Although scalability (the block size limit) has been the main topic of conversation in the Bitcoin community over the past year, this controversy has also brought up another important subject for the peer-to-peer digital cash system: governance. Bitcoin Core Contributor Peter Todd is no fan of Bitcoin XT, but he does like the fact that Mike Hearn's alternative implementation of the Bitcoin protocol brought the topic of governance to a wider audience.

So how does Bitcoin governance work? Blockchain Capital Managing Partner Brock Pierce was recently asked this question by Jason Calacanis on This Week in Startups, and he described the checks and balances that exist between different participants in the Bitcoin ecosystem.

A Developer Has to Write the Code

Pierce described Bitcoin governance in layers, noting that a developer must first write code that becomes an option for users of the system:

"The system actually has multiple layers. One, a developer has to write the code and put it forward. It really goes through a peer-review type of process where it gets vetted because it's a very public process. It's an open-source project; that's what it is."

Some are worried about the perceived centralization currently found in the Bitcoin development process, but in reality, developers have no power over what code Bitcoin users decide to run on their computers. Although Bitcoin Core is currently the reference implementation of the Bitcoin protocol, the five developers with commit access to that particular software client do not have any sort of tyrannical power over the system.