No, That's Not How "The Longest Chain" Works in Bitcoin
As we approach the scheduled network upgrade for November 2018, there is some debate in the community over the meaning of “longest chain proof of work” with respect to chain splits, Nakamoto consensus, and the Bitcoin whitepaper. I think that some people are getting this wrong.
“So its interesting the different camps. One does not believe that longest POW should decide rules like the whitepaper says, and the others think they can just make whatever rules they want without doing Proof of Work, and everyone must follow. I think if we are just going to have one developer group decide everything and keep the ticker, then maybe Bitcoin is broken.”
From a different thread, Here is another comment
“An honourable hash war rather than minPOW chain stealing the bitcoin brand”
I understand the motivation of these arguments; some people would like hashpower to resolve the dispute between the various BCH factions. And perhaps it may. But to assume it necessarily should do that (and to express indignation if it doesn’t) shows a misunderstanding of the Bitcoin system. This attitude stems from beliefs that:
a.) Bitcoin is defined by facts rather than opinions b.) The longest chain necessarily defines Bitcoin c.) The white paper states that the longest chain determines outcome of a consensus split
These are all false, as I will explain.
Bitcoin Facts Vs. Opinions
Let’s be clear on one thing: Individuals are going to disagree about Bitcoin. Some people say “Bitcoin Cash is Bitcoin”... some say “Bitcoin Cash is effectively Bitcoin”... others say “Bitcoin is Bitcoin, Bitcoin Cash is Bitcoin Cash”. Still others believe BCH is an alt or even a scam.
Jameson Lopp (despite being a small blocker) said it best: “You may define what Bitcoin is to yourself. You may not define what Bitcoin is to others without their consent.”
The obvious irony of a BCH supporter (which is a minority chain of BTC) attempting to define Bitcoin strictly based on hashpower is comical. I have seen this contradiction defended with the explanation that the BCH/BTC split was ideologically very clear, but in the case of 2 similar versions of a "peer to peer electronic cash system", then we must look to hashpower. I find this reasoning to be faulty. “Bitcoin is the longest chain that’s still a p2p cash system” is not necessarily less opinionated than any other definition, even if people could agree on the exact requirements for that system.
If there is a split of the ecosystem, folks on either side have their own reasons for believing their side is more legitimate. One important reason for valuing a fork is the community that supports it. However, the reasons could be just about anything and are therefore irrelevant to the fact that people can and will disagree about what is Bitcoin to them.
Since the definition (or the interpretation of the definition) of Bitcoin is a matter of opinion rather than fact, it therefore follows that the longest chain proof of work does not define Bitcoin for everyone.
Three Kinds of Chain Splits
You may reject the premise that Bitcoin isn't defined objectively; for example the whitepaper may be deemed authoritative. But even what the whitepaper says is misinterpreted. But before we can analyze it, we need to differentiate between different types of chain splits.
In the first scenario, there is only one set of network consensus rules. In this context, a chain split occurs when two miners find a block at roughly the same time, and each winning miner is able to broadcast their block to about half the network. Each fragmented part of the network will then continue to mine until they find a block. Eventually, one group will outpace the others, which will cause the shorter chain to be orphaned and the network will be re-united. This is mostly what the whitepaper describes.
In the second scenario, there are 2 or more sets of competing network rules. In this context, blocks on one network will be invalid on another, causing a permanent divergence of the ledger. For lack of a better phrase, we can call this a “consensus chain split”.
A third imaginable scenario is that we have a consensus chain splits but the minority capitulates at some point and abandons their chain.
Meaning of “The Longest Chain” in the Whitepaper
First, what does the whitepaper NOT say? It never says anything like: “if there is a disagreement in Bitcoin, then miners compete with Hashpower, and whoever builds the longest chain is entitled to call themselves the true Bitcoin.” (This is what certain redditors seem to believe).
Perhaps Satoshi never envisioned competing chains to begin with. In any case, I will repeat the observation that different people will have different opinions about all of this.
Let’s see what the whitepaper actually says.
In the Abstract section: “The longest chain not only serves as proof of the sequence of events witnessed, but proof that it came from the largest pool of CPU power. As long as a majority of CPU power is controlled by nodes that are not cooperating to attack the network, they'll generate the longest chain and outpace attackers”.
This section definitely seems to be referring to the first type of chain split that I described. It talks about miners competing on transaction ordering and resolving the original double-spend dilemma which Bitcoin solves.
In section 4, “Proof of Work”, it states: “The majority decision is represented by the longest chain, which has the greatest proof-of-work effort invested in it. If a majority of CPU power is controlled by honest nodes, the honest chain will grow the fastest and outpace any competing chains. To modify a past block, an attacker would have to redo the proof-of-work of the block and all blocks after it and then catch up with and surpass the work of the honest nodes.”
This is again referring mostly to transaction ordering, and also the security aspect of Proof of Work. It could refer to a consensus chain split, but even in that context, all it really says is that the majority decision is represented by the longest chain. This does not necessarily imply any divine right to the Bitcoin name, the ticker symbol, the community, or anything else.
If anything, the idea that the economic majority should follow hashrate is backwards. We know that hash follows price, both logically and by observing the behavior of BCH/BTC mining ratios. This behavior is more a property of the Bitcoin system rather than a matter of opinion.
Finally, in the conclusion of the paper: “They vote with their CPU power, expressing their acceptance of valid blocks by working on extending them and rejecting invalid blocks by refusing to work on them.”
The key words here are “valid” and “invalid”. Nowhere does the white paper say that the majority has dominion over what is valid.
Bitcoin is an economic system and a social experiment. The honey badger doesn’t really care what your personal opinion is. You can have the best arguments in the world for what you think people should believe or support, but at the end of the day, the market and reality will decide what will happen.
Markets can be irrational, people can be irrational; this does not mean Bitcoin is broken. At least, not for me.
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