More scaling debate news this week as we ramp up to the ominous Aug 1st deadline everyone has been hearing about. First off, I just have to say, this stuff is complicated! As someone who has been digging into this stuff for around 4 years now, I have a hard time keeping up with this debate and said proposals myself. So if you feel confused and don’t know what to make of all of this, you are in the majority. Second I want to also say that this debate has been going on for over 2 years with at least 12 different proposals and tensions have now reached a fever pitch between all the camps that have participated in submitting proposals. It can be hard to find the truth in the middle of all the strong opinions. That coupled with the natural lack of leadership with these decentralized projects makes it really hard to accept what is fact and what is propaganda or scare tactic. So as of now, June 19, 2017 there seems to be two major camps as we head into what may be the final stretch for these proposals and said activation times. These two proposals are: SegWit2x and BIP148 or what people are calling UASF. You can find some resource links for background on these things at the bottom of this post.
BIP148 was submitted by an anonymous developer named Shaolin Fry around March of this year. It is a UASF or user activated soft fork that is designed to cause the existing SegWit MASF or miner activated soft fork deployment to cause activation in all existing SegWit capable node software. This will deploy on Aug 1, 2017 unless Segwit is activated by some other proposal first. If this happens then come Aug 1st, BIP148 would do nothing. BIP148 was essentially set in motion to force the economic majority of nodes (wallets and exchanges) to activate Segwit. This economic majority as mentioned, seems to be supporting SegWit2x which I will explain next. If you want to find out more about this UASF and or would like to support this UASF go here.
SegWit2X was rolled out by an entity known as The Digital Currency Group. Segwit2x seems to be the proposal of choice for the majority of bitcoin mining operations or otherwise known as the economic majority. Segwit2x is much like it sounds with an activation of Segregated Witness followed by a hard fork of 2MB blocks six months later. They also have an activation day scheduled for July 21st which seems to be an attempt to get ahead of BIP148. Signaling for this proposal starts June 19th 2017. Like I said previously, if something like SegWit2x activates with the majority of nodes signalling bit 1 for SegWit in their header blocks before Aug 1st, then BIP148 will do nothing and no chain split will occur this time around. At least that is the theory. One more thing to mention is that Bitmain, a Chinese chip manufacturer of the chips used in bitcoin mining rigs, has issued a statement stating their plan B if UASF activates. Basically, what they are saying is that if BIP148 activates come Aug 1st, Bitmain will activate their own proposal with their own pre-configured miners to prevent BIP148 from being the majority. Bitmain is probably the only single entity that would be able to pull this off because of the large concentrated hashing power they possess. They claim to have this contingency plan to avoid a coin split, something they would stand to lose out on quite a bit considering the investments they have in the bitcoin ecosystem.
Now I know most of you are probably thinking this is just a bunch of garbage I don’t understand and that is totally fair. The truth is, none of this really matters much for us as normal/average users of bitcoin. That doesn’t mean there aren’t things we should be doing to prepare, or that there aren’t opportunities that may lie ahead for us. Here is a group that has put out a great piece of just how most of us should prepare. They are urging all users of bitcoin to start holding your private keys. I think this advice is spot on. The truth is if there is a coin split there really isn’t anything any of us can really do. If the price goes way down as a result, that may be an early adopter buying opportunity you have been looking for. Or maybe that Ethereum you are holding will finally go to the moon. Who knows, hard to say. To be honest, I don’t really care either way. I am an opportunist, I take advantage of opportunities. I know cryptocurrencies are here to stay, and if you are like me, you diversified your holdings to hedge against which one will fail or fall out of favor. Could this kill bitcoin? Maybe, but I would place my bet that it will not. I believe much of this is brinkmanship and noise. Seems to me in the end, the biggest players, whom I would identify as the economic majority will come to a compromise and do whatever is possible to avoid a coin split. If you think you have a lot to lose in the case of a coin split, imagine a multi-million dollar chip company or exchange. My money is on cooler heads prevailing in this final stretch of proposal activations, which will lead to a grand compromise, which we already see happening. In any case, this will make the technology stronger as these hard changes always have in the crypto space.
- What is the difference between a soft fork and a hard fork? A quick answer is that a soft fork is a tightening of the protocol rules which nodes have to abide by if they are in the majority consensus. A hard fork is the opposite, it’s a loosening of said rules. A more technical explanation is here.
- What is a BIP? A BIP is short for Bitcoin improvement proposal. This concept of how to change Bitcoin in a decentralized way was thought up and set in motion by someone I have a great deal of respect for, Amir Taaki. Here is the wiki to learn more.
- What is UASF? UASF stands for user activated soft fork and has been used before, most recently to activate P2SH or pay to scrip hash. To find out more go here.