Consensus Rules

These are the rules every node must follow. No exceptions. No appeals. They define what Bitcoin is — and what breaks it.

🏛️ The Constitution of Bitcoin

Consensus rules are the hard law of Bitcoin. They are built into every node client. When a peer sends your node a block or transaction, your node checks it against every single consensus rule before accepting it.

Think of it like a mathematical trapdoor: a transaction either passes all rules or it doesn't. There's no "mostly valid." There's no "close enough." There's no authority to appeal to. The rules are the authority.

Every one of the 20,000+ reachable nodes running Bitcoin enforces these rules independently. If a block is produced that violates even one rule, every honest node rejects it instantly, automatically, and without coordination.

"No government can print more bitcoin. No central bank can lower the block reward. No president can suspend the difficulty adjustment. The rules are not subject to emergency executive orders."

This is the direct answer to the Nixon Shock. In 1971, the gold convertibility rule was suspended with a speech. In Bitcoin, the supply cap of 21 million is enforced by every node, everywhere, every time. Changing it would require convincing almost every node operator on Earth to accept a different version of the rules — a hard fork.

⬡ Block Structure Rules

Every block must satisfy these structural constraints before any node will accept it:

1 Weight limit: A block must not exceed 4,000,000 weight units (WU). This is the SegWit-adjusted size limit, roughly equivalent to 4 MB of block data or 1 MB of base data.
2 Valid proof-of-work: The block header's hash must be below the current difficulty target. This is the rule that makes mining expensive — and makes rewriting history computationally infeasible.
3 Timestamp rules: The block timestamp must be greater than the median timestamp of the last 11 blocks (MTP), and not more than 2 hours ahead of the node's system time.
4 First block at height: Only one block can exist at any given height. If two blocks claim the same height, only one can be part of the chain with the most cumulative work.
5 Coinbase maturity: The coinbase transaction (block reward) cannot be spent until 100 blocks later. This prevents miners from spending money that could vanish in a chain reorganization.

₿ Monetary Rules (The Economics)

These are the rules that make Bitcoin sound money. They define the supply, issuance, and economic properties that no central bank can override:

1 Hard cap of 21 million: The total supply of bitcoin that will ever exist is 21,000,000 BTC. This is enforced by the block reward schedule — no additional coins can ever be created by any mechanism.
2 Halving schedule: The block reward halves every 210,000 blocks (roughly every 4 years). Starting at 50 BTC in 2009, then 25, 12.5, 6.25, and currently 3.125 BTC per block as of 2024.
3 Difficulty adjustment: Every 2,016 blocks (roughly 2 weeks), the network adjusts the mining difficulty to keep the average block interval at 10 minutes. If blocks come too fast, difficulty goes up. Too slow, it goes down.
4 No inflation override: No mechanism exists to increase the supply beyond the schedule. Not by miners, not by developers, not by anyone.

⬡ Why This Matters

The Nixon Shock increased the money supply by uncapping dollar creation. Bitcoin cannot do this. The 21 million cap is not a policy — it's a mathematical constraint enforced by every node. No emergency, no crisis, no "temporary measure" can bypass it.

✉️ Transaction Rules

Every transaction must prove it has the right to spend its inputs. These are the cryptographic rules that prevent double-spending:

1 Valid signatures: Every input must be signed by the private key corresponding to the previous transaction's output public key. No valid signature = the transaction is rejected.
2 No double-spend: An input that has already been spent (appears in any other transaction in the chain) cannot be spent again. The UTXO set tracks all unspent outputs.
3 No value creation: The sum of inputs must be greater than or equal to the sum of outputs. The difference becomes the transaction fee (collected by the miner). You cannot create bitcoin out of thin air in a transaction.
4 Script validity: The locking script (scriptPubKey) and unlocking script (scriptSig/scriptWitness) must execute without error. Invalid scripts (bad opcodes, missing data) are rejected.
5 No negative outputs: Each output value must be a positive integer of satoshis (≥ 546 satoshis for standard transactions).

🔧 How Consensus Rules Change

Consensus rules can change — but the bar is deliberately high:

Type	Mechanism	Example
Soft Fork	Tightens a rule — old nodes still accept new blocks	SegWit (2017), BIP110 (2026)
Hard Fork	Relaxes or changes a rule — old nodes reject new blocks	Bitcoin XT (failed), Bitcoin Cash (2017 split)

Soft forks are backwards-compatible. Old nodes see new blocks as valid (since they follow stricter rules). Hard forks are not. Old nodes see new blocks as invalid — causing a permanent chain split unless everyone upgrades.

This is why soft forks are preferred. BIP110 (covered in Part 4) is a live soft fork — it tightens the OP_RETURN data limit without breaking existing nodes.

"A soft fork is like adding a new lock to a door that already has one. Old keys still work. A hard fork is like moving the door — old keys don't open the new location."

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