Securing Bitcoin Core: Relay Policy, Fees, and Privacy

• My 'briefing notes' summarize the content of podcast episodes; they do not reflect my own views.
• They contain (1) a summary of podcast content, (2) potential information gaps, and (3) some speculative views on wider Bitcoin implications.
• Pay attention to broadcast dates (I often summarize older episodes)
• Some episodes I summarize may be sponsored: don't trust, verify, if the information you are looking for is to be used for decision-making.

Summary

The December 28, 2024 episode of the Human Rights Foundation at PubKey podcast features Bitcoin Core maintainer Gloria Zhao discussing how Core underpins transaction relay, censorship resistance, and node accessibility. She explains current work on V3 relay, fee-bumping, and mempool policy, emphasizing their role in protecting Layer 2 protocols and user security. Zhao also highlights long-term challenges including block subsidy decline, privacy upgrade adoption, and sustaining developer funding.

Take-Home Messages

1. Core Infrastructure: Bitcoin Core remains the reference software that secures validation, relay, and node operation.
2. Relay Security: Strengthening transaction relay prevents censorship and protects time-sensitive Layer 2 contracts.
3. Fee Market Transition: As the block subsidy declines, efficient fee mechanisms are central to sustaining miner incentives.
4. Privacy Pathways: Upgrades such as Taproot, BIP324, and silent payments offer stronger user protections if widely adopted.
5. Funding Resilience: Grants and nonprofits provide essential developer support but must remain independent from technical decisions.

Overview

Gloria Zhao positions Bitcoin Core as the backbone of the network, explaining that its protocols for validation and relay allow ordinary users to self-verify without costly infrastructure. She stresses that decentralization depends on lightweight nodes, achieved by carefully engineering gossip efficiency and protective limits. While most users remain unaware of these details, their security relies on the robustness of this software.

Her work spans code review, personal development projects, and advocacy to sustain open-source contributions. She cites V3 relay, package relay, and fee-bumping improvements as priorities that make the block-space market more efficient while reducing reliance on direct miner submission. By tying these efforts to censorship resistance, she shows how design choices translate into resilience for all participants.

Relay design becomes particularly critical for Layer 2 systems like Lightning and other pre-signed constructions. Zhao explains that pinning or censorship can escalate from delayed settlement to outright fund loss, making robust relay policies a foundation for higher-layer safety. She frames this as plumbing that ensures security for complex systems built on top of Bitcoin.

Governance of Core remains consensus-driven and meritocratic, with multiple maintainers reviewing proposals and no unilateral authority. Controversies such as full-RBF and inscriptions highlight the culture of prioritizing technical merit over ideology. Zhao also underscores the need for privacy improvements - through encrypted transport, address schemes like silent payments, and wallet practices - while noting the persistent challenge of slow adoption across the ecosystem.

Stakeholder Perspectives

1. Core Developers: Focus on censorship resistance, mempool policy, and careful governance to avoid regressions.
2. Miners and Pools: Depend on predictable fee markets and efficient relay that reduce incentives for out-of-band deals.
3. Wallet Providers and L2 Builders: Require robust fee-bumping and relay mechanisms to protect users in time-sensitive contracts.
4. Exchanges and Custodians: Need upgrade clarity and stable norms to manage fees, throughput, and regulatory compliance.
5. Human Rights Activists: Rely on privacy, permissionless broadcast, and accessible node operation to protect against censorship.

Implications and Future Outlook

The decline of the block subsidy makes the efficiency of fee markets and relay mechanisms central to long-term network security. Unless users can reliably settle transactions without privileged miner access, confidence in Bitcoin’s neutrality may weaken. Ensuring that the fee market functions as designed is both a technical and governance challenge.

Privacy enhancements remain unevenly adopted, but proposals such as BIP324 and silent payments could materially improve user protections. Wallet defaults, user education, and developer funding will determine whether these innovations become widely available. Adoption delays create a lag between technical capability and actual user benefit.

The governance culture of Bitcoin Core, with its emphasis on review and distributed responsibility, continues to safeguard neutrality in the face of disputes. Sustained, diversified funding through nonprofits helps maintain independence from donor influence. Together, these structures form the backbone of Bitcoin’s resilience against both technical and political pressures.

Some Key Information Gaps

1. What models can project miner incentives as the block subsidy approaches zero? Long-term projections are essential for understanding security budgets and planning sustainable fee markets.
2. How can transaction relay be redesigned to strengthen censorship resistance across both base layer and Layer 2 protocols? Effective solutions are needed to prevent targeted transaction blocking and protect time-sensitive contracts.
3. Which privacy enhancements should be prioritized for implementation at the base layer? Clarifying trade-offs will guide development and wallet adoption strategies.
4. How can Bitcoin funding structures be diversified to reduce dependence on a small set of donors? Broader financial support is critical to prevent capture and sustain open-source work.
5. What migration strategies should be planned if quantum computing threatens ECDSA security? Early preparation ensures Bitcoin can adapt without disruption if cryptographic assumptions fail.

Broader Implications for Bitcoin

Fee Market Sustainability

As block rewards diminish, Bitcoin’s ability to sustain miner participation hinges on an efficient and credible fee market. If transaction relay remains weak or users migrate to direct miner channels, centralization risks may rise. A robust, competitive fee environment will be critical to keeping mining decentralized and aligned with user interests.

Governance as Public Good

Bitcoin Core’s governance model demonstrates how open-source consensus can maintain neutrality in the absence of formal institutions. The reliance on review culture rather than voting offers a case study in distributed trust management. Broader digital infrastructure projects may look to Bitcoin as an example of sustaining critical systems as global public goods.

Privacy and Political Freedom

Enhancements like silent payments and encrypted transport represent more than technical upgrades—they are enablers of civil liberties in restrictive regimes. As surveillance intensifies worldwide, Bitcoin’s privacy trajectory could shape its utility for activists, NGOs, and citizens under authoritarian control. The direction of wallet adoption will determine whether these protections are meaningful at scale.

Funding Independence

Grant-based models for Core development highlight the tension between financial sustainability and independence from donor influence. The evolution of nonprofit funding structures provides lessons for other decentralized projects facing similar challenges. Ensuring broad, diverse, and transparent funding streams will be key to preserving Bitcoin’s autonomy.