A Technical Exploration of Bitcoin’s Censorship Resistance and Its Future Implications | by Michael P. Di Fulvio | The Dark Side | Feb, 2024

In the nuanced ecosystem of Bitcoin, a key feature that stands out for its complexity and significance is censorship resistance. To truly grasp this concept, one must delve into the intricate workings of Bitcoin’s protocol, the underlying code, and the dynamic interplay of economic incentives that uphold this feature. Let’s embark on a detailed journey through these layers, examining core code segments and projecting future challenges and adaptations.

Decentralized Consensus and Miner Decision Autonomy

Bitcoin’s censorship resistance is anchored in its decentralized consensus mechanism. Each miner, through their node running the Bitcoin Core software, independently validates and selects transactions for block construction. This is reflected in the CheckTransaction function within the validation.cpp file in the Bitcoin Core codebase:

cppCopy code// src/validation.cppbool CheckTransaction(const CTransaction& tx, TxValidationState& state){// [Detailed transaction validation logic]}

Each node has the autonomy to determine which transactions to include in a block. However, this decision-making process is tempered by economic considerations, as we will explore in the next section.

The Interplay of Transaction Fees and Miner Economics

In Bitcoin’s ecosystem, miners are financially incentivized to include transactions in their blocks due to the fees associated with each transaction. The fee market is a crucial element in discouraging censorship. If a miner decides to exclude certain transactions, they lose out on potential revenue from these fees, creating a natural economic disincentive for censorship.

This process can be represented in pseudocode to illustrate the impact on a miner’s earnings:

pythonCopy codedef calculate_block_fee(transactions):total_fee = 0for tx in transactions:total_fee += tx.fee # Summing up the fees of included transactions…