I’m following the blocksize debate for a very long time now. Like many others I feel that it has been debated for too long now and that we’re somehow stuck with different views that block each other from achieving progress. I have to say that I often saw Bitcoin Core and Blockstream as the root of all our problems and that I thought they’re actively harming bitcoin. But while I thought this I never assumed that they do this because they want to weaken or destroy bitcoin. I always assumed that they must be less capable of understanding the behavior of complex systems than many people think. I thought they simply don’t know what’s going on and how things work. A daring thesis about a company with admittedly many very intelligent individuals. I want to question this believe I myself had in this article and give an Idea of how the behavior of certain individuals belonging to Bitcoin Core and Blockstream might be motivated.
Why Segwit as a soft fork?
This is often criticized. It is common knowledge that the security of an application depends to a high degree on the simplicity of the code. If bitcoin goes through a segwit soft fork we’re stuck with a lot of overly complex code that fewer and fewer people are able to maintain. Software development typically gives power to the developers who work the longest time on the project. Not because they’re the smartest but they know the code best. This would be a very selfish reason for core developers to push for segwit as a soft fork. But I don’t think they’re that selfish.
I think the reason why Bitcoin Core wants to deploy segwit (without blocksize increase) as a soft fork is honestly because they want to prohibit a chain split. They seem to think that even with a threshold of 95% this might be possible. I started to think they’re right about that.
For a long time I had a similar stance as John Blocke described in his article “There Will Be No Bitcoin Split” on the likelihood of a Bitcoin chain split. In short: Because of Bitcoins slow difficulty adjustment we’re in a very different situation as e.g. Ethereum is. The losing chain would have very slow block times making the chain less usable and would have to go through 2016 blocks in slow motion to achieve a difficulty adjustment.
So why do I think a chain split would still be possible if Bitcoin Core would publish a release with segwit as a hard fork (without block size increase) with an activation threshold of 95% now? In my opinion there are two main forces that could lead to this:
- Speculative interests
I think both of these would very well be represented on the potentially segwit hard fork blocking side. Idealism because the missing block size increase in that hard fork would signal Core’s position on the future of Bitcoin and how to scale it. Many (including myself) disagree with this vision. Speculative interest because even though it might be a waste of energy to mine on a unusable chain for several weeks one might assume that a not to dismiss economic force stands behind a Bitcoin with bigger blocks and thereby give this chain a value even though it’s practically not usable for quite some time. One should also not forget that even when mining on the <5% minority chain with only <5% as many blocks generated as before from the single miners perspective the number of blocks he’ll find will not change.
So why not just a segwit hard fork with a block size increase to 2 or 4 MB?
So why is Core not making that compromise? 2 to 4 MB will make everyone happy and a network split highly unlikely. Also it will not cause mining centralization, give Bitcoin further room to grow it’s user base, attract new businesses/people and additionally will enable solutions like the lightning network to enable further off-chain scaling. Lightning makes sense. If we want to scale to a level where almost every transaction we make in our daily live can be done in Bitcoin we need solutions like this. But this has to happen additionally to on-chain scaling. This brings me to the point where I highly criticize Core/Blockstream:
I think the reason they didn’t propose such a segwit hard fork with a block size increase is because they want to push the adoption/use of the lightning network they develop right now. There’s no other reason I see for this that makes sense. It’s a clear conflict of interests. Of course they will justify that by saying the use of the lightning network is in bitcoins best interest. But I say it does not have to be enforced.
The lowest fee method will be adopted
I was just on a trip to a third world country and saw how mobile money is already widely used and accepted. Many currencies in these countries are unstable and the mobile money used is still denominated in these unstable currencies. People will adopt what gives them a monetary advantage. This is why I think the only missing piece for wide cryptocurrency usage in such countries is a very low transaction fee making them actually usable for everyone. The rest can be triggered by even some enthusiasts letting some small amounts flow and thereby the infrastructure and acceptance grow.
What I want to say with this is the following and also a bit directed to Core/Blockstream direcly:
You don’t have to be concerned about the adoption of lightning. If it works and enables a lower fee than on chain transactions it WILL be adopted and used. But do not cripple the network in a state where this adoption of an alternative is not even possible because the necessary components in the core protocol are not implemented yet.
I really hope that we can all put our egos aside a bit and reach a compromise better sooner than later. We’re not free from competition from others. Even banks might have a chance to prohibit the wide adoption of cryptocurrencies we all want to see. If they really start making an effort and start to deliver better services then people might actually not care about the ideological superiority of Bitcoin and other cryptocurrencies. They might just continue using the Dollar/Euro.
I think we all do not want that.