The Eternal Dilemma of Bitcoin Governance: The Clash Between Decentralization Ideals and Reality

Bitcoin is currently in a profound debate over self-identity. This is not merely a technical dispute but a fundamental question about how Bitcoin should exist.

Identity Paradox: The Curse of the Universal Protocol

At its core, Bitcoin is a data recording system. When you make a transfer, what moves is not physical currency but digital records like UTXOs. But because the Bitcoin protocol stores information without discrimination, it falls into a deadly paradox.

The white paper describes it as a “peer-to-peer electronic cash system,” with a clear focus on payments. Yet reality is far more complex—JPEGs, videos, website code are all permanently written into the blockchain. Some call it “uncensorable freedom of information,” while others criticize it as a “blockchain garbage dump.”

This problem has no solution, because Bitcoin’s egalitarian design fundamentally cannot and does not intend to differentiate between data types.

The Node Dilemma Is Becoming Apparent

What is the cornerstone of Bitcoin’s decentralization? It’s the nodes. These validators operated by ordinary people verify each transaction and safeguard the network’s independence.

But the harsh reality is: according to on-chain data, the number of Bitcoin network nodes has decreased by nearly 60% since the peak in 2018. Why? Because running a node offers no economic incentive. Miners earn mining rewards, traders have transfer needs, but those who operate nodes out of conviction— their efforts are consumed purely by human spirit.

Human nature tends toward centralization. You see more users opting to host wallets or rely on institutional infrastructure. This is quietly eroding Bitcoin’s intended decentralization.

The Spam War Reveals a Governance Vacuum

From late 2023 to 2024, data inscription methods like Ordinals have sparked intense debate. Miner income has surged as a result, but it also raises an annoying question:

Who has the authority to define what is “spam”?

Some criticize this data bloat for increasing operational costs. But proof-of-work ensures that any attack incurs a cost—if you want to write useless data, pay the fee.

Current evidence suggests that these activities have not yet posed a fatal threat to ordinary users nor caused legal issues for operators. But that doesn’t mean the problem is solved—it’s only temporarily set aside.

From the Block Size Wars to the Anarchic Nature of Governance

In 2015, Bitcoin experienced a philosophical split that revealed its governance truth.

The large-block camp wanted to scale up, enabling Bitcoin to handle Visa-level throughput and become a daily payment tool.

The small-block camp insisted on restraint, believing Bitcoin should maintain security and finality, leaving Layer 2 to carry transaction volume.

These visions are irreconcilable. The final outcome? Bitcoin split. Bitcoin Cash (BCH) took the large-block route, while Bitcoin maintained its original design. But market voting was clear—the small-block side won, and BCH has yet to gain significant market share.

This precedent shows that: Bitcoin’s governance is fundamentally chaotic and anarchic. No one can enforce anything; only code and market collectively determine the direction.

An Unsolvable Balance

Bitcoin faces a four-way dilemma:

• Users want low transaction fees
• Node operators want small blocks to reduce hardware requirements
• Developers want flexible programming space
• Miners need fee-based economic incentives

These four needs are fundamentally impossible to satisfy simultaneously. Any hard stance from one side damages another, and compromises are never thorough enough.

The spam controversy remains unresolved, and the anti-censorship paradox cannot be truly resolved. Bitcoin is not about solving problems but learning to coexist with these contradictions.

Future Risks

The greatest risk to Bitcoin does not come from technology but from human nature. If the majority opt for convenient custodial solutions instead of running their own nodes, decentralization will quietly disintegrate. If the number of nodes continues to shrink by 60%, Bitcoin’s claim of “trustless” will become empty words.

This is the paradox Bitcoin must face but may never fundamentally resolve: Either maintain idealistic decentralization or embrace pragmatic scaling, but both cannot be achieved simultaneously.