Proposal for Peaceable Bitcoin Ecosystem Scaling

I’m a bigblocker.

Perhaps more importantly, I believe in free markets. I think there is a way both big block and small block camps get what they want, in a constructive way, as opposed to a more messy power struggle.

As of July 20, 2017 it appears chain-splits around August 1, 2017 will be avoided, because the consensus on the Bitcoin network will be to accept only SegWit signaling blocks. This means the UASF (which mandates SegWit activation) will not result in a chain-split, which means the counter UAHF, a contingency plan against a UASF chain-split, will also not go forward.

This doesn’t yet mean harmony in the community.

Members from each camp are chomping at the bit for assured action/resolution. If there is no UASF chain-split some smallblockers are prepared to fork away with a proof-of-work change, effectively “firing” existing Bitcoin miners. Likewise, even without a UASF chain-split some bigblockers want to activate the UAHF known as BitcoinABC or Bitcoin Cash on August 1st anyway.

It appears these are the most extreme of the camps, though, and there isn’t currently significant ecosystem support for such moves.

Mainstream Showdown

It appears most of the community (and hashpower) is on board with the New York Agreement, omitting the mandatory 2 MB hard-fork. It’s this 2 MB hard-fork, scheduled three months after SegWit activation, that is likely to produce a significant chain-split. While a supermajority of hashpower currently agrees to support the NYA, it may be the intent of some was only to avoid a chain-split, if only a little longer, and/or activate SegWit. Ongoing support for the 2 MB hard-fork is less clear, even with members that signed onto an agreement clearly made in such spirit. It appears certain a large portion of hashpower (e.g. Bitmain) will hard-fork per NYA as scheduled.

The curious thing about currencies is their value depends on the shared perception of them.

Hashpower doesn’t decide the value (or perception) of a cryptocurrency. What’s more likely to define what is perceived as “Bitcoin” shortly after the hard-fork are exchanges, wallets, ATMs and payment processors, because these are used by the bulk of ordinary users and it’s users that collectively define value in currency.

I believe most exchanges etc. are in wait and see mode. Here is a statement from Coinbase on July 19, 2017 (bold emphasis mine):

“Should UAHF to increase the Bitcoin block size activate on August 1, Coinbase will not be able to support the new blockchain or its associated coin since it is incompatible with the current Bitcoin ruleset and will create a separate blockchain.

Customers that desire access to UAHF coins should withdraw their bitcoin from Coinbase by July 31. Although we have no plans to support additional blockchains at this time, we will continue to monitor UAHF developments.”

Nobody can define Bitcoin alone, rather its presence — or lack of a clear presence in favor of multiple coins— emerges collectively over time. That’s the disorganized and potentially confusing, harmful way to do it, though I do feel it would still work in the long run. (It’s the free market in action.)

Organized Proposal

Instead, let’s do an amicable divorce, something best for both parties. Agree to disagree. The market will be the arbiter of the winning vision, or support coexisting ones.

Folks, this is over branding. Someone asked why bigblockers don’t move to Litecoin; after all they now have effectively 16 MB max block capacity. Litecoin is the closest, and oldest alt to Bitcoin, except with what I believe to be an improvement in block time; but it’s not the #2 coin. Ethereum, which I believe may end up a victim of its own success via scaling issues, and where the slogan is “move fast and break things” (hardly ideal for a currency) is in that spot, not barely beating Litecoin but valued some nine times higher. Wise investors know markets can remain irrational longer than they can remain solvent; and for currency the network effect amplifies this problem.

Bigblockers feel a claim to Bitcoin (Satoshi is documented supporting big blocks), and conflict won’t cease until brand value is somehow resolved.

I propose smallblockers keep the Bitcoin brand, and continue being known as the original, and (for marketing purposes) immutable coin. They won’t compromise, even against losing everything. Hard-forks are an emergency only measure. These appear to be selling points for smallblockers. I say let the market value that. They’ll probably stick around, especially if the next coin I propose appears to approach unacceptable centralization.

Bigblockers should hard-fork per the NYA schedule, but seek to brand themselves as “Bitcoin Cash” with the distinguishable ticker BCC. Bigblockers believe hard-forks are a preferential way to upgrade, and the key word is upgrade. Embrace being a changed, upgraded Bitcoin. I further propose using the same Bitcoin logo for branding, but green, and with the hard-fork moving block time down to ~2.5 minutes to ensure competitiveness in the top few coins (instead of a 2 MB size change to be somewhat close to max effective size).

Markets love more not less options. I practically guarantee something like a stock split where the diverged coins end up with greater value combined soon after the split.

Neither camp, if they believe their vision truly valuable, should fear competition this way. Since the proof-of-work isn’t changed miners can merged mine both, meaning both have similar security (smallblockers can even SPV mine big blocks). It’s really the ecosystem making these options available which determines later value. Users will automatically have (and probably keep) both.

So what will it be community? Organized and predictable? Or messy and harmful, with possibly confusing, ongoing power struggles over branding? Both will work in the long term because cryptocurrency will live on, but I know which I prefer. I’d prefer to work on and share good ideas again like improving latency with things like compact blocks, or user experience with software checkpoints. Bitcoin can use all hands on deck, not perpetual war.