Saturday, August 13, 2022

Bitcoin’s Fight to Survive Continues as Bitcoin Unlimited, SegWit Debate Reaches a New Climax

Bitcoin’s Fight to Survive Continues as Bitcoin Unlimited, SegWit Debate Reaches a New Climax

Two sides, only one solution. The drama is heating up as the war between SegWit and Bitcoin Unlimited boils over to the public at large. With a hard fork looming on the horizon, a showdown between conflicting visions of Bitcoin could end in its demise. Will the Bitcoin experiment finally come crashing down, or will economic realities sink in and force a solution?

Also read: Analyzing the Fallout: Where Will the Bitcoin Price Go After Last Week’s Block Size Drama?

Two scaling solutions for Bitcoin are currently at the forefront of this debate: Bitcoin Core, featuring Segregated Witness or “SegWit,” and Bitcoin Unlimited. The debate essentially amounts to tying up loose ends as developers prepare the digital currency for mainstream acceptance.

SegWit is part of a software update to the current version of the dominant Bitcoin Core protocol — while Bitcoin Unlimited proposes an entirely new version of the code. Consequently, implementing Bitcoin Unlimited would require a hard fork of the blockchain, a point of fear and contention in the bitcoin community.

 Antpool Switches to Unlimited

Until recently, Bitcoin’s scalability issue has mostly smoldered in the background. However, it gained new life when Bitcoin’s biggest mining pool, Antpool, announced it had switched to the Bitcoin Unlimited client.

Bitcoin Unlimited (BU) differs from the standard client in that it rids the technology of any hard-coded block size limit. In other words, it doesn’t limit how many transactions can be confirmed by the network. Currently, Bitcoin Core’s protocol only allows blocks to handle 1MB worth of transaction data at a time, with a single block generated every 10 minutes.

BU would remove this limit and, according to the developers, a natural block size limit would arise to take its place. This contrasts with SegWit, which would keep the hard-coded limit in place but increase the number of transactions per block by separating out a percentage of the block data.

Antpool’s move caught the eye of larger news outlets and lead to reports that brought the messy infighting to public attention. One report by Bloomberg wrote that the Bitcoin blockchain faced problems with handling larger transaction loads, writing that it was “more backlogged than at any point in the currency’s eight-year history.”

Core developer Luke Dashjr publicly contested this report. In fact, he directly confronted the author on Twitter, pointing out key problems he saw in the story.

Dashjr attacked the authors, denouncing the story as “a pack of lies.” When one of the authors of the story asked him to elaborate on what he specifically thought was wrong with it, he obliged by listing off his complaints in a flurry of tweets.

According to him, the Bitcoin blockchain is incapable of being backlogged.

“Bc’s blockchain *cannot* get backlogged, and is nowhere near a point of anything like a backlog,” Dashjr wrote on Twitter.  He also criticized the report’s claim that Bitcoin’s block-size limit had slowed transaction confirmation speeds.

However, probably the most noteworthy comment was when Dashjr called out Roger Ver, one of the most recognized proponents of Bitcoin Unlimited, claiming that he did not even understand Bitcoin.

Bad Economics or Technical Incompetency?

Of course, this was not the first time a prominent SegWit supporter has accused those in the BU camp of technical incompetency. Indeed, it seems to be a common theme among the SegWit camp to criticize BU supporters from a technical perspective.

In fact, SegWit supporters express opposition to BU mainly due to code-related issues. They say many problems exist with BU because the developers do not have enough experience and the supporters, in general, don’t understand the technical side enough to know why they’re wrong.

Charlie Shrem Bitcoin Unlimited
Earlier today, Bitcoin entrepreneur Charlie Shrem took to Twitter and launched a multi-part attack on Bitcoin Unlimited supporters.

What are the technical shortcomings of BU, according to opponents? The very concept that drives the alternative in the first place: limitless blocks. Developers believe that a protocol change that radical would end up giving miners too much power in the grand scheme of things.

By removing the block data cap, many believe that Bitcoin Unlimited would allow larger mining pools to drive smaller ones out of the market. Thus, SegWit supporters argue that the only outcome of a BU implementation involves more centralization — seemingly contradicting Bitcoin’s entire purpose as a decentralized currency.

According to Core developers, SegWit avoids these issues by keeping a block size limit in place at the protocol level. By retaining the limit it stops large mining pools from converging onto a block size that would be too large for smaller mining pools to handle.

BU developers refer to this process of naturally evolving block sizes as”emergent consensus.” According to BU proponents, the process makes the Bitcoin network more flexible and responsive to changing circumstances.

On the other hand, Core developers and SegWit supporters point to “emergent consensus” as a key technical problem with BU. By allowing miners to dictate the block size, SegWit supporters argue, the blockchain would see regular hard forks due to disagreements among large miners.

Additionally, Core developers argue that SegWit fixes a problem known as “transaction malleability.” With this solution, developers say, blocks could actually become smaller by removing data related to signatures. It could also pave the way for second-layer micropayment channels that alleviate network congestion, such as the Lightning Network.

Letting Free-Market Principles Decide

BU supporters haven’t taken this criticism passively, however.

Roger Ver, one of the most vocal BU proponents, told Consolidated Crypto that the Core developers’ history of “intentionally advocating that Bitcoin blocks be full all the time, causing long delays, and high fees, while simultaneously thinking that Bitcoin adoption will continue unabated,  SegWit advocates are displaying their lack of economic knowledge.”

While Ver conceded that he and other BU supporters may have a blind spot regarding technical aspects of scaling, he noted that before getting involved in Bitcoin he had 15 years of experience as the CEO of a company that helped scale enterprise networks.

Additionally, according to Bitcoin Unlimited’s website the entire idea behind “emergent consensus” has market principles in mind:

An emergent consensus will thus arise based on free-market economics as the nodes/miners converge on consensus focal points, creating in the process a living, breathing entity that responds to changing real-world conditions in a free and decentralised manner.

And what of the mining centralization that SegWit supporters fear will occur with a BU implementation? It’s just a natural response to increasing demand, according to Unlimited proponents. In order for miners to keep up with transaction volume they must mine more and employ more computing power. Thus, they combine to achieve economies of scale and lower costs.

Essentially, Bitcoin Unlimited’s implementation could lead to increased mining centralization. However, the BU camp argues, by arbitrarily limiting transaction volume, the data limit acts as an output ceiling causes higher fees. Therefore, this means fewer people will adopt Bitcoin, hindering its growth outwards — making it less useful as a money. Bitcoin Unlimited supporters say the reward of long-term scalability outweighs the perceived risk of mining centralization.

DDoS Bug Casts Doubt on Bitcoin Unlimited

Even though the implementation’s architects purportedly have Bitcoin’s best interest in mind, BU’s reputation became further tarnished when a bug in the software’s code was discovered in the software’s code. Following the discovery, 70 percent of BU’s nodes went offline temporarily.

The bug allowed an influx of transaction messages that overloaded the network: basically a DDoS attack. The fact that the exploit managed to shut down 70 percent of the BU network provided the Core camp with further ammunition to discredit Unlimited’s developers.

After the bug went public, Charlie Lee, founder of Litecoin and a prominent SegWit supporter, commented on Twitter to echo the general sentiment of technical incompetence.

“Today’s Bitcoin Unlimited node crashing bug proves that users cannot trust Bitcoin’s $20B network in the hands of BU developers… Having assert(0) triggered by untrusted inputs is amateurish.”

Others were just as critical and quick to comment, such as Peter Todd, another Core developer. But some BU developers hit back, responding to the DDoS bug and accusing Core developers of deceptive tactics.

Roger Ver, in response to Dashjr’s comments, told Consolidated Crypto that he tended to agree with Gavin Andresen in questioning his usefulness to the Bitcoin community. Andresen went as far as to call Luke Dashjr “poisonous.”

Then, defending his own knowledge and dedication to  Bitcoin, Ver pointed to a video of him from 2011 betting $10,000 that Bitcoin would eventually outperform gold and silver.

Why Can’t We Be Friends?

With all the hostility coming out of this debate, it’s easy to get lost in the details and lose perspective of the bigger picture. It can be easily forgotten, with each side castigating one another so regularly, how esoteric the infighting actually is.

That’s not to say the scalability issue is a trivial matter, but outside the community, no one else really cares about it. Yet, people can get so caught up in the drama that it gets carried away and begin assigning motives to the other side. This behavior is something that has divided Bitcoiners and pit them against one another.

However, there are figures in the Bitcoin community trying to bring people together, such as Alan Silbert, founder of BitPremier, who tweeted out a message of solidarity, saying:


So to sum up: I condemn censorship on Reddit, devs treating people like crap, and 300k blocks. I SUPPORT BITCOIN.  Now let’s move forward.”

Additionally, Ver has given his opposition the benefit of the doubt, commenting that while  “some ideas are clearly mistaken,” all sides have good intentions.

Even Charlie Lee, who sharply criticized BU developers after the DDoS bug, was ultimately supportive of them — even giving some friendly advice.

“Being a cryptocurrency developer is not easy as a web/mobile dev. They are learning now. But best experiment with an altcoin first,” he explained.

Conciliatory efforts like this are made harder by a condescending culture prevalent in Bitcoin circles. We’ve seen it when public figures mock each other for supposed intellectual shortcomings.

Even Gavin Andresen, one of the most respected members of this community, fell victim to this culture when he publicly backed Craig Wright’s claims of being Satoshi Nakamoto. The fallout from that mistake led to Andresen losing his commit access to Bitcoin Core.

This “know-it-all” syndrome that many suffer from demands that people have perfect knowledge of every aspect of the cryptocurrency. But not every person in the Bitcoin community is a PhD-holding economist, computer scientist, or a perfect judge of character — nor do they need to be.

The debate has been intense with some complicated politics on both sides, but despite their differences, there should be no doubt that their motives are the same: improving the popular crypto so that it can fulfill its destiny as the currency of the future.

What do you think of the ongoing debate between SegWit and Bitcoin Unlimited? Can a hard fork still be avoided? Let us know in the comments below.


Images courtesy of FEE, Antpool, and BTCtheory.com

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