Bitcoin is difficult to change. How do we reach consensus to change it? Nitesh walks us through the first half of the Bitcoin Consensus Analysis Project paper, providing an in-depth analysis of Bitcoin’s consensus mechanism and the complexities surrounding protocol upgrades. He discusses the challenges of implementing changes in a decentralized network, the difference between soft forks and hard forks, and various activation methods like Flag Day, BIP 34, BIP 9, and BIP 8. Nitesh also outlines the different stakeholders in the Bitcoin ecosystem—including economic nodes, investors, media influencers, miners, protocol developers, users, and application developers—and their respective incentives and influence on the network.

Show Notes: https://atlbitlab.com/podcast/nitesh-b-how-does-bitcoin-consensus-work-part-1

00:00 Introduction to Bitcoin Soft Forks

00:35 Event Recording and Sponsors

02:09 Meet the Speaker: Nitesh

02:52 Understanding Bitcoin Consensus

05:38 Consensus Rules in Bitcoin

08:51 Soft Forks vs Hard Forks

14:25 Activating a Soft Fork

20:25 Voting Systems in Bitcoin: BIP 34 and BIP 9

21:44 Introducing BIP 8: Community-Driven Upgrades

23:08 User Activated Soft Forks (UASF) and User Resisted Soft Forks (URSF)

24:27 Human Factors in Bitcoin Changes

25:31 Stakeholders in Bitcoin: Economic Nodes and Investors

33:09 Influence of Media and Miners on Bitcoin

36:17 Role of Protocol Developers

41:34 Users and Application Developers

42:58 Conclusion and Next Steps