Bitcoin scaling: SegWit, User Activated Soft Forks and Bitcoin splitting in two
Bitcoin scalability issues continue to generate controversies spanning across countries and continents from China to the US and from Iceland to Japan. Many individual Bitcoin users have now joined in the controversy by airing their views and participating in other ways to make their voices heard in the call for a resolution to the block size saga.
The heightening issue has triggered several new developments in recent days creating series of discussions in the entire ecosystem particularly that miners pose an attack threat to the network even though others think attacking the network would devalue their gain unless they do not seek to make profit.
Unlike the initial stage when it was left to miners and other major players that predominantly play a role in bitcoin-related activities, some of the SegWit-related developments that are aimed directly at individuals include:
There’s been an increase in the call for a user-activated soft forks (UASF) as a remedy to the ongoing deadlock. The idea is to leave miners, which are considered the only party in the Bitcoin circle that has greater financial benefits, with less power to control the system. However, the symbiotic balance that needs to be maintained between miners and users keep showing up. Of the around 6,000 nodes that are available on the Bitcoin network, about half of them are running Bitcoin Core versions that fully support SegWit but they need miners to activate it which is not happening.
A call for a vote
To solve Bitcoin’s block size debate and impasse, the BTCC CEO, Bobby Lee, has put out a vote on Twitter to get a view of what Bitcoin users support and would like to see achieved among four options: Bitcoin Core: SegWit, Bitcoin Unlimited, Hybrid: SegWit + 2 MB HF and Do nothing. All is fine. More than 3,000 votes have been cast so far.
Mining empty blocks
Despite complaints that blocks are full, the co-founder of Bitmain, Jihan Wu says they will continue to mine empty blocks as a freedom given by the Bitcoin protocol. As he warns exchanges to be careful and the need to control the damage of a UASF if and when its popularity gets accepted, Wu says they are providing a 10BTC bounty for anyone seeking to provide a guiding document for exchanges during the split that would likely be brought about by the UASF. They expect the documentation to analyse how exchanges should taint their UTXO during the chain split.
While Wu and Roger Ver are accused of artificially congesting the network when there is a price increase to make people worried and panic to promote Bitcoin Unlimited, others say it is an economically rational choice.
Some likely outcomes
SegWit activation has become too controversial that it seems is likely never going to get a consensus as a scaling solution. While the two main parties that are to reach a consensus on the issue – Bitcoin Core and Bitcoin Unlimited – are aiming to achieve the same objective which is to make bitcoin better including having cheaper transactions but from different perspectives, it is clear that to have cheaper transactions without miners permission (which is not likely) will result in higher transaction fees. An option would be to implement the Lightning Network where miners need to compete with payment channels that could delay settlement if fees are too high. Better still, there could likely be another winner: a less valuable altcoin created on the other side.
Also, in support of his claim that UASF makes splitting likely, a recent tweet by Wu on his page shows there is a possibility of one of “the most sophisticated exchanges” to go ahead with a planned chain splitting.
Olusegun Ogundeji writes on tech-related issues including from the crypto/Blockchain space.
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