Analyzing Bitcoin Consensus: Risks in Protocol Upgrades
A recently publicized paper co-authored by Ren Crypto Fish, Steve Lee, and Lyn Alden provides an analysis of bitcoin’s consensus mechanism, focusing on the roles of various stakeholders, their powers, and the incentives that guide their actions.
- This paper identifies six distinct stakeholder groups involved in Bitcoin's consensus, each with specific motivations and levels of influence. Additionally, it observes that the relative power of these stakeholders varies based on their roles in the network's operations and the phase of the consensus change process.
"Historically, changes to Bitcoin's consensus have typically followed a smooth path. However, it is essential to thoroughly explore and understand potential future scenarios that may be more contentious and could lead to a fragile network," state the report authors.
- The paper also presents "a novel analysis of the challenges and risks associated with adopting alternative clients." These risks could materialize in a vulnerable network, potentially causing chain splits and bounty claims, which may lead to the loss of user funds.
"We also identify that not all Investors are equal when it comes to price discovery with state of mind, speed and capability to act as critical factors."
- Finally, the report’s authors provide recommendations for stakeholders on how to evaluate proposed consensus changes, highlighting critical questions to consider throughout the process and in various scenarios.
"We consider our initial version to only be the start. We're releasing the paper to the public domain, and inviting people to contribute to it or even help maintain it on Github," said the paper's co-author Lyn Alden.
