The publication of Bitcoin XT threw the Bitcoin forums into turmoil, with partisans duking it out in what has amounted to an old-fashioned flame war. Some of the public debate was constructive, though. PHOTOGRAPH BY KAREN BLEIER / AFP / GETTY

A terrific rumpus broke out in the world of Bitcoin last week, when veteran developers Gavin Andresen and Mike Hearn published Bitcoin XT, a competing version of Bitcoin Core, the open-source program that generates new bitcoins, verifies all transactions, and records them on the massive distributed ledger known as the blockchain. Andresen is Bitcoin’s most senior developer, and has been the project’s de-facto leader since 2011; Hearn is a pioneer in the development of Bitcoin wallets. According to an explanation Hearn posted on Medium, they released XT because “the decision-making process in Bitcoin Core has broken.” The real crisis, as this suggests, is less about Bitcoin’s code than about the power structure that governs it.

The dispute centers on a fast-approaching computational bottleneck. The blockchain is composed, as you might guess, of “blocks,” each consisting of a list of recent bitcoin transactions, time-stamped and verified by one of the network’s “miners”—computers that secure a block’s inclusion on the chain by solving a computational puzzle called a proof of work. The first computer to win this computational race “mines” a reward of twenty-five bitcoins, and then competition recommences for the next block.

According to a Bitcoin Foundation post by Andresen, Satoshi Nakamoto, the creator of Bitcoin, imposed a maximum block size of one megabyte in 2010, in response to some denial-of-service attacks.* This cap effectively restricts the number of bitcoin transactions to about seven per second, since it takes a certain number of characters to record a given transaction, and only so many fit in a megabyte. (Visa, by contrast, routinely handles thousands of transactions per second, and claims a capacity of more than twenty-four thousand transactions per second.) Hearn anticipates that Bitcoin transaction volumes will blow past the seven-per-second limit by 2017, at the latest, creating backlogs, settlement delays, and perhaps even mass outages. The primary goal of Bitcoin XT, then, is to increase the size limit of each block to eight megabytes.

Prior to the release, a block-size debate had been blazing for months on Bitcoin forums. Opponents of an increase argued, for instance, that mining larger blocks would require more computing power, thereby discouraging small operators in favor of the massive mining farms that have gradually concentrated the network into fewer and fewer hands. It was widely feared, as well, that a serious disagreement among the core developers might further destabilize public faith in Bitcoin. Those in favor of an increase contended that “forking”—creating a competing version of a program in response to diverging aims—is the very essence of open-source software development.

Such decisions stand to affect millions of participants in the bitcoin economy, but ultimately lie with a very few people. Theoretically, any user of an open-source program is free to create, adopt, or reject any alterations he pleases; in practice, software shared on networks or between users requires painstaking standardization. This means relying on decision-makers with “commit access,” who have the right to amend a software project directly, on their own. This status represents a high level of developer control, and of user trust.

Andresen told me that, to his recollection, when Nakamoto withdrew from the project (and from public view), in 2011, only he, Nakamoto, and possibly one other person had commit access to Bitcoin’s software. Andresen eventually granted this level of access to four additional developers, for a total of five “core devs.” In April, 2014, Andresen decided to devote more of his time to other projects, and named one of the core devs, Wladimir van der Laan, to succeed him as lead developer. Even today, only van der Laan and Andresen can grant commit access to other developers of Bitcoin Core.

“Right now,” Andresen added, “just Mike and I have commit access to Bitcoin XT.”

The publication of XT threw the Bitcoin forums into turmoil, with partisans duking it out in what has amounted to an old-fashioned flame war. Some of the public debate was constructive, though. Roger Ver, a Bitcoin investor and evangelist famously nicknamed “Bitcoin Jesus,” tweeted, “If you run a full node, and support bigger blocks so more people around the world can use bitcoin, install XT today.” Nick Szabo, a respected cryptography expert whom some believe to be the real Satoshi Nakamoto (whose identity and location remain mysterious), publicly stated his opposition to XT, tweeting, “A rapid block-size increase is a huge security risk: a reckless act to be performing on a $4 billion system.”

One of the most vocal critics of XT has been Gregory Maxwell, one of Bitcoin’s five core developers. Aside from the many other enhancements he has made to Bitcoin Core, Maxwell is a developer of “sidechains,” a clever proposal for scaling Bitcoin by processing transactions partly off the main blockchain. But he and fellow core dev Pieter Wuille have faced criticism, during the recent debate, over an apparent conflict of interest: both are co-founders of Blockstream, a startup venture, capitalized to the tune of twenty-one million dollars in a recent seed round, that is experimenting with a number of scaling options, including sidechains. Should any of Blockstream’s proprietary innovations become essential to Bitcoin, the company could make a fortune. On Reddit, a user with the handle yumein observed as much, suggesting, in imperfect English, that preventing the move to a larger block size might one day force Bitcoin users to adopt Blockstream. “Nothing against Blockstream,” he wrote, but, “might be a big reason why this gentlemens stand against bigger blocksize, isn’t it?”

Adam Back, another co-founder of Blockstream and a pioneering cryptographer in his own right, maintains that his company only wants what is best for the system as a whole. “We really want and need Bitcoin to function well, in terms of its security and scale and safety,” he told me. I asked Back, who strongly opposes XT, why he thought that Andresen and Hearn had released their software independently of the other core devs. “I’m a little confused about why that is,” he replied, adding that he had spoken with Andresen and met with Hearn for several hours in the weeks before XT was published. “I think the tech community was expecting and hoping that Gavin would work within this process . . . and see which [proposal] is accepted.”

“Why did that not happen?” I asked.

“You would have to ask Gavin that,” he said, laughing a little ruefully.

Problems of governance have beset Bitcoin from its inception. Notably, there have been mass resignations from the Bitcoin Foundation, the cryptocurrency’s standards body. Furthermore, some of its most prominent members have been in trouble with the law: Charlie Shrem is serving a two-year sentence on money-laundering charges, and Mark Karpelès, C.E.O. of the bankrupt MtGox bitcoin exchange, is being held in a Tokyo jail on suspicion of fraud. In the absence of institutions capable of implementing clear standards, it’s plain that Andresen and Hearn decided to take matters into their own hands. XT is above all a path toward establishing new leadership. I asked Andresen whether, if XT were to achieve full acceptance, he would then include all the earlier Bitcoin core devs in the new XT team. He replied that “[XT] will have a different set of developers. Part of the reason for forking is to have a clear decision-making process for the software development.”