Why Bitcoin’s Block Size Matters

A Bitcoin block is essentially a digital container with a limited capacity where a group of transactions is bundled together and stored. Each block has a capacity of 1MB to 2MB. As new blocks are mined, they are added to the blockchain: a permanent ledger containing details of every Bitcoin transaction ever made.

Because space is limited, the size of a block dictates exactly what Bitcoin is and how it can act. This has sparked a long-standing debate between two opposing philosophies: Big blocks versus small blocks.

Big vs small blocks

Big blocks mean Bitcoin can store more information in every batch (block) of transactions. This allows for more transactions per second and cheaper fees. 

Small blocks mean the amount of data is strictly limited. This keeps the network lighter and easier to store.

While the blockchain is primarily for financial data, people can, and have, stored everything on the Bitcoin blockchain. This ranges from the controversial (links to illicit content like child pornography or leaked government cables) to the historic (the Bitcoin Whitepaper)

The difference in block size has a massive impact on the network. It changes how people use Bitcoin, how difficult it is to mine, and how quickly a transaction is processed. But most importantly, it changes the identity of the coin:

• Big Blocks turn Bitcoin into a digital currency for daily payments (like Visa).
• Small Blocks turn Bitcoin into a store of value (like digital Gold).

The SegWit solution

In 2015, a solution to tackle Bitcoin’s block size was introduced, known as SegWit (Segregated Witness).

This solution was added to Bitcoin Core in October 2016, but it would require consensus from miners for it to become active. 

Writer David Canellis provides a good explanation of how SegWit would tackle Bitcoin’s block size problem:

But this proposed solution was not accepted by all. Many Big Blockers called SegWit an “ugly hack” or “accounting trick.” To them, this was not an acceptable long-term solution but rather a band-aid. 

This created the rift in the Bitcoin community that would culminate in the Bitcoin Cash Hard Fork of 2017.

The 2017 Bitcoin Cash Hard Fork

The Bitcoin Cash hard fork, or known more dramatically as the “Block Size War”, reached its climax in August 2017 when Bitcoin Cash split from Bitcoin. 

This was an argument between the ‘Big Blockers’ who wanted to scale the network, and small blockers who wanted to stick more closely to Satoshi’s original vision of Bitcoin as a decentralized, democratized network. 

The big block argument

Leading the charge for larger blocks were figures like Roger Ver (often called “Bitcoin Jesus” at the time) and mining giant Bitmain.

Ver argued that Bitcoin was meant to be “Peer-to-Peer Electronic Cash.” He believed that if Bitcoin didn’t increase its block size, transaction fees would become too high for the average person to buy a coffee or send small amounts of money. He argued that high fees would kill adoption and force users to other cryptocurrencies.

The small block argument

On the other side were the Bitcoin Core developers and the “purists.” They argued that Bitcoin should remain with the current 1MB block size limit.

They argued that if you increase the block size, the blockchain becomes too heavy (too many gigabytes) for a normal person to store on their computer. If only massive data centers can run Bitcoin nodes, the network becomes centralized and corporate.

They envisioned Bitcoin as a robust, decentralized settlement layer (Digital Gold), with cheap payments happening on a second layer (The Lightning Network).

The market eventually decided the winner. Bitcoin (BTC) remained the dominant cryptocurrency, validating the “Small Block” philosophy of decentralization over raw speed. Bitcoin Cash went on its own path, allowing block sizes up to 32MB.

The 2026 “Data War” and BIP 110

Just as the community fought over transaction volume in 2017, a new civil war has emerged, this time over the type of data stored in each block rather than the block size itself. 

The Bitcoin Core v30 update on October 10, 2025, removed the long-standing 83-byte limit on non-financial data on a Bitcoin block. The goal was to stop users from bypassing the old limit in ways that clogged up the network. 

This led to a deluge of data, or “spam” as some would call it, on the Bitcoin blockchain. 

BIP 110 was then introduced as a temporary “emergency brake” to stop this bloat.

The pro-BIP 110 argument

Supporters of BIP 110, including many “Small Block” purists, argue that Bitcoin is a monetary network, not a hard drive. They believe that if we allow people to fill blocks with “junk” data, the blockchain will become too massive for regular users to store. 

Their goal is to protect decentralization by reinstating a strict 83-byte limit on non-financial data, ensuring that a Bitcoin node can still run on a simple home computer.

The anti-BIP 110 argument

Critics argue against these restrictions. They believe that if a user is willing to pay the market fee, they should be able to include whatever data they want in a block. They argue that “spam” is a subjective term and that trying to filter data is a form of censorship that goes against Bitcoin’s open nature. They prefer to let the market decide what gets into a block, rather than hard-coded rules.

A soft fork solution?

Unlike the 2017 split, BIP 110 is proposed as a Soft Fork.

In a soft fork, instead of the network splitting into two different coins (like BTC and BCH), the new rules are compatible with the old ones. It is a way to “tighten the belt” of the network for one year without forcing a permanent divorce. The community then has time to find a long-term solution to the problem.

The quantum computing problem

There is a fear that quantum computing could one day pose a threat to Bitcoin’s security. While that day is still far off, the solution to this problem brings us right back to the block size debate.

Today, it is mathematically impossible for a regular computer to figure out your combination (Private Key) just by looking at the vault (Public Key). However, a sufficiently powerful quantum computer could essentially reverse-engineer the combination in minutes.

To protect Bitcoin from this threat, a new type of security called “Post-Quantum Cryptography” may need to be employed. 

But this poses another size problem: These new proposed signatures are massive. Instead of 70 bytes, a single quantum-safe signature could be 2,500 bytes to 7,000 bytes.

If Bitcoin stays with its current “Small Block” rules, the math becomes a nightmare. If every transaction becomes 40 to 100 times larger in file size, a 1MB block that currently holds 2,500 transactions would suddenly only be able to fit about 25 to 50 transactions.

This future dilemma about Bitcoin’s block size is far off, but it is one that will eventually have to be faced. 

Bitcoin’s balancing act

Whether it’s the past (Bitcoin Cash), the present (BIP 110), or the future (Quantum Computing), the size of a Bitcoin block is never just about data. It is a constant balancing act between keeping Bitcoin fast enough to use and decentralized enough to be “Digital Gold.”

Read More

• Blockchain Forks: Everything You Need to Know
• Bitcoin vs Bitcoin Cash: The Split, Differences, and Problems
• Ethereum Classic Emerges Following Hard Fork
• Bitcoin White Paper Explained

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