Network Consensus Rules

When talking about Bitcoin network rules and the difference between invalid and valid data, the general assumption is that these rules are uniform, but that is just a simplification of the network's composition and how network rules are established or changed.

The reality is that there is no single set of rules, no authoritative guide to what a Bitcoin is, what the rules must be, instead the rules are simply a common treaty between interoperating individual nodes, and the uniformity is an emergent and non-universal property of many nodes working together.

Because this makes discussion of what the rules should be confusing, there have been some attempts to pin down what can to be considered to be the canonical rules in a non-authoritative system.

Economic Majority Consensus

One common way to describe what the network rules are is to describe the ruleset used by the economic actors who miners can sell their coins to economic majority. Meni Rosenfield coined this expression in a discussion about how the Bitcoin protocol is changed.

In this theory, a dichotomy is created between miners and other economic actors: miners strongly depend on economic actors to give their function value, and economic actors weakly depend on miners to provide security and stability for their commerce.

Miners and more broadly all participants are prevented from changing the rules of Bitcoin through a simple litmus test: will the other economic actors continue to cooperate and value the coins under a changed rule set? Naturally there may be some percentage who will never cooperate, so the question becomes: will more than a majority continue? Assuming that all economic members are also asking themselves the same question about economic participation and wanting to simply maximize the value of their coins or Bitcoin businesses, a majority is enough to maintain a consensus about the rules.

This model can be used to answer simple questions about the rule set. If miners wanted to speed up the mining rewards process, would that be possible? Only if the economic majority went along with it, otherwise the miners would be exiting the ad-hoc cooperation of the network.

The Economic Majority concept is not a hard and fast rule. It itself rests on a large assumption: that the network would not split, that the cost of cooperation failure is the only cost that the majority cares about. This is broadly true, which is why it can be used as an assumption, but not true all the time.

It's quite possible that at some point in Bitcoin's future, a significant divide will occur, creating two separate and distinct groups. In that case the economic majority argument will be academic, because it was only ever a weak economical observation, no logical reason prevents the fracturing of the Bitcoin rule set, and with altcoins like the CLAMs project, or loosely considering Litecoin and Feathercoin, it has even happened to various degrees in the past.