Bitcoin's Free-Market Principles on Full Display During BIP-110 Episode

When Bitcoin faced a split due to BIP-110, the market responded in line with free-market principles. The proposed update led to the creation of two separate chains: the original Bitcoin and a new chain that inherited its massive mining difficulty. However, miners quickly chose the more profitable version, which retained virtually all activity, liquidity, and security.

The new chain struggled to gain traction, attracting only a tiny fraction of hashpower and producing just two blocks before grinding to a halt. In contrast, the original Bitcoin network continued uninterrupted.

According to Michael Saylor, founder of BTC-holding company Strategy (MSTR), 'Bitcoin worked exactly as designed.' He compared this episode to the real economy, pointing out that free-market economies often fail to adjust when faced with falling corporate profitability or high inflation. Instead, governments intervene and block necessary adjustments.

The takeaway from Bitcoin's BIP-110 episode is clear: a free market economy works best when left to run its course without interference.