer 2 scaling solution built atop Bitcoin—remains low (partly because Bitcoiners actively warn these systems are experimental). Liquid, built by major Bitcoin infrastructure firm Blockstream, fares even worse.
Similarly, just as persistently high fees during active usage pose challenges, the current Bitcoin architecture may face long-term vulnerabilities if it fails to generate a sustainable “fee economy” to compensate miners—or if most fee-generating activity migrates to Layer 2.
“In hindsight, it was clear the small-blockers needed to win, and their principles align more closely with my view: expanding the reach of sound money while preserving decentralization,” said Peter McCormack, host of a Bitcoin podcast, English football club owner, and pub proprietor, in an email. Today, most Bitcoiners broadly agree that open markets will resolve lingering uncertainties around Bitcoin’s long-term security and current scalability limits. Because block space, like Bitcoin itself, is a scarce asset with a highly loyal user base, it is expected to grow increasingly valuable.
Nic Carter, co-founder of investment firm Castle Island Ventures, argues that some Bitcoiners’ current rejection of new asset types like Ordinal NFTs and BRC-20 tokens is misguided. Given Bitcoin’s roots in cryptographic libertarianism—tracing back to economist Murray Rothbard and 1990s cypherpunk culture—calls to censor these non-economic use cases are indefensible.
But hypocrisy—voluntary or unnoticed—has long permeated Bitcoin culture. Carter himself has been rejected by contemporary “BTC extremists,” a small yet vocal segment of the user base. This group is often defined not by radical economic beliefs, but by a social media-driven lifestyle marked by deep skepticism of authority (politicians supporting Bitcoin are exceptions) and an almost missionary obsession with spreading Bitcoin as salvation. The CEO of MicroStrategy earned favor with this group after transforming his internet-era tech company into a publicly traded Bitcoin entity.
Among Bitcoiners, periodically purging heretical ideas that violate Bitcoin’s principles and attacking critics emerged as a consensus forged during the 2015–17 civil war. As cryptocurrency historian Dr. Paul Dylan-Ennis put it: “Extremism was forged in the crucible of the block size wars, introducing dogmatism that ushered in a dark age we’re only now emerging from.” At the time, the scaling debate was often framed as a clash between “populists” favoring large blocks and expanding Bitcoin’s commercial potential versus “elites” protecting their status against rising cryptocurrencies. Modern historical understanding of the block size war has moved beyond this rhetoric, favoring instead the goal of preserving the “democracy” of running nodes.
History is written by the victors, and today the big-blockers are largely seen as a coalition of financial interests—such as Chinese miners and major crypto payment providers. Small-blockers are typically portrayed as the underdogs—Bitcoiners wanting the network to stay closer to its original codebase, cautious about backward-incompatible upgrades. There is some truth to this narrative.
Moreover, the so-called New York Agreement holds a place in public imagination (rightly or wrongly)—a closed-door meeting at CoinDesk’s Consensus conference where dozens of companies, guided by CoinDesk’s parent Digital Currency Group (DCG), allegedly conspired to push through a protocol update. The agenda centered on SegWit2x, a hybrid proposal combining elements of both sides: doubling Bitcoin’s block size to 2MB while activating Segregated Witness (SegWit), an upgrade proposed by Bitcoin Core developers that improved network throughput by separating signature data from transaction data.
SegWit2x ultimately collapsed. SegWit itself was implemented on August 1, 2017, through a “User Activated Soft Fork” (UASF)—a day dubbed Bitcoin Independence Day, symbolizing the community’s unity and resistance against powerful, well-funded miners. This marked the end of Bitcoin’s “first civil war,” as Colin Harper wrote in an excellent retrospective for Bitcoin Magazine: UASF was a feat of technical and social engineering, uniting diverse factions, avoiding a hard fork, and significantly improving the network. Eric Wall of Arcane noted the event “permeated” Bitcoin culture and gave profound significance to running a full node. “It permanently changed the tone of Bitcoin discourse.”
One of SegWit’s enduring charms is how many miners and crypto firms hesitated to implement the change. Coinbase didn’t upgrade until February 2018, and processor BitPay waited until July 2020. Such stories spread orally and resurface repeatedly on social media, reflecting a certain self-image among Bitcoin holders—tech-savvy, economically minded punks.
It’s hard to say whether this spirit has faded. Bitcoin, as a socio-technical system, has evolved over the years—especially during the COVID-era bull run that attracted massive new users. Now, it appears to be on the brink of another major transformation. Yet, the scars from the last civil war remain real, and this time, the shift is unlikely to be purely technical. All technology is “path-dependent,” and Bitcoiners long ago chose their path. Whatever strange new thing unlocks next, we must reckon with a blockchain designed to be constrained.
Let me leave you with one final historical reflection: SegWit was coded before implementation and entered Bitcoin’s source code even before full consensus existed among users and miners—supported arguably only by a small circle of Bitcoin Core developers. The debate brought a benefit: a collective effort to reduce miner centralization. But SegWit was a change that became part of the core release; had miners not resisted it, it might have passed unnoticed. Isn’t there another version of this story where Bitcoin purists were wrong, and miners wanted to vote to improve Bitcoin’s governance?
Bitcoin is designed for everyone—including your enemies.
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