Jeff Garzik and Charlie Lee say Bitcoin hard forks are not a trend

Will the Bitcoin network really split in two, and is this really unstoppable? As the block size dispute becomes increasingly heated, many people are confused. We are fortunate to understand the views of Jeff Garzik and Charlie Lee, two "veteran" developers, on this Bitcoin expansion dispute. They made detailed speeches on the following five aspects: what is the real dispute, the loss of uncensorable transactions, core options, and the shortcomings of segregated witness.

Jeff Garzik, a veteran Bitcoin developer. Image source: Golden Finance

Will the Bitcoin network really split in two, and is this really unstoppable?

As the block size debate heats up, many people are confused. We were fortunate to get the views of two "veteran" developers, Jeff Garzik and Charlie Lee, on this expansion dispute.

Laura Shin, the most insightful reporter of Forbes magazine. Image source: Golden Finance

The two have been paying attention to this expansion controversy for "a long time". In the "Unchained" podcast by Laura Shin, one of Forbes magazine's most insightful reporters, the two shared their insights on this incident.

Bitcoin Core developers want to maintain the current 1MB block size limit and have proposed a solution that would allow each block to contain more transactions - Segregated Witness (SegWit).

On the other hand, Bitcoin Unlimited (BU) is proposing to replace the original 1MB limit with a flexible limit. BU has gained support and has the ability to activate a hard fork and create a replica of Bitcoin.

Bitcoin Core is worried that BU will allow a few people to gain control of Bitcoin, and Bitcoin will lose its decentralized value.

Shin said: "It's just a perception, not necessarily a fact." She then introduced the guests participating in the show to the audience: Jeff Garzik, co-founder of Bloq (a blockchain solution provider) and developer of Bitcoin Core, and Charlie Lee, technical director of Coinbase and creator of Litecoin.

What is the real controversy?

Garzik said one of the biggest issues in the block size debate is how to update Bitcoin's consensus rules (consensus rules are what every participant in the network needs to follow).

“No. 1 How do we update Bitcoin in a way that doesn’t break Bitcoin?” he asked. “That’s why so many Bitcoin Core supporters have been focusing on security updates.”

Garzik said there is also a view that Segregated Witness will take Bitcoin to a unique economic path, and many people in the Bitcoin ecosystem are unwilling to take this path.

“Is this the path for Bitcoin Core, or is this the path for resistance?” Garzik asked, summarizing the core of the current dispute: “Are we going to increase the bucket size, and what happens when the size increases? That has implications for how high fees and transaction volume will grow in the future.”

Currently, the transaction fees for Bitcoin are rising day by day, and some companies are completely squeezed out of the market by such high prices. Some exchanges have begun to advise customers not to trade below $1 because it is too uneconomical.

Ethereum’s Choice: Centralization

There is a fear that miners are becoming the “Federal Reserve System” of Bitcoin, Garzik said. This fear exists in both SegWit and BU.

Garzik said that Segregated Witness needs more testing, and he specifically mentioned that the Litecoin network is testing the activation of Segregated Witness.

“The Litecoin network is providing that testing,” he said.

BU is still a young project and does not meet many of the criteria for a safe hard fork.

Segregated Witness increases block capacity a little bit, and this expansion is spontaneous. However, this solution cannot significantly reduce transaction fees.

Segregated Witness and the Lightning Network built on top of it are not yet viable as an alternative means of payment.

“As a result, Bitcoin is at a point where on-chain payments are being squeezed out by high fees, and proposed replacements are still years away.”

Charlie Lee, founder of Litecoin Image source: Golden Finance

Charlie Lee expressed support for Segregated Witness, but Segregated Witness is incompatible with BU or larger blocks.

He said that because Segregated Witness is more secure, it should be implemented now. The increase in block size will come immediately after activation.

Bitcoin is no longer as useful as it once was for storing value or making payments. He said: “We are unwilling to lose the decentralized value of Bitcoin.”

Losing uncensorable transactions?

Lee Qiwei said that the most unique feature of Bitcoin is the uncensorable nature of its transactions. In order to compete with other payment methods, this feature is slowly being lost.

He said that we don’t know how much Bitcoin can scale on-chain yet, which is why he hopes to see off-chain scaling. Instead of putting transactions on the blockchain, transactions are shared with payers and payees.

Li Qiwei said that people are ready for the update and the only hope is that it can be updated safely.

Core Options

Shin said that if BU gains a majority of the network’s hashrate and splits the blockchain, it would destroy the minority chain.

The “core option” for Bitcoin Core is to change the Bitcoin software so that it does not mine with existing equipment, thereby squeezing miners out of the ecosystem.

"Nobody wants to see this happen," Garzik said of the two core options.

Garzik said that Segregated Witness will bring immediate expansion in 2 to 4 weeks. This view is misleading. The Segregated Witness update has two steps. This is also the point of view of many people who oppose Segregated Witness.

Disadvantages of Segregated Witness

Garzik said: “We still haven’t solved the problem that people in the industry are facing today, and they want to wait until SegWit fully meets the expansion conditions or not. This has become the most optimistic forecast.” Transaction fees continue to rise, but expansion is slow to come.
"These lab projects have made us excited and encouraged, but these results will not lead to low-cost online payments in the next one to two years."

He doesn't think a contentious hard fork will happen. "Everyone in the room wants the same thing at the end of the day," Lee said. Garzik agreed with Lee. Once a hard fork occurs, neither Garzik nor Lee can predict which chain will be the real chain.
They compared the situation to the results of the Ethereum hard fork (Ethereum and Ethereum Classic).

Shin asked: Will the one that looks more decentralized be the winner? If so, what is the criterion for judging? Lee said that the size of the market will affect this judgment. "If the fork is more controversial, it will take some time to identify the real chain."
High transaction fees make people prefer to trade on more centralized platforms. Garzik said: “This is the centralization factor we are seeing now.”

"How do you make decisions in a centralized environment?" he said. When asked what people should do with their bitcoins, both said people should protect their bitcoins and wait for the problem to be solved.

“One of the great things about Bitcoin is that you’re in control of your money,” Garzik said. “It takes care of itself over time.”