On Friday and Saturday, a group of key players in Bitcoin met in Hong Kong and came to an agreement over some questions that have divided the community for more than a year and caused it to split into factions.
The accord represented a first step in breaking through the impasse, and afterward, the currency, which had been rising over the previous week when the event details had been finalized, reached a value of around $430, a level last seen in mid-January.
It was then hostility over the debate reached critical levels when one of the most prominent developers declared Bitcoin a failure and announced he was quitting it altogether in a widely publicized blog post that coincided with a New York Times article. The currency immediately shed 15% of its value, demonstrating one of the persistent threats to the currency – the issue of governance. The fact that Bitcoin is not controlled by any one entity but by a sprawling group of developers and other economic actors means that it is not always obvious how problems will be resolved or who is responsible for resolving them.
However, the new statement by the group calling itself the Bitcoin Roundtable seems to point to a way forward for the community.
“There were a lot of arguments [during the Roundtable],” said Samson Mow, chief operating officer of BTCC, a China-based Bitcoin exchange and one of the organizers of the event, which had about two dozen attendees. “We are not like-minded individuals who all think the same thing. However, we do have an intent to work together, which is the differentiator.” He noted that the group had invited some members of other factions who declined to attend.
This commitment to finding common ground was echoed by Valery Vavilov, CEO of BitFury, a Bitcoin chip, hardware and mining company that currently accounts for about 10% of the network’s power, whose chief information officer attended: “For us it’s important not to decide on our own but to collaborate with other parties because this is the greatest open-source project ever,” he said.
The consensus reached by the Roundtable, which wrapped up its negotiations at 3:30am Saturday, presents one of the more definitive resolutions to the standoff, mainly because its members represent 80% of the network security and included five of Bitcoin’s developers (now called the Core team to differentiate them from the splinter groups) and other economic actors in the ecosystem such as exchanges.
Mow acknowledged that the agreement was very carefully worded to account for the concerns of the various Roundtable members and that the majority of the Core developers who were not present still needed to sign on to it, but he was confident that the plan represented the most likely outcome for Bitcoin moving forward.
“It’s futile to run Classic,” Mow said, referring to a new version of the software proposed by a splinter group. “This is done. This is over. Anyone who thinks otherwise is probably not going to be convinced of reality. They have their head in the sand and they will only believe what they want to believe.”
As Bitcoin has become more popular, transaction volume has increased, nearing the limit for the number of transactions that can be processed at any time in what is called “a block.” A few developers and large Bitcoin companies have proposed increasing each block’s cap, which is currently at 1 MB, even going so far as to launch new versions of the software themselves without first obtaining consensus amongst most of the developers and other Bitcoin stakeholders.
Ten days before this meeting, a new team of developers that broke off from the original group and calls itself Bitcoin Classic made another attempt to boost that cap — this time to 2 MB (previous proposals called for an 8 MB limit) — but within a day, the group of companies and players forming the Bitcoin Roundtable released a statement effectively rejecting the Classic team’s proposal. Their stance held weight because the companies behind it comprised enough network power to prevent the Classic version of the software from being implemented, despite the fact that Classic has the support of Coinbase, one of the most well-funded consumer-facing companies in the space. (Coinbase did not respond to requests for comment, but after the Roundtable agreement, CEO Brian Armstrong published a statement on Medium reiterating his support for an immediate block size increase to 2 MB and having miners “vote” on competing versions of the software by running the one they prefer.)
Over the weekend, the Roundtable convened in Hong Kong and sketched out a plan for increasing the network’s capacity that did not follow the Classic proposal. The Roundtable plans to implement a software change that separately processes some of the data currently in each block so that it does not contribute to the amount of data used toward the block limit. That effectively increases the number of transactions that the network can handle at any given time without actually increasing the block size.
The group also announced that it will release the software to increase the block size by July, and potentially activate that new software by July 2017. However, Vavilov, who prefers a quicker timeline, said, “I think July 2017 is likely a deadline. We think it could be done faster.” Mow concurred: “In software development, not all dates are firm,” he said.
While on the surface, the debate seemed to be about the block size, it eventually became a power struggle, with the factions vying for control over the protocol. When asked why BitFury and other companies with a large portion of the network power decided to go with the Core team, Vavilov said, “For us, before we switch to another team, we need to understand if the existing team with the great experience who worked on this for many years can [upgrade the network]. For me, it would be good if Classic and Core could join forces and collaborate. Because of the Classic team, I think the Core team started to move slightly faster. The Classic team is good, but if Core can do this, why take the risk and switch?”
His comments echoed the sentiment of many of the Chinese companies that also account for a large portion of the computing power. In a previous article, I wrote about how cultural differences between China, where many of the miners are based, and the West, where many of the developers are from, are affecting Bitcoin’s progress. The Chinese Bitcoin community members I interviewed, while desiring a larger block size, were averse to switching to a new team. Some of Bitcoin’s bilingual community members surmised that those in the Chinese were not comfortable “voting” for different factions because they had grown up under China’s one-party political system.
For instance, Jack Liao, CEO of China-based Bitexchange and LightningASIC, told me then, “the Core developer team for the past two years did a great job and I trust them more than the Classic team,” mostly because they were new. (Liao signed the agreement this past weekend.)
Vavilov also said that other measures could be taken to help ease the problem of the transaction volume bumping up against the cap with other technological advancements currently in development, such as the Lightning network and side chains, that allow transactions to be processed not directly on the Bitcoin network, but connected to it.
“I think multiple competing teams are okay, but those teams should develop something but also somehow make consensus,” said Vavilov, then concluded. “But I think competition is good.”
https://bitcoininthenews.com/?q=Bitcoin-Agreement-Promises-To-Break-Impasse-Currency-Jumps-In-Value
