Many thanks to Grok I live on a different planet. I come down to 'earth' every now and then. To have a look to see if anything has changed. Call me God if you like. On a recent trip to a planet a really clever man called Mr. Ex invented a fantastic labour saving device called IA . Now, for each hour of labour worked, and dollar of capital employed, 1000 times more wealth could be produced than before Mr. Ex invented IA. All thanks to IA. People started planning to escape this planet called Rent to move to planet Rent+1 there was going to be so much money to be made there. And many believed people would not last long on planet Rent. But for some reason in spite of all the new wealth very few people could afford a house on planet Rent+1. Especially the young who started to complain angrily about old people, who themselves once had similar complaints. The young were not listening and just wanted free stuff and a target to blame for not getting it. Largely by thr...
Quick Summary
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By showing you this, I'm not saying that it's a good or a bad thing. I'm pointing at it so that we can all make better investment decisions, being closer to actuality. I do not care about who is right or wrong, per se. I care about what actually happened.
What this means is nothing happens in Bitcoin until the economic nodes have decided who is going to win through actions where software changes are needed to command power. Just like central banking for the past 3 centuries.
All economic nodes are user nodes (they run full validation),
but only a tiny fraction of user nodes are economic nodes.
In a true crisis of consensus, it is the economic nodes — not the thousands of ideological user nodes — that determine which chain survives as “Bitcoin.”
but only a tiny fraction of user nodes are economic nodes.
In a true crisis of consensus, it is the economic nodes — not the thousands of ideological user nodes — that determine which chain survives as “Bitcoin.”
Economic Nodes
'Businesses' with the ultimate power to make things happen with Bitcoin. Much like monopoly corporations could be said to be to some extent an arm of the state - they have the power to set the price of everything.
- exchanges
- wallets
- payment processors
- merchants
- custodians etc
User Nodes - “My node, my rules.” Validates for ideological or technical reasons
Nodes which run the same software, do not create blocks and do nothing at all relevant (all ~15,000 of them). What use is verification if the economic nodes have already decided. Anyone running these is doing it for ideological reasons.
Miner Nodes - “Our node, everyone else’s money.” Validates for business reasons and decides which coins have economic value
Nodes whose role is to reinforce the fiat power the economic nodes have already decided - $100 million data centres, spending huge sums on electricity creating blocks for the subsidy (15-20 nodes with only about 4 actually creating blocks at any time)
I hear you - Satoshi has tried to change this recently but failed badly, once again beaten by the user nodes, who always decide.
More detail from Grok below
"Is a user node the same thing as an economic node?"
No — a “user node” and an “economic node” are not the same thing, although there is a large overlap in practice. The distinction becomes extremely important in contentious situations like a UASF or a chain split.
Why the distinction matters in practice
All economic nodes are user nodes (they run full validation),
but only a tiny fraction of user nodes are economic nodes.
In a true crisis of consensus, it is the economic nodes — not the thousands of ideological user nodes — that determine which chain survives as “Bitcoin.”
Term | Who runs it? | What power does it actually have? | Examples |
|---|---|---|---|
User node | Any individual or organization that runs a full Bitcoin node (Bitcoin Core, Knots, etc.) | Validates blocks & transactions according to its own rules Can refuse to follow the longest chain if it violates its policy (e.g., inflation >21 M, confiscation, etc.) Does not directly control where money is accepted in the real world | You, me, a hobbyist in his basement, a university research lab, a privacy activist running a node on a Raspberry Pi |
not an exchange, wallet provider, or merchant with millions of users | |||
Economic node | The relatively small set of entities that the rest of the world depends on to convert bitcoin into fiat, goods, services, or other cryptos | Decides which chain is called “BTC” on price tickers Decides which coins users can withdraw or deposit Decides which chain merchants and payment processors will accept Their policy effectively defines “the real Bitcoin” for 90–99 % of the monetary value | Major exchanges (Coinbase, Binance, Kraken, Bitstamp, etc.) Large custodians (Fidelity, Grayscale, BitGo) Popular wallets with millions of users (Blockchain.com, Exodus, Electrum servers) Payment processors (BitPay, Coinbase Commerce) Stablecoin issuers that peg to “BTC” |
- In normal times
The two sets are aligned → nobody notices the difference. - In a serious UASF or chain-split scenario
- 100,000 user nodes can activate a UASF and still lose → the chain they support dies.
- 5–10 economic nodes (exchanges + big wallets) can activate a UASF and win → their chain becomes the one everyone calls Bitcoin, even if it has 1 % of the original hashpower.
- Real-world numbers (rough estimates, 2024–2025)
- ~17,000–18,000 reachable Bitcoin full nodes worldwide (user nodes).
- <50 entities control >95 % of liquid BTC trading volume and custody (economic nodes).
→ In a governance fight, the second group wins almost every time.
- User node → “My node, my rules.” Validates for ideological or technical reasons.
- Economic node → “Our node, everyone else’s money.” Validates for business reasons and decides which coins have economic value.
All economic nodes are user nodes (they run full validation),
but only a tiny fraction of user nodes are economic nodes.
In a true crisis of consensus, it is the economic nodes — not the thousands of ideological user nodes — that determine which chain survives as “Bitcoin.”
What is a user activated soft fork?
A User-Activated Soft Fork (UASF) is a mechanism in Bitcoin (and some other cryptocurrencies) where a backward-compatible protocol upgrade (a soft fork) is enforced not by miners, but by users—specifically, by the economic nodes (wallets, merchants, exchanges, and full nodes run by individuals and businesses).Key Characteristics of a UASF
Why UASFs Are ControversialYes, and these economic nodes do not create blocks nor maintain the blockchain?
- It’s a soft fork
- The new rules are a stricter subset of the old rules, so old nodes can still validate blocks under the new rules (they just won’t enforce the extra restrictions).
- This makes it backward-compatible in the sense that non-upgraded nodes won’t immediately reject the chain.
- Activation is triggered by users, not miners
- A specific date/time (a "flag day") is hardcoded into the client software.
- On that date, upgraded nodes begin rejecting any block that does not signal support for the new rules (usually via a specific bit in the block header, e.g., bit 1).
- Even if miners don’t upgrade or don’t signal, users will follow the chain that complies with the new rules.
- Economic majority matters
- The success of a UASF depends on a significant portion of the Bitcoin economy (exchanges, wallets, payment processors, merchants) running the UASF client.
- If the economic majority rejects non-compliant blocks, miners are economically forced to follow or risk mining blocks that the economy won’t accept (orphan risk).
- What it was: A UASF to activate SegWit (BIP 141).
- Flag day: August 1, 2017 (block height 477,120 onward).
- Rule: Any block mined after July 31, 2017, that did not signal support for SegWit (bit 1 set) would be rejected by BIP 148 nodes.
- Outcome:
- Created enormous tension because a large portion of miners opposed or delayed SegWit.
- Exchanges and many companies announced support for BIP 148.
- To avoid a chain split, miners and the community eventually compromised with BIP 91 (a miner-activated rule that forced SegWit signaling earlier), and SegWit activated safely on August 24, 2017 via BIP 141 (lock-in via miner signaling).
- BIP 148 itself never fully activated because the compromise made it unnecessary, but it proved the concept: users can force miners’ hands.
Feature | MASF (e.g., BIP 34, BIP 66) | UASF (e.g., BIP 148) |
|---|---|---|
Who enforces the rule? | Miners (95% hashpower threshold) | Users (economic nodes) |
Activation trigger | Miner signaling over a window | Fixed date/time ("flag day") |
Risk of chain split | Lower (needs miner consensus) | Higher (if miners resist) |
Political message | Miners have final say | Users/economic majority have final say |
- Pros:
- Reasserts that miners are service providers, not rulers of the protocol.
- Gives power back to users and the broader economy.
- Cons:
- High risk of a prolonged chain split if miners refuse to follow.
- Can be seen as coercive or reckless.
Yes, and these economic nodes do not create blocks nor maintain the blockchain?
Exactly — that's the crucial point that makes a UASF so powerful (and controversial).
Economic nodes (wallets, exchanges, merchants, payment processors, and individual full nodes) do not:
- Mine blocks
- Produce new blocks
- Directly contribute hashpower
- Maintain the blockchain ledger by themselves
Yet they do decide which chain has economic value. Here’s why that matters in a UASF. When a UASF flag day arrives, These economic nodes start rejecting any block (and the entire chain continuing from it) that doesn’t follow the new rules. Even if those blocks are produced by 100% of the current miners.
If major exchanges, wallets like Coinbase, BitPay, or hardware wallets like Ledger/Trezor enforce the UASF rules, then coins on the non-UASF chain become unsellable, unspendable, or worthless in practice — even if that chain has all the hashpower.
Miners are then faced with a brutal choice:- Keep mining the “old rules” chain → their blocks get orphaned by the economy → they earn zero revenue (because no one accepts their coins).
- Switch to mining the UASF chain → they follow the users’ rules and get paid.
This is why people say:
“Miners follow the chain with the most economic value, not the one with the most hashpower in the long run.”
The 2017 BIP 148 UASF threat worked because enough economic nodes (exchanges, wallets, businesses) publicly committed to enforcing it. Miners backed down first to avoid mining worthless blocks.
In short: Economic nodes don’t create blocks or secure the chain with proof-of-work, but they decide which blocks have economic relevance. A UASF is the mechanism that turns that economic power into protocol enforcement.
Exactly — that's the crucial point that makes a UASF so powerful (and controversial).
Economic nodes (wallets, exchanges, merchants, payment processors, and individual full nodes) do not:
“Miners follow the chain with the most economic value, not the one with the most hashpower in the long run.”
The 2017 BIP 148 UASF threat worked because enough economic nodes (exchanges, wallets, businesses) publicly committed to enforcing it. Miners backed down first to avoid mining worthless blocks.
In short: Economic nodes don’t create blocks or secure the chain with proof-of-work, but they decide which blocks have economic relevance. A UASF is the mechanism that turns that economic power into protocol enforcement.
- Mine blocks
- Produce new blocks
- Directly contribute hashpower
- Maintain the blockchain ledger by themselves
Yet they do decide which chain has economic value. Here’s why that matters in a UASF. When a UASF flag day arrives, These economic nodes start rejecting any block (and the entire chain continuing from it) that doesn’t follow the new rules. Even if those blocks are produced by 100% of the current miners.
If major exchanges, wallets like Coinbase, BitPay, or hardware wallets like Ledger/Trezor enforce the UASF rules, then coins on the non-UASF chain become unsellable, unspendable, or worthless in practice — even if that chain has all the hashpower.
Miners are then faced with a brutal choice:
This is why people say:If major exchanges, wallets like Coinbase, BitPay, or hardware wallets like Ledger/Trezor enforce the UASF rules, then coins on the non-UASF chain become unsellable, unspendable, or worthless in practice — even if that chain has all the hashpower.
Miners are then faced with a brutal choice:
- Keep mining the “old rules” chain → their blocks get orphaned by the economy → they earn zero revenue (because no one accepts their coins).
- Switch to mining the UASF chain → they follow the users’ rules and get paid.
“Miners follow the chain with the most economic value, not the one with the most hashpower in the long run.”
The 2017 BIP 148 UASF threat worked because enough economic nodes (exchanges, wallets, businesses) publicly committed to enforcing it. Miners backed down first to avoid mining worthless blocks.
In short: Economic nodes don’t create blocks or secure the chain with proof-of-work, but they decide which blocks have economic relevance. A UASF is the mechanism that turns that economic power into protocol enforcement.