How to stop a Bitcoin hard fork… or how to accelerate it

  1. Lower the supply of transactions below market demand to drive up fees
  2. Increase the supply of transactions and therefore fees, the value of which is lower than or equal to today’s fiat value

Running the numbers

If Bitcoin Core’s approach is taken, then we need to determine to what degree transaction fees will change for the end user. Specifically we need to ask:

What is the minimum transaction fee required to cover the cost of mining (~$3,000 USD/block) or replace today’s block reward (~$10,000 USD/block)?

According to my rough calculations, if the block size remains at 1 MB, the transaction fee would need to rise from today’s level of ~$0.08 to:

  • $1.50/transaction: to cover the cost of mining
  • $5.00/transaction: to replace the block reward purely by transaction fees

What is the minimum block size required to cover the cost of mining or replace the block reward, assuming transaction fees stay at their current level?

Again, according to my rough calculations, if transaction fees stay at $0.08, the block size would need to rise from 1 MB to:

  • 19 MB: to cover the cost of mining (which is in agreement with Jonathan Toomim’s estimates [slide 26], who was and is a miner before being involved with Bitcoin Classic)
  • 63 MB: to replace the block reward
  • Core may be wrong about the decentralization risk
  • Classic may be wrong about Bitcoin suffering a consumer failure if block are allowed to stay full

How we can fix Bitcoin together

These are two values where I think Core and Classic have some common ground:

  1. Bitcoin decentralization should not further deteriorate
  2. The accessibility of on-chain transactions, for everyone, should not further deteriorate

… but if Bitcoin must fork

If Bitcoin Core continues to ignore the miners, the economic majority, and the users, a fork will come… and they’ll have no one but themselves to blame.

Who leads Bitcoin Classic? How are development decisions made? Who are the main developers of Bitcoin Classic? What’s the timeline for development? Who do we talk with to get timely answers to our questions?

If a fork must happen, then someone widely respected in the Bitcoin community needs to grit their teeth, think of England, take the pledge and lead Bitcoin Classic… namely Gavin Andresen and/or Jeff Garzik. Otherwise, this fork is never going to happen.

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Co-founder of OB1; core-developer for OpenBazaar

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