As transaction demand grew, a major dispute emerged over whether Bitcoin should raise its 1 MB block size limit or scale in other ways. Bitcoin XT, a fork of Bitcoin Core tied to BIP101, proposed increasing block size to 8 MB through a hard fork, bringing the scaling debate into open conflict between different technical and governance approaches.
Bitcoin Core 0.11.2 was released as a routine software upgrade, but it highlighted how Bitcoin often changes rules through “soft forks” (backward-compatible changes). This period helped set the stage for later scaling work by showing that upgrades could be coordinated through version signaling and activation thresholds, rather than only through disruptive hard forks.
Developers formalized Segregated Witness (SegWit) as BIP141, describing a new transaction format that separates signature (“witness”) data from the main transaction data. This design aimed to fix transaction malleability (a problem that could change a transaction ID) and to increase effective capacity without a simple block-size hard fork.
Bitcoin Classic emerged as another attempt to resolve congestion by raising the base block size, this time from 1 MB to 2 MB. It showed that the community still lacked broad consensus on a single path forward, with competing clients and proposals pulling miners, businesses, and users in different directions.
Bitcoin Unlimited proposed letting miners and nodes choose larger blocks through configurable limits rather than a single fixed increase. The project reflected growing frustration with network congestion and fees, but it also raised concerns that bigger blocks could increase hardware and bandwidth demands, potentially favoring large operators.
At an industry meeting, many companies and mining interests backed the “New York Agreement,” which aimed to activate SegWit first and then pursue a 2 MB hard fork later (often called SegWit2x). The proposal was controversial because many developers and node operators argued it was negotiated outside Bitcoin’s usual open technical process.
BIP91 was introduced as a coordination mechanism using BIP9 “version bits” signaling, with an 80% activation threshold over a short window. It was designed to help align miner signaling for SegWit, reducing the risk of a messy split as competing activation plans gained support.
With rising tension about a possible chain split, miners began signaling strongly for BIP91, and it locked in during July 2017. This mattered because BIP91 made it easier for miners to coordinate around SegWit signaling, reducing the immediate risk of two competing Bitcoin chains based only on different activation rules.
Bitcoin Cash (BCH) launched via a hard fork, creating a new chain that rejected SegWit and instead prioritized larger blocks for on-chain throughput. The split turned the scaling debate into a real market and network separation: BTC continued with SegWit plans, while BCH pursued bigger blocks and different rule changes.
Soon after launch, Bitcoin Cash used special rules to adjust mining difficulty more quickly than Bitcoin’s normal 2016-block cycle. These “emergency” adjustments aimed to keep blocks coming regularly even if miners switched between BTC and BCH based on profitability, but they also created incentives for rapid hash-rate swings.
After signaling reached the required threshold during a difficulty adjustment period, SegWit locked in, meaning activation was now scheduled and highly likely. This was a major turning point because it committed the Bitcoin network to the new transaction format and laid groundwork for later capacity improvements such as second-layer payment channels.
SegWit became active on the Bitcoin network, enforcing new consensus rules for SegWit-formatted transactions. In practical terms, this reduced the impact of signature data on block limits (via “block weight”) and fixed transaction malleability, helping Bitcoin scale in a way that did not require an immediate base block-size hard fork.
As the planned SegWit2x hard fork approached, Bitcoin.org announced it would display warnings about services that might treat a SegWit2x chain as “Bitcoin” or expose users to replay attacks. This reflected how the scaling dispute had shifted from pure engineering to user safety, naming, and ecosystem coordination.
SegWit2x organizers announced they were calling off the planned 2 MB hard fork because there was not enough community agreement. The suspension effectively ended the “compromise” path and confirmed a new status quo: Bitcoin (BTC) would continue with SegWit and layered scaling, while Bitcoin Cash would continue as the main larger-block fork.
Bitcoin Cash upgraded its difficulty system by replacing the Emergency Difficulty Adjustment (EDA) with a new Difficulty Adjustment Algorithm (DAA). Adjusting difficulty more smoothly and frequently helped stabilize block times, reducing extreme swings that had made the network unpredictable for users and miners.
Bitcoin Cash implemented a major capacity increase, raising its maximum block size limit from 8 MB to 32 MB as part of its on-chain scaling strategy. By this point, the 2015–2018 scaling conflict had produced two established approaches: BTC focusing on SegWit and layered scaling, and BCH focusing on larger blocks and protocol changes to support high on-chain throughput.
Scaling debate, SegWit deployment, and the Bitcoin Cash hard fork (2015–2018)