In preparation for the November lock-in of Bitcoin Cash's May 2024 upgrade, I'd like to offer my support for one Cash Improvement Proposal (CHIP). For more information on Bitcoin Cash's upgrade process, see this overview.
Adaptive Blocksize Limit Algorithm (ABLA)
The proposed algorithm would automatically adjust Bitcoin Cash's block size limit to reduce infrastructure costs during periods of lower usage while enabling up to a doubling of the maximum block size per year at peak growth.
Why Limit Block Size?
The block size limit caps the technical requirements of network infrastructure, enables reliable infrastructure cost projection, and prevents attacks that increase the cost of participating in the network.
Excessively large blocks could require users and businesses to waste resources on unnecessary infrastructure, switch to cheaper and less secure validation strategies, or even to abandon running their own infrastructure and instead rely on third-party service providers – reducing the overall privacy, independence, and financial freedom of all users.
Vulnerability of Static Block Size Limits
To limit block size, most bitcoin-like networks (BCH, BTC, BSV, XEC, etc.) employ a static block size limit. For Bitcoin Cash, this limit is currently 32MB.
If a payment network is growing, usage will eventually approach any previously-established static limit. If this limit is reached before a successfully coordinated upgrade, network service degrades: transaction fees and confirmation times become less predictable as size-limited blocks become more common.
Uncorrected, market actors begin to adapt to this artificial scarcity by using alternatives to on-chain transactions: custodians, intermediaries, and competing networks. This in turn compromises the long-term economics of mining – cumulative transaction fee revenue is suppressed, and long-term network security grows to rely on continuous inflation via block subsidies.
Because static block size limits can only be changed as part of a widely coordinated network upgrade, they present a focal point for network interruption or capture by motivated attackers: rent seeking institutions, competing networks, opponents of peer-to-peer cash, etc. To make matters worse, the attackers have a significant coordination advantage – while honest network participants must achieve near-unanimous consensus to activate an upgrade, attackers must only create sufficient uncertainty among the honest participants to delay limit increases, as inaction results in degradation of the network’s functionality and long-term security.
Adaptive Block Size Limits
Adaptive block size limits resolve the economic vulnerability of static limits by automatically adjusting the maximum block size over time, either following a fixed schedule or based on observed usage (for a comparison of these strategies, see my earlier comments about the advantages of this proposal's usage-based adjustment algorithm).
While an adaptive block size limit could still diverge from a hypothetical "ideal" size due to significant changes in the rate of technological advancement or the availability of capital, such divergences would likely remain much smaller than with static limits, and attackers are no longer afforded an advantage.
The proposed algorithm is conservative and based on observed usage. In cooling-off periods of falling network usage, the limit slowly decreases to preserve the resources of infrastructure operators. On the other hand, during periods of rapid growth, the limit can increase at a rate of up to 2x per year.
To demonstrate widespread approval, CHIPs must collect public statements from stakeholders. For example, the CashTokens CHIP was locked in without a dispute resolution process given the clear result of its stakeholder responses.
I've submitted the following stakeholder statement for
CHIP-2023-04 Adaptive Blocksize Limit Algorithm:
This proposal resolves the economic vulnerability inherent to static block size limits and could reasonably get us to universal Bitcoin Cash adoption without further intervention. Fourteen years of network usage data, across multiple ecosystems, provide the insight required to have confidence in deploying an adaptive block size algorithm. On the specifics of the algorithm: I'm most focused on development of applications and services (primarily Chaingraph, Libauth, and Bitauth IDE) where raising the block size limit imposes serious costs in development time, operating expense, and product capability. Even if hardware and software improvements technically enable higher limits, raising limits too far in advance of real usage forces entrepreneurs to wastefully redirect investment away from core products and user-facing development. By measuring observed usage,
CHIP-2023-04 Adaptive Blocksize Limit Algorithmminimizes such waste while still ensuring adequate capacity for both bursts of activity and consistent future growth; I support this CHIP's activation in the May 2024 upgrade.
Open Source Software Support
The following open source software projects will provide support for the 2024 Bitcoin Cash upgrade:
For questions and discussion, please join us in each project-specific chat group: Bitauth IDE Chat, Chaingraph Devs, and Libauth Devs. You can also follow each project on GitHub: