Bitcoin & Crypto & NFT News
Adam Back, the President of Blockstream – a company which employs or contracts numerous developers of Bitcoin Core, Litecoin and the Lightning Network, including Pieter Wuille, Gregory Maxwell, Christian Decker, Gregory Sanders, Glenn Willen, Warren Togami, Luke Dashjr, Mark Friedenbach, Jonas Nick, Rusty Russell, Patrick Strateman and Jorge Timón – has called for all to “collaborate on a unified coin.”
“Whether you think you are in the technical right, or are purer at divining the true meaning of satoshi [sic] quotes is not really relevant – we need to work within what is mutually acceptable and incremental steps [in my opinion].” Back publicly stated.
The comments are made after Bitcoin Unlimited gained momentum with its hashrate and nodes increasing. A new pool is soon to join, which may send BU’s share of the network to near 30%, a significant psychological threshold as Bitcoin Unlimited would need just another big pool to reach nearly 50%.
Back says that would be “contentions” and might “split bitcoin in 2 or 3 part-currencies” as well as delay the ETF’s approval. He instead argues for “incremental improvements,” by which he means Segregated Witnesses (segwit).
Just a few weeks ago, everyone expected segwit to be a done deal, but then – somewhat surprisingly – it stalled at around 23%. It appears the bitcoin community has rejected the proposal probably for two main reasons. Jeff Garzik, a long-time Bitcoin Core developer who worked on Linux for twenty years, criticized it for fundamentally changing bitcoin’s economics.
That is because the way segwit increases bitcoin’s transaction capacity is by in effect not counting around 75% of data within a transaction. They are segregated. The 1MB maxblocksize remains, but around 75% of current transaction data, mainly signatures which witness a transaction, is taken out and “segregated,” thus not counted.
This has two effects. Firstly, transactions that are heavy on signatures, such as Lightning Network or Sidechains related transactions, cost far less than non-multisignature transactions while at the same time requiring more space. Secondly, future increases of on-chain transaction capacity are made more difficult as an increase of maxblocksize to 4MB creates an attack vector of 16MB by creating signature only transactions. At 8MB, the attack vector is 32MB, and so on.
Once the segwit change is made it cannot be reversed. Its reversal would mean that transactions which do not use segwit once it became activated can be spent again.
These appear to be the primary reasons for segwit’s apparent rejection, although there may be other reasons too. The question now rises, how does bitcoin move forward on scalability?
Bury the Grudges
“[W]e should focus on today, what is ready and possible now, not what could have been if various people had collaborated or been more constructive in the past. It is easy to become part of the problem if you dwell in the past and what might have been. I like to think I was constructive at all stages, and that’s basically the best you can do – try to be part of the solution and dont [sic] hold grudges, assume good faith etc.”
It’s a message many would agree with, but there haven’t been many attempts by Blockstream employees or contractors to reach out. They rarely respond to requests for comments, for example – shunning much of the media which can hold them to scrutiny. Moreover, just yesterday Luke-Jr stated: “the community opposes any block size increase hardfork ever.” A nuancless and unqualified statement that suggests a proposal by Bitcoin Core which is acceptable to all might not be possible.
That is despite Back himself suggesting a 2-4-8 maxblocksize increase in 2015, which changed to segwit plus a 2MB hardfork in 2016. Now, both Luke-Jr and Gregory Maxwell are stating neither is going to be proposed.
Where Do We Go from Here?
If segwit does activate, a significant section of bitcoin’s community would consider the currency doomed. If BU does activate, a significant section of bitcoin’s community would consider the currency doomed.
The obvious solution is to have both, making neither side fully happy nor fully unhappy. But, Blockstream employees, in particular, appear unwilling to agree – even though many of them, including Adam Back, did so agree and signed to that effect in Feb 2016 at the Hong Kong agreement.
It is not very clear why they – including Luke-Jr who actually signed the agreement – now appear to argue against a maxblocksize increase ever. They surely must know that developers do not dictate anything. They provide code which is accepted or rejected by the community. They cannot force anything. They are here to serve the market, not order it around.
The market appears to have clearly rejected segwit, but no one wants to disenfranchise a section of bitcoin’s community, therefore around 47% of miners remain undecided as far as their blocks are concerned.
They are most probably waiting for another proposal, but if pressure on transaction capacity continues to increase, especially as blocks have variance which means that one might not be found for an hour or more, their patience might run out.
They have set aside $100 million to attack a smaller chain which tries to market itself under the Bitcoin name, potentially ensuring a smooth upgrade. Whether they will in fact do so remains to be seen, unless developers – which are meant to serve, not order around – merge a proposal that is largely acceptable to all.
Featured image from Shutterstock.