Wednesday, September 28, 2022

BitPay Software Drama a Sign of Bitcoin’s Rough Road Ahead

BitPay Software Drama a Sign of Bitcoin’s Rough Road Ahead

Payment processor BitPay’s recent controversy over its choice of Bitcoin protocol software shows strong divisions remain in the community. Whether Bitcoin will be intact at the end of 2017 is still far from certain.

Also read: Will Mt Gox Creditors Receive Bitcoin Cash?

Drama? What Happened This Time?

It started when BitPay, one of Bitcoin’s best-known names, announced it would soon switch to the “BTC1” protocol software. It also advised developers using its Bitcore Bitcoin development platform to upgrade to SegWit-compatible boundary nodes. In a blog post, the company said it was to avoid double-spend risks after SegWit activated.

Bitpay logoWhy is this controversial? BTC1 is a rival Bitcoin implementation to Bitcoin Core. Those loyal to Core and its development team consider any other implementation a heresy, or an attempt to usurp control over Bitcoin’s future direction.

Bitcoin Core is the evolution of the original client software released by Satoshi Nakamoto in 2009. It remains by far the most popular implementation, running on 6,142 nodes (according to Coin Dance). By contrast, only 186 nodes run BTC1.

At this stage, BTC1 runs on the Bitcoin main blockchain and supports SegWit. However, it includes the provision to hard-fork and create 2 MB blocks. This is called “SegWit2x” — which Bitcoin Core calls “an incompatible change to the consensus rules of the Bitcoin network”.

Core supporters called for a boycott of BitPay services, and even banished the company from the traditional website.

BitPay: We Want to Support the Majority Chain

A few days later, BitPay followed up with an explanation. Miners, it said, have signaled support for the SegWit2x block size increase. If they do this, Bitcoin Core will suddenly find itself on the minority blockchain. BitPay’s priority, it said, was to stay with the majority to avoid disruption.

“Part of our commitment is to maintain a service that is always available and safe to use, which drives the decisions we make from a technical standpoint.”

Needless to say this explanation did nothing to placate BitPay’s critics, who continue to rail against the company.

It’s a sign Bitcoin’s scaling debate and the threat of further contentious blockchain splits are far from over. This could affect everything from price to reputation, and affect the overall stability of the ecosystem.

Why ‘2x’ Is Still Controversial

Bitcoin block blocksMany assumed the fight over SegWit vs. large block sizes was settled at the start of August. Miners voted to activate the segregated witness format, and agreed to signal again in November whether to increase transaction block sizes to 2 MB. The “big-blockers” left the project completely, hard-forking away to create Bitcoin Cash.

In reality, most were just agreeing to SegWit in some form. Arguments about any block size increase, and which protocol software to support, are separate issues.

SegWit2x is a compromise scaling solution that emerged from the 2017 Consensus conference in New York City. It’s also sometimes called the “New York Agreement“. However Core developers and supporters Blockstream did not participate in that meeting. Blockstream CEO Adam Back instead submitted a brief statement saying his company supported only SegWit in the short-term.

Some Bitcoiners and supporters of the New York Agreement have publicly stated a desire to remove Core and Blockstream from their influential positions. These include one of Bitcoin’s historic leading developers, Gavin Andresen.

So, despite the illusion of harmony after miners activated SegWit, there’s still plenty of drama ahead for Bitcoin — with a lot of market cap and ego at stake. The picture will be much clearer at the beginning of 2018, but it won’t be to everyone’s liking.

What’s your prediction for Bitcoin over the next six months? Let’s hear your thoughts.

Images via Twitter, BitPay, Pixabay

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