So, Bitcoin is gearing up for possibly its biggest test so far. On May 23rd the Digital Currency Group (DCG) revealed a consensus to implement SegWit on Bitcoin, and to increase the block size to 2MB (called SegWit2MB as shorthand), in a deliberate hard fork. Representing some 83% of the network’s hashing power, this is the kind of majority that would constitute a landslide in the world of politics. For Bitcoin, it’s nothing of the sort. The block size debate – or stalemate as it should more accurately be called – rages on. With rollout planned for December 2017, there’s a lot of work to be done if it’s going to be a technical success. But more importantly, a mountain to move if there’s going to be a true consensus.
SegWit’s activation on Litecoin sets an encouraging precedent, and Ethereum is thriving in the shadow of its hard fork. But Bitcoin isn’t Ethereum. And there’s more than just a ton of money at stake. We’re looking not just at the future of Bitcoin – but whether it still has one.
Tipping the scales
So who’s pulling the strings to make this proposal happen? The DCG is led by CEO Barry Silbert, and represents the interests of some 53 major Bitcoin players. Self-styled ‘epicentre of the blockchain industry’ and probably the most influential Bitcoin investment firm on the planet, its mission statement is to accelerate the development of a better financial system. All good so far. .Essentially an upgrade to the failed Hong Kong Bitcoin Roundtable event, the SegWit2MB proposal states that the upgrade will be rolled out in a mere 6 months. That sounds like a big ask, but when you consider they have technical and engineering support from the likes of RSK Labs, Bitpay, Blockchain, Bitcoin.com, Xapo and many others, it might just be possible.
The announcement has been met with a great deal of support, not only from the development community, but also from investors and bitcoiners who are tired of seeing transaction fees and processing times rise. Each passing day only adds urgency to the scaling debate under these conditions, and recommended transaction fees have risen from 160 to 420 Satoshis per byte in only a few short months this year. That’s like paying twice for your coffee, and then waiting 3 days before you can drink it. Something’s got to give. That much we can all agree on…
The altcoin factor
It’s somewhat timely that this announcement is made directly in the shadow of Litecoin’s SegWit adventure, don’t you think? Less than two weeks after Litecoin’s enjoyed a brief holiday at the dizzy heights of $40, Bitcoin can’t afford to be 2nd bested – by its own family no less. And since Litecoin is basically a carbon copy of Bitcoin, with a few simple parameters changed, it proves that SegWit is both viable and survivable. Maybe even desirable. Despite Litecoin’s price falling quite sharply after the upgrade, it’s doing quite well again at the time of writing. But like I said, Litecoin isn’t Bitcoin, and doesn’t have to contend with our soap opera of incessant internal bickering and family feuds.
Who said anything about an agreement?
Let’s get down to the nitty gritty then. To call this proposal an agreement seems somewhat disingenuous at best, since the lack of agreement in the community has been neither addressed nor resolved. If anything, this latest move serves only to entrench Bitcoin’s tribes to their positions. While the DCG may represent 83% of the hashing power (for now), it lacks the support of Bitcoin Core developers. In fact, Core devs have openly criticised the plan, calling it “highly unrealistic” and saying it doesn’t allow for sufficient review and testing – fair criticisms I’d say.
Then there’s the small issue of changing the SegWit activation threshold from 95% to 80% (a convenient number might I observe). It’s obvious that a 95% consensus is never going to happen, but should that mean you can arbitrarily move the goalposts to force a decision? My hunch is that there’s a significant element of wishful thinking in this ‘agreement’ – and while it’s imperative that Bitcoin gets a scaling solution asap, it’s equally imperative that we don’t end up with 2 non-viable blockchains. I don’t know about you, but I’d rather have a sluggish transaction than a worthless one.
Maybe – just maybe – this new agreement will pave the way for a proposal that really defies objection. One Bitcoin. One Blockchain. One future.
This article represents the personal opinion of the author and is not a recommendation to buy or sell Bitcoins.