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Bitcoin’s Block Size Debate Tests Its Community Governance

Over the weekend two bitcoin core developers released Bitcoin XT, a way to 'opt out' of bitcoin's current 1MB block size limit. This is the first attempt to resolve the ongoing debate over how to solve scalability issues for Bitcoin’s blockchain.

The move by two bitcoin core developers over the weekend is the result of a stagnated and deadlocked debate about a core issue, which according to the developers, can’t afford to be debated any more.

Bitcoin XT is the most aggressive attempt to increase the size of Bitcoin’s blocks, which would allow for more transactions to be handled by the network. The issue has become a focal point of discussion for the bitcoin community this year, and Bitcoin XT would gradually increase the block size limit beginning in January of 2016.

Currently there is a 1MB cap on block size in Bitcoin’s open ledger, and the network can process roughly 7 transactions per second. As bitcoin’s popularity increases, and with it the number of daily transactions, raising this limit becomes increasingly important. The original 1MB blocksize was a temporary limit, and Bitcoin XT follows the roadmap for expansion originally proposed by the creator of the protocol.

Allowing the network to clog with transactions could cause it to break down, according to proponents of Bitcoin XT. Bitcoin’s transaction growth has become more apparent recently, with the network hitting all-time records for the number of daily transactions this year, and large numbers of unconfirmed transaction forming a backlog in recent weeks.

The fork was originally proposed by well-respected bitcoin core developer Gavin Andresen, and was developed with the help of ex-Google software developer, Mike Hearn, who is also the developer of Bitcoinj and Simplified Payment Verification (SPV), two technologies that have been crucial for the advancement of the Bitcoin platform.

In a previous fork situation, unexpected consequences arose from two different versions of the blockchain existing. After the diverging blockchains were noticed, many industry participants ran to the bitcoin IRC channel to come to form a consensus. Even though the solution made mining pools lose thousands of dollars, several agreed. This was an unexpected result at the time, and highlighted bitcoin’s inherent incentive to form a consensus. Disagreement could have caused people to revert to an earlier version, losing exchanges and mining pools even more money, and potentially destabilizing the network for good.

In order to safely call the fork successful, Andresen and Hearn are hoping to get enough users to upgrade to the Bitcoin XT software so that 75% of the bitcoin hashrate goes through the new client. At press only 8.4% of all bitcoin network nodes had upgraded. Fellow bitcoin core developer Peter Todd said that the standard 95% threshold for soft forks would be far safer, and called the lower threshold highly risky. Hearn has said that he isn’t too worried about miners since they have joined at the last minute several times before. It will ultimately be decided by exchanges, mining pools, and other bitcoin businesses upgrading their client software.

While the fork is in the process of being voted on by miners and exchanges, and receiving feedback from the public, it has also come under scrutiny of many Bitcoin proponents. Perhaps most notably bitcoin core developer and Blockstream co-founder Adam Back, who says the proposal itself undermines bitcoin’s decentralization by allowing larger miners to handle larger blocks, and thus have more influence over the network than smaller miners. Back has expressed his opinion that Andresen’s forceful manner in trying to bring the fork into life has undermined the communal governance of bitcoin.

Hearn and Andresen, who are noticeably less interested in decentralization and fighting governmental power, have expressed their interest in improving the existing financial infrastructure, particularly in the area of payment networks in the digital age, something Bitcoin XT would be crucial for.

“In recent months it’s become clear that a small group of people have a radically different plan for Bitcoin. These people have never really been comfortable with Satoshi’s intentions because they fear success — what if technology never improved, what if people couldn’t run Bitcoin on their home computers any more? Would that not somehow make Bitcoin less peer-to-peer, and more like banking? What if people start to rely on Bitcoin even though it’s imperfect?”
— – Mike Hearn

Richard Brown, head of banking innovation at IBM and a vocal proponent of blockchain and distributed ledger technology’s potential, provided a less politicized view of the ongoing debate. In his blog Brown states that he saw it more of divide among different areas of the tech industry, rather than ideologies.

“First, there is a very strong security engineering culture [among bitcoin core devs]. I sometimes think the trick to being a good security engineer is to think like a software tester (and vice versa): ‘How could I break this?’… ‘How could an attacker get round this?’… ‘What could go wrong here?’… ‘How could I force the provider of this service to waste all their resources’ And so on. Your job is to figure out all the ways something could fail, and fix it.”
— – Richard Brown

Brown went on to state that there is “a somewhat different culture” on the other side of the argument, “one that comes from a world where there are problems everywhere you look and they all need fixing. So you pick the biggest one, fix it and move on. The engineering functions of large companies are often like this. You know your change might cause problems but if you believe ‘doing nothing’ is not an option then it comes down to making the least-worst decision. There are, after all, usually no good solutions, just compromises.”

As the bitcoin industry recently hit a major milestone, with more than $800 million having been raised by bitcoin companies. The debate, unlike earlier ones in the digital currency’s history, has been filled with opinions from businesses who rely on the technology.

Bill Barhydt, CEO and founder of the bitcoin remittance app Abra, said that he was in complete agreement with bitcoin developer Jeff Grazik, who expressed his opinion of why the upgrade was important for bitcoin businesses.

“Businesses won’t build w/ #bitcoin, not even plan, if scaling picture uncertain at this early stage.”
— – Jeff Grazik

Miners, who have the most sway in this debate, have also been very vocal. Miners in China represent a large portion of the hashing power in the bitcoin network, and have expressed concerns that Andresen’s proposal, which would ultimately increase the block limit to 20MB, would overwhelm them. The concerns revolved around a limited access to quality bandwidth, due to the Chinese Firewall and the country’s relatively poor internet. In a statement signed by several major bitcoin mining pools, they agreed that an 8MB limit would be achievable.

The CEO of one the most popular and well funded bitcoin companies, Brian Armstrong from Coinbase, expressed that while the debate is important they were less worried about no agreement at all.

“The longest chain is by [definition] bitcoin, with a few months warning for when the election happens, users would not experience disruption,” he wrote on Twitter, adding that his company will be waiting for a clear winner before making a decision on the proposal.

The lack of a central organization

The infighting among bitcoin developers, who have the most political sway over bitcoin’s code, is happening in the apparent absence of any guidance from the self proclaimed institution for governance over the open-source technology, the Bitcoin Foundation. Originally launched in 2013 as an attempt to represent the interests of the diverse community with vested interests in the technology, and acting as a guide to technology changes to bitcoin’s codebase, it has yet to quell the disagreements among the community.

Until recently the Foundation helped fund Bitcoin Core development, and thus had some say in its development. However, most of the organization’s true influence lay with its members, including Andresen who left earlier this year.

Without a forum like the foundation the debate over the coming need to increase the block limit has happened in an ad hoc manner, with much of the debate happening on Reddit, Twitter, and the bitcoin dev mailing list.

The block size debate ultimately represents a bigger issue than scaling the network. Though the bitcoin protocol has seen numerous updates, including some controversial ones, none have caused quite as much public discussion and uproar from the bitcoin community as this one. The debate will test if bitcoin’s natural incentives can overcome issues with the network, without a centralized institution like the Bitcoin Foundation.


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