Sunday, July 16, 2017

The state of Bitcoin, summer 2017

After years of acrimonious blocksize debate, we are finally forking to bigger blocks on August 1st. Run Bitcoin ABC, which is a user activated hard fork (UAHF) to basically get what was promised by Bitcoin Unlimited, paving the way for up to 32-megabyte blocks (without segwit). However, the situation is a bigger mess than a split into two chains, with at least two other competing forks. There is Segwit2x, which will implement segwit as a soft fork on August 1st and then about three months later hardfork to a two-megabyte base blocksize, but then there is also a user activated soft fork (UASF, aka BIP148) which will only implement segwit. The UASF, being a soft fork of Core, can any time later wipe out the Core chain without segwit if it gets enough hash power, but it wouldn't surprise me if we get some kind of hard fork to preserve both of these as well, perhaps with a proof-of-work change (wouldn't it be lovely to be able to mine Bitcoin on CPUs and GPUs again? I doubt this chain will win over the economic majority though).

No wonder Bitcoin is going down. On the plus side, you will have coins on all forks if you already hodl bitcoin or buy now (before August 1st), except that is not so straightforward either due to the risk of replay attacks.

The Bitcoin community could absolutely not agree on a clean scaling solution, or even the need to scale at all, so instead it is tearing itself apart and splitting along fanatical ideological lines (with some corporate interests thrown in, which are also rather complicated, and it is not at all clear which side is best for decentralization and censorship-resistance though they all claim to be). Perhaps one of the chains will rise up and be great again, but I can't predict which. All I know is that it will be very exciting to see what happens in August and the next few months. I recommend running one node of Core, one with UASF, one Segwit2x and one Bitcoin ABC, unless you just want to pick the one best suited for your ideology or wait to see which one ends up being considered the real Bitcoin. I am rooting for ABC, or at least Segwit2x (which is admittedly more realistic, and I am afraid the 2x part might well not happen either), being sick and tired of the one-megabyte limit. I am somewhat philosophically opposed to segwit, but anything is better than one megabyte.

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