On Wednesday afternoon, a leading panel of leading Bitcoin experts and figures from around the industry met on a panel focused around the scaling of Bitcoin technology. This block size talk was decidedly less crowded than the previous talks around the blockchain, yet attracted a more technically focused discussion and engaged crowd of enthusiastic Bitcoiners, many of who lingered around the room afterwards, than any other panels at the conference. As Moderator Jon Matonis of the Bitcoin Foundation said during his introduction, “A lot of blockchain panels are theoretical. They haven’t actually launched anything. We’re up here, some of us have up to 7 years of production in Bitcoin.”
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Block Size at Money 20/20
As is widely documented, the Bitcoin network is under stress to scale. With the Bitcoin network now typically only able to process 7 transactions per second, a limit has been imposed. The ongoing debate between Bitcoin Classic and Bitcoin Core should work itself out and help to advance the potential to understand and implement Blockchain technology in the end. In turn, look for implementations on a wider scale and in more applications in coming years.
According to Mr. Matonis, at this point 30% of all Bitcoin Nodes worldwide use Bitcoin Classic, yet of the last 1000 blocks only 5.5% of use Bitcoin Classic, thereby proving the difficulty in providing consensus towards any upgrades. “Bitcoin should not be easy to change, and this puts the burden of proof on challengers,” Matonis added.
Bobby Lee, CEO of BTC China, commented on the matter, saying, “We have typically shown support for the Bitcoin Core developers. I do think it’s a governance issue, because the technology solutions have been debated for the better part of a year in terms of how to use Bitcoin’s Blockchain….It’s also good that we are having this debate. Because in Bitcoin if one person or group can push Bitcoin in the way that they want it to be, than that’s not the sort of centralization we want to see.”
Additionally of note from the panel was Pierre Noizat of Paymium, who shared his belief that the lightning network could go live as early as 2016. The discussion around the block size is bringing attention back to Bitcoin and technology fundamentals in an increasingly blockchain focused banking world. Reffering to the promise of the lightning network, Mr. Noizat remarked, “We are only missing a few op. codes,” and additionally advocated the potential of sidechains and explained their inherent value.
Ethereum drew lots of interest among the panel. Mr. Gallippi pointed out that, even given Ethereum’s recent hype and ascension to a market cap exceeding $1 billion, Ripple similarly had a market cap of over $2 billion at one point. Ethereum certainly will have a number of use cases due to its local scripting language, and the roadmap towards upgrading the scalability issues is much more detailed and promises to bring forth alternative forms of trasnaction validation into the Bitcoin network upgrade discussion, while also learning from the valuable lessons which scaling the Bitcoin network is currently providing.
Frank Schuil of Safello echoed concerns often brought forth within the Bitcoin community about the power that small groups hold in shaping the future of the digital payments industry. If only 6 people in Bitcoin Core and a small group of miners remain after a potential block size upgrade, then not enough players are being involved in the democratic process here, Mr. Schuil asserted. Determining processes for governance structures on token-based distributed systems has proven to be problematic, and further best practices need to be implemented to prevent this over centralization in Bitcoin’s software review and decision authority.
Three challenges commonly arise when analyzing the block size, and the Megabyte level of storage is not the only component effected by a change in bitcoin’s software. “The block size impacts storage and CPU computation and network connectivity” remarked Mr. Lee. With these three sectors all growing at different rates, a huge jump in the Block size would shrink the network by the lack of rate of scaling in network connectivity. As a result, there is competition to be included in earning a spot in the Bitcoin lockchain’s valuable real-estate. “My view is that fee markets will go up inevitably,” additionally reflecting views of the inherent value in on-chain Bitcoin transactions.
Mr. Gallippi weighed in on the issue and advocated for a flexible block-size, which would allow the limit to go up or down in a self adjusting means while the network grows. “Today, a good portion of the blocks are empty, they don’t have any transactions in them. They more that you start to increase the block size, the more that that may become a problem”, Gallippi said. Additionally, Mr. Matonis added, “With the Bitcoin public Blockchain being in a production environment, any other public blockchain that has a token is going to have these same issues, and obviously there are going to be a variety of ways to solve it. And that’s why everyone is watching to see how this is solved. That’s why this discussion is so valuable to have.”
Overall, the scaling Bitcoin panel brought back some excitement to the initial promise that Bitcoin enabled and held. While the discussion has grown tiresome in some Bitcoin circles, it is also re-igniting the initial technological utopianism which Bitcoin attracted. Examination of the specifics of Bitcoin helps the industry understand both Bitcoin and Blockchains at a deeper, more fundamental level (something which was arguably fading in Bitcoin in 2015), while also bringing light to the differences between the Bitcoin Blockchain and the “Blockchains” that large banks are now looking to implement. The questions around Bitcoin Core and Classic will continue, yet perhaps this is enabling Bitcoin to grow up and also regain appeal amongst its early fans.
What do you think of the latest in the block size debate? Can or should Bitcoin Classic win out? What role will Ethereum play in Bitcoin’s scaling? Share your thoughts below!
Images courtesy of Money 20/20, Bitcoin Classic.