How to capitalize off the BIP 16/17 debate

[Steve]

Like Bitcoin itself, the value represented by P2SH transactions is enormous.  Probably second only to bitcoin itself.  You can read about the various use cases for p2sh on these forums, I won't rehash them here.

For some enterprising individual, there is enormous wealth to be gained.  You can bypass this whole debate about BIP 16/17.  All you need to do is implement p2sh in a manner that is better than either BIP 16 or 17.  I would suggest a complete rewrite of the script engine.  Do it in a language of your choosing so long as it is approachable by many, open source, and very well tested (unit tests with code coverage analysis is preferred).

Forget about backward compatibility.  You are going to fork the block chain.  You will do it deliberately by injecting a p2sh transaction into the network that the old bitcoin block chain accepts and that yours rejects.  This will be the shot fired across the bitcoin bow.  Your script engine must accept all current bitcoin transactions with the exception of coinbase transactions and their derivatives (so almost everyone's transactions will be perfectly valid in your block chain and the original bitcoin chain).  People will look at you like a lunatic until they start to realize your script engine is indeed better than the original bitcoin script engine and that p2sh transactions are a killer feature.  Once this realization sets in, people will desperately rush out updates to the bitcoin block chain…or they'll even try and start using your script engine on the main bitcoin block chain…but by then, your software will have been so well tested with many clients already supporting it, and enough miners committed to it that it will be a lost cause.  The remaining hold outs will simply flock to your new block chain rather than reinvent what already exists.  And by then you may have mined the better part of a years worth of bitcoins'.

[Steve]

Interesting.

If you fork the chain and start mining the fork, aren't you stuck with the current difficulty? Sounds fun! 

Ah, good point.  The difficultly will eventually adjust downward, but that could be quite a long time.  You would need to either have substantial mining hardware yourself, or bring along enough miners to make it tolerable.  That's probably enough of a hurdle that it wouldn't be so different from the challenge we currently have with BIP16/17.

[kangasbros]

There are probably two organisations whose decision would make the change de facto standard - mtgox and silk road. I guess those are the two biggest bitcoin enterprises (of course this is debatable), and if they would for the blockchain, everyone else would probably follow.

[farfiman]

I have no Idea about the inner workings of the blockchain, bip this or bip that... my question is how
will this "war" effect users of Bitcoin. Will splitting of the chain make it unreliable for merchants and
customers to use bitcoin? what effect will that have on adaptation ?

If I was a new bitcoin user or a merchant thinking about accepting bitcoin , I would be scared
out of my wits from some of the discussions going on..

[Steve]

I have no Idea about the inner workings of the blockchain, bip this or bip that... my question is how
will this "war" effect users of Bitcoin. Will splitting of the chain make it unreliable for merchants and
customers to use bitcoin? what effect will that have on adaptation ?

If I was a new bitcoin user or a merchant thinking about accepting bitcoin , I would be scared
out of my wits from some of the discussions going on..

I don't think there is a real concern.  This is actually bitcoin working as designed.  Changes like this require consensus.  Once consensus is reached, all the economic incentives are there for everyone to start following the same rules (for transaction verification).  For example, once >50% of miners adopt these stricter rules around p2sh transaction verification, other miners not supporting it risk mining blocks that are invalid to the majority of miners and their 50 BTC block reward being unmarketable.  Miners could even decide that they'll enforce the rules of both BIP16 and BIP17 just to be on the safe side (which just means that they won't include any transaction that would be considered invalid under either the BIP16 or BIP17 transaction format).  It would be better (less confusing) if people could just settle on one solution to p2sh, but even if they don't and miners validate both styles of p2sh transactions, everything will work just fine.

[farfiman]

I have no Idea about the inner workings of the blockchain, bip this or bip that... my question is how
will this "war" effect users of Bitcoin. Will splitting of the chain make it unreliable for merchants and
customers to use bitcoin? what effect will that have on adaptation ?

If I was a new bitcoin user or a merchant thinking about accepting bitcoin , I would be scared
out of my wits from some of the discussions going on..

I don't think there is a real concern.  This is actually bitcoin working as designed.  Changes like this require consensus.  Once consensus is reached, all the economic incentives are there for everyone to start following the same rules (for transaction verification).  For example, once >50% of miners adopt these stricter rules around p2sh transaction verification, other miners not supporting it risk mining blocks that are invalid to the majority of miners and their 50 BTC block reward being unmarketable.  Miners could even decide that they'll enforce the rules of both BIP16 and BIP17 just to be on the safe side (which just means that they won't include any transaction that would be considered invalid under either the BIP16 or BIP17 transaction format).  It would be better (less confusing) if people could just settle on one solution to p2sh, but even if they don't and miners validate both styles of p2sh transactions, everything will work just fine.

So this only has implications on the mining side of things and not the use of bitcoins? Can't it be possible that a transaction will be on the "wrong" chain if thats possible?

[Steve]

I have no Idea about the inner workings of the blockchain, bip this or bip that... my question is how
will this "war" effect users of Bitcoin. Will splitting of the chain make it unreliable for merchants and
customers to use bitcoin? what effect will that have on adaptation ?

If I was a new bitcoin user or a merchant thinking about accepting bitcoin , I would be scared
out of my wits from some of the discussions going on..

I don't think there is a real concern.  This is actually bitcoin working as designed.  Changes like this require consensus.  Once consensus is reached, all the economic incentives are there for everyone to start following the same rules (for transaction verification).  For example, once >50% of miners adopt these stricter rules around p2sh transaction verification, other miners not supporting it risk mining blocks that are invalid to the majority of miners and their 50 BTC block reward being unmarketable.  Miners could even decide that they'll enforce the rules of both BIP16 and BIP17 just to be on the safe side (which just means that they won't include any transaction that would be considered invalid under either the BIP16 or BIP17 transaction format).  It would be better (less confusing) if people could just settle on one solution to p2sh, but even if they don't and miners validate both styles of p2sh transactions, everything will work just fine.

So this only has implications on the mining side of things and not the use of bitcoins? Can't it be possible that a transaction will be on the "wrong" chain if thats possible?

A transaction can be included in multiple chains.  If a chain split actually occurred (highly unlikely even if both BIPs were supported concurrently on portions the network), what users would want to do is only accept transactions that are valid on both forks of the block chain.  This means that no one would be accepting block reward coins (coinbase transactions) after the split (because those transactions would only be valid on one of the two chains).  That creates a very powerful incentive for the mining community to resolve the split and get back on a common chain.  Once the community sees that everyone has settled on one chain again, the rest of the users can lift the embargo on the coinbase transactions.  (note: there's no easy way to "only accept transactions that are valid in multiple block chains", but such software could be created if necessary)