Is Bitcoin in danger ?

If you’re following news about cryptocurrencies, you might have seen that Bitcoin is the object of an intense debate, lately reinforced by the fact that the network is becoming clogged and leave a big backlog of transactions. This is, to say the least, a bit annoying for users. « Core », the actual main version of Bitcoin is competing against « Classic », the team that wants a hardfork as fast as possible to increase the size of each blocks that contains everyone’s transactions. Let’s try to take a global stance on what is the situation while keeping it simple.

What is the plan for « Core » developers ?

The Core team is taking a very careful stance, it seems, when it’s coming to scale the main Bitcoin network. They fear consequences of further centralization (because scaling to get blocks to contain more data require a faster internet and bigger storage) and see the scaling of the main blockchain pointless, as it will never be on par with the capacity of a centralized payment system like Visa or Mastercard. Nevertheless, after some time and pressure from the « Classic » side they are considering scaling on a short-term basis, but only on a « softfork » (updates won’t be mandatory but recommended), with a technology called « Segregated Witness » which would make transactions taking less space, giving the network a little more oxygen and time.

Core supporters think it’s better to scale outside the main chain for small daily transactions. There is a technology called the Lighting Network which could do that, but it’s not ready yet (and when it will be, no one knows). Some are even thinking it would be better to leave small transactions to centralized alternatives… Like Visa ?

While reluctant to to increase the block size, they will probably do it in the next 12 months and it will require a hardfork (mandatory update of Bitcoin).

Core supporters think that the main blockchain will need to stay alive, of course (it’s necessary) but by the growing of transaction fees, making it useful only for big transactions, a bit like bank money transfers.

They are accusing Classic supporters to not think enough about centralization dangers and are also accusing them to be in favor of private interests that need bigger blocks.

How about the « Classic » side ?

The Classic team wants to scale the main blockchain and make it a priority, so doing it as fast a possible if the miners agrees (75 % majority needed). They think that normal, even small transactions should stay mainly on the main blockchain that will eventually be able to handle a big sum of transactions in the future due to the increase in power of computers, increase in storage space capacity and speed of internet bandwidth. Usually they are not against alternative payment transaction technologies as long as it is decentralized.

They are also accusing Core to delay the size increase of the blocks to favor other technologies such as Blockstream, that are developed by private companies and also accusing to be censored by Core supporters on the main forums such as the Bitcoin Reddit.

So who is right ?

To be honest, I don’t know. It’s always difficult to know who’s really saying the truth or not in that kind of situation.

Nevertheless, I can list what are the scaling solution and different philosophies about the future of the cryptocurrency and tell you my opinion :

Do we need Segwit ? Yes, I think it’s a great improvement and no one is opposing that I think.

Do we need the 2MB block size hardfork ? Yes, even Core is planning it now. It is essential for the moment to earn some more time and keep the network healthy, with a good usability for daily transactions (yes, even for a coffee), I think.

Will the future of Bitcoin for smaller transactions be on its actual main blockchain or other technologies such as the Lighting Network ? Difficult to say really.

Are high fees healthy for the network ? Again, very difficult to say but at the moment, I’d say no. We’ve sold Bitcoin to people as something very cheap and need to try to keep it that way as long as the Lighting Network is not operational.

Are Core and Classis developers sold to other private interests ? I don’t know.

Is Bitcoin in danger ? We’ve got many mainstream press articles lately that are claiming again that Bitcoin is almost dead. It is not, it is in the process of an intense debate about scaling and like every debate, it can be a bit violent. I can’t predict what would be the outcome of it, but a new decentralized currency technology can’t be perfect from the first shot. Yes, Bitcoin is still in development. Of course, prepare for some price drops if a solution is not found quickly enough.

Now let’s grab a bit more popcorn ;).

 

PS : don’t try to take this article to be for another side or not, I’m mostly neutral on the question.