- CHIP-2023-04 introduces an adaptive algorithm for block size in Bitcoin Cash, improving the network as of May 2024.
- The upgrade resolves previous economic vulnerabilities, optimizing infrastructure costs and preparing BCH for future growth.
The May 2024 update to Bitcoin Cash (BCH), known as CHIP-2023-04, implements an adaptive algorithm for the block size limit, already active on chipnet since block #174519. This enhancement addresses an economic vulnerability identified in 2010, which was a key factor in the BCH/BTC network split in 2017.
The algorithm dynamically modifies the block size limit for Bitcoin Cash, decreasing operational expenses in times of reduced activity, while permitting the maximum size of blocks to increase twofold annually during periods of heightened growth.
Block size limiting is essential to contain the technical requirements of the network infrastructure, enabling reliable cost projections and preventing attacks that increase the cost of network participation.
Oversized blocks may compel individuals and enterprises to allocate resources towards redundant infrastructure or depend on external service providers, compromising their privacy and autonomy.
The issue with fixed block size caps is that, over time, network activity might escalate to these set boundaries. Without a timely and collective update, such a scenario would lead to a decline in the network’s service quality, rendering transaction costs and processing times unpredictable.
The May 2024 upgrade to Bitcoin Cash (BCH), CHIP-2023-04 Adaptive Blocksize Limit Algorithm, is now active on chipnet at block #174519 (0000000068675ff881ff763de0c4b47b8da8f64c7800c016a9dac60f7f8e0007)! 🎉
This upgrade resolves an economic vulnerability that was introduced in… pic.twitter.com/OxcK7aejLb
— Jason Dreyzehner (@bitjson) November 15, 2023
Adaptive block size limits address this vulnerability by automatically adjusting the maximum block size over time. The new Bitcoin Cash algorithm is conservative and based on observed usage.
During periods of reduced network usage, the limit slowly decreases to conserve infrastructure operator resources. In contrast, during periods of accelerated growth, the limit can increase by up to double per year.