What is Bitcoin governance?

Bitcoin is not a static protocol. Developers work on Bitcoin to fix critical bugs and deliver upgrades that ensure the protocol stands the test of time. But who decides what changes are made to Bitcoin? Since Bitcoin is decentralized, the process for evolving it is very different than with a centralized entity where decisions can be made in a top-down manner. Actually, the term 'governance' is not strictly applicable to Bitcoin. Reason being, it implies a situation where leaders act as proxies for the masses - and that's not how Bitcoin works. Although some blockchain-supported decentralized systems do integrate formal governance processes such as the ability to vote for proposals on-chain or elect leaders, Bitcoin has nothing of the sort.

The process for improving the Bitcoin protocol is quasi-political in the sense that stakeholders must jockey for power and influence. However, it's not a democracy, a plutocracy, or any other kind of formal political system. Rather, the process for evolving Bitcoin is one of consensus building, where deliberation and persuasion are critical, but where all participants always retain volition. In other words, it’s an opt-in system where everyone has the choice to go their own way, and what Bitcoin is is up to the people who use it. Importantly, the default culture amongst Bitcoiners is that the protocol does not change unless it absolutely has to. This means that, unless the vast majority of participants agree to a change, there will be no change - and those who wish to change are always free to go their own way.

With the understanding that, at the end of the day, Bitcoin is what its users say it is, there is a formalized process for deciding, at the developer level, what changes are needed and how to integrate them. This is the process of developing the Bitcoin Core software client that the community of nodes chooses to run. This software defines the rules of the Bitcoin protocol, so in some ways it is Bitcoin.