By Ben Muse, VP of AI at Rankplan, operator of PSP Dex.
Background: a temporary limit becomes permanent
Bitcoin’s 1 megabyte block size limit was added by Satoshi Nakamoto in 2010 as an anti-spam measure, at a time when blocks were nearly empty. As adoption grew, blocks began filling up, and a question that had seemed theoretical became urgent: should the limit be raised, and if so, by whom and by how much?
The technical research of the period, including a widely cited 2015 Bitfury paper on block size, examined how larger blocks would propagate through the network and what they would cost node operators. The engineering question was real. The fight that followed, though, was about governance: who gets to change Bitcoin’s rules.
2015: Bitcoin XT and the first break
In 2015, developers Gavin Andresen and Mike Hearn released Bitcoin XT, implementing BIP 101, a proposal to raise the limit to 8 megabytes and then double it on a schedule. XT was designed to activate if 75 percent of mined blocks signalled support. 
The proposal split the community. Opponents argued that hard-coding rapid growth would price ordinary users out of running full nodes and hand influence to miners and large companies. Supporters argued that cheap on-chain payments were the entire point of Bitcoin and that refusing to raise the limit would strangle adoption. XT never reached its activation threshold, and Hearn left the project in early 2016, publicly calling Bitcoin a failure. Bitcoin Classic, a more modest 2 megabyte proposal, followed in 2016 and also failed to activate.
2017: compromise, fork, and resolution
The New York Agreement and SegWit2x. In May 2017, a group of companies and miners representing a large share of hash rate agreed to a compromise: activate SegWit, a capacity and malleability upgrade from Bitcoin Core, and follow it with a hard fork doubling the base block size. The second half was known as SegWit2x.
SegWit activates. A miner-activated compromise (BIP 91) combined with pressure from a threatened user-activated soft fork (BIP 148) broke the deadlock. SegWit locked in during July 2017 and activated on 24 August 2017.
Bitcoin Cash splits. Opponents of the SegWit path, including supporters of much larger blocks, executed their own hard fork on 1 August 2017, creating Bitcoin Cash with an 8 megabyte limit (later raised further). The two networks have coexisted, at very different market values, ever since.
SegWit2x is called off. In November 2017, with the hard fork days away and large parts of the ecosystem refusing to follow, its organisers suspended it, citing a lack of consensus. The 1 megabyte base limit, plus SegWit’s weight-based accounting, stayed.
What the war settled
The outcome established precedents that still govern Bitcoin. Rule changes require overwhelming consensus among the users who run nodes, not just miners or companies. Contentious hard forks are treated as new networks rather than upgrades. And future upgrades, Taproot included, have been designed and activated in ways shaped directly by the memory of 2017.
Timeline: 2010: 1 MB limit added as an anti-spam measure. 2015: Bitcoin XT and BIP 101 propose 8 MB; fail to activate. 2016: Bitcoin Classic (2 MB) also fails; Hearn exits. May 2017: New York Agreement proposes SegWit plus a 2x hard fork. 1 August 2017: Bitcoin Cash hard fork. 24 August 2017: SegWit activates. November 2017: SegWit2x suspended days before launch.
