When Bitcoin Splits into Sects: Developers Wage a Holy War Over “What Should Go Into a Block”

Bitcoin is facing a new civil war over the use of its blockchain

I recently had the pleasure of visiting the charming Swiss mountain town of Lugano. Its appeal lies in the fact—as Tether CEO Paolo Ardoino put it—that the city is “essentially Italian, but managed by the Swiss.” Ardoino is one of the main backers of the “Plan B” Bitcoin conference, where I moderated a discussion about the growing trend of governments around the world embracing this original cryptocurrency.

The atmosphere at the conference was upbeat—which is no surprise, since everyone present worships Bitcoin—but it was also clear that trouble lurks in paradise. It turns out that Bitcoin’s codebase is experiencing an increasingly deep division: the controversy centers on whether the code should be modified to allow the blockchain to accommodate more data unrelated to financial transactions.

The idea of including non-Bitcoin transaction-related data in blocks is not new. In fact, the very first block on the blockchain included a newspaper headline about a bank bailout. However, today, Bitcoin’s largest and most influential group of developers—known as “Core”—plans to adjust their software to significantly relax the restrictions on the amount of non-payment information that can be included in each block.

For the Core camp, this is a simple and pragmatic move that can both promote new uses for Bitcoin and create additional fee income for miners at a time when the block reward is only 3.125 bitcoins and is expected to halve again in 2028. However, a rapidly rising rival faction completely rejects this plan and has launched their own Bitcoin client software—Knots.

This faction’s software is led by an influential Bitcoin developer who is a devout Catholic and reportedly named it “Knots” after the story of Jesus driving out the money changers from the temple with a “whip of cords.” According to a lawyer from the Knots camp whom I interviewed, the necessity of this software lies in protecting the blockchain from what he condemns as spam senders and those promoting “borderline scam” projects such as Bitcoin NFTs.

If you have ever interacted with Bitcoin supporters online or offline, you know they are not known for their diplomacy. This is especially true of early prominent figures in Bitcoin—they attacked each other both on the stage in Lugano and on X (formerly Twitter). These high-profile camp representatives include: Peter Todd and Jameson Lopp from the Core camp, and Nick Szabo and Luke Dashjr from the opposing Knots camp.

This latest split (a useful overview can be read here) is reminiscent of the “block size war” that swept the entire Bitcoin community from 2015 to 2017. At that time, the “small block” faction—those who advocated keeping Bitcoin blocks at 1MB—ultimately defeated their opponents who believed that expanding to 2MB or larger was commercially viable. The resentment left by that war lingers to this day.

In the current struggle, Knots remains the smaller faction, but it has become the preferred client for more than 20% of Bitcoin node operators. Its rapid popularity is not only due to its stance on blockchain expansion issues, but also because of the widespread perception that the Core camp has become arrogant and detached from Bitcoin’s core values. The Core camp, in turn, dismisses the Knots faction as “lying troublemakers.”

I am not in a position to judge, but I can point out: this latest battle for Bitcoin’s soul once again confirms my long-held view—Bitcoin is both a remarkable technology and a religion. As with any religion, there will always be splits between conservative believers and modernists. Fortunately, there was also a moment of unity at the Lugano venue: that was at the lakeside unveiling of the restored Satoshi Nakamoto statue. Although the various Bitcoin factions are at war, there is no doubt that they still worship the same god.