The Block Size War, 2015 to 2017
The one time the rules basin was pushed past its edge: a two-year argument over block size that ended with Bitcoin splitting in two.
The fourth basin is the rules themselves. They hold because people decline to switch to new ones. Its edge is a dispute the community cannot settle, and between 2015 and 2017 Bitcoin crossed it.
The Argument
In 2010 Satoshi added a limit of one megabyte to the size of a block, as protection against anyone flooding the ledger with junk. By 2015 Bitcoin was busy enough that blocks were filling up, payments were waiting longer, and fees were rising. One side wanted to raise the limit so more payments would fit and stay cheap. The other side argued that bigger blocks would make it more expensive for ordinary people to keep a copy of the ledger, putting control in fewer hands, and that the limit should stay while payments moved to other layers built on top.
It was an engineering question that the mathematics did not settle, and it turned bitter. Competing versions of the software were released, among them Bitcoin XT in 2015 and later Bitcoin Classic and Bitcoin Unlimited. In January 2016 one of the most prominent developers, Mike Hearn, quit and declared Bitcoin a failed experiment.
The Split
In 2017 the dispute came to a head. A change called Segregated Witness, which fit more payments into each block without raising the limit outright, was pushed through with pressure from ordinary users who threatened to reject blocks from miners who did not support it. The big-block side, unwilling to accept that, launched its own version on 1 August 2017: Bitcoin Cash, with a larger block limit. From that block on there were two chains with a shared history and two separate currencies. Segregated Witness took effect on Bitcoin later that month, and a compromise plan to also double the block size, agreed by a group of companies in New York that May, was abandoned in November.
What It Shows
The other three basins are pushed by machines and prices. This one is pushed by people, and when the people could not agree, no rule inside Bitcoin could make them. The basin did not return; it divided, the way a cell divides, into two basins that each kept going on their own. Bitcoin kept its original rules because enough people declined to switch, which is exactly how this basin was described: made of people's judgment. The episode is also the clearest evidence for the open question on the Bitcoin page. Bitcoin's rules are kept by people the system does not pay, and when those people split, so does Bitcoin.
Sources
De Filippi, P., & Loveluck, B. (2016). The invisible politics of Bitcoin: governance crisis of a decentralised infrastructure. Internet Policy Review, 5(3).
Bitcoin Cash fork: 1 August 2017. Segregated Witness activation on Bitcoin: 24 August 2017. SegWit2x cancellation announcement: 8 November 2017.
Hearn, M. (14 January 2016). The resolution of the Bitcoin experiment (essay announcing his departure).