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I've thought about how powerful companies can change the protocol in pretty much any way they want. I'm pretty sure and hope there's some kind of way the network is resilient to this but I'm not sure how.

Let's say powerful companies want to change the block size limit, they want to upgrade it to 100 MB for whatever reason.

1 - Big companies like Amazon, Facebook or Google just set up a bunch of nodes. They're like 95 % of nodes now.

2 - They hire the best tech guys and designers to design some slick, user-friendly wallets and they spend a lot on marketing to promote them. Your average joe, non-tech guy (most users) will use these wallets now (like how everyone just uses Whatsapp, Twitter or Facebook). Those wallets are designed to be served the blockchain by one of the nodes controlled by the companies.

3 - The companies talk with mining pools to convince them to accept the changes they propose. If needed they can give them a bunch of money, after all mining pools runners only care about business.

4 - They deploy the new software on all their nodes (95 % of all nodes), and miners validate the new blocks.

5 - This new chain has the avail of 95 % of nodes and of miners. This is the real Bitcoin now. The old chain will be considered just an irrelevant fork maintained by old Bitcoin enthusiasts.

What would prevent powerful companies or actors to do something like this?

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If the vast majority of the network including users, economic majority, miners, and some subset of the developers were to hardfork a blocksize increase, this would result in effectively two networks. Let’s refer to the newly created one as BIGcoin, and the one following the existing rules SMALLcoin.

Whether the networks separated with replay protection or not, eventually, new block rewards would mature that only exist on either BIGcoin or SMALLcoin. Users would use these coins to send BIGcoin and SMALLcoin to new addresses in transactions that are valid only on one of the two networks (as we’ve seen in the replayable BCH/BSV split). Some exchanges may offer splitting of coins as a service for users that cannot do it themselves. (We have already seen that exchanges are happy to list both, because more pairs means more trading.) This enables users to effectively speculate on the future exchange rates of BIGcoin and SMALLcoin, with many participants probably divesting either one or the other side.

Your scenario seems to imply that the vast majority of users would go along with BIGcoin, so it would seem likely BIGcoin would be able claim the “Bitcoin” moniker going forward.

However, even when the majority of nodes, economic majority, and miners were to support BIGcoin, it is possible that the majority of bitcoins might be held by users of a different persuasion and more conviction…

It just so happens that we have seen almost exactly your scenario play out in 2017: numerous major Bitcoin businesses and the vast majority of the hashrate supported the SegWit2x hardfork attempt. The hardfork attempt was called off about a week before the activation date, among other reasons, because BitFinex “virtually split” bitcoin deposits and allowed its users to trade the two to-exist subvariants, where the “segwit2x” token ended up trading at around 10% of the “SMALLcoin” token.

If you want to read more about that era of Bitcoin, you may want to look into BitMex Research’s “The Blocksize War”.

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  • Did Bitfinex call the non-segwit2x token "bitcoin"?
    – user253751
    Sep 16, 2023 at 13:48
  • They were called "BT1 and BT2 chainsplit tokens".
    – Murch
    Sep 16, 2023 at 15:50

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