Wu Jihan: All Antpool hashrate will be switched to Bitcoin Unlimited

You may only see the recent surge in Bitcoin prices, but you may not know that the infrastructure of the world's most popular virtual currency is on the verge of danger.

As speculators continue to drive the digital currency's value to an all-time high against the dollar, the system that verifies bitcoin transactions, known as the bitcoin blockchain, is more congested than at any time in its eight-year history. The number of transactions waiting to be verified is five times higher than a year ago, and users are being forced to pay more fees to speed up confirmations, making bitcoin more expensive to use in some cases than Visa or PayPal.

Now, after more than two years of infighting, some of the most influential members of the global bitcoin community have abandoned consensus on how to resolve the issue. Instead, they have begun supporting a controversial solution called Bitcoin Unlimited. If the gamble pays off, it could ease congestion and help bring the community back together. If it fails, the digital currency could face a hard fork that would split bitcoin into two currencies.

"We will switch our entire mining pool to Bitcoin Unlimited," said Jihan Wu, founder of Bitmain, the world's largest Bitcoin mining company, in an interview with foreign media on March 10. His Ant Pool accounts for nearly 15% of the computing power of the entire network and has a very large influence in the community. "We don't know what will happen with this hard fork. We won't know until we get there."

Roger Ver, a Wu supporter and an early Bitcoin evangelist known as Bitcoin Jesus for his massive Bitcoin wealth, opened another Bitcoin Unlimited mining pool to the public last week. Relying on his high profile in the community and aggressive pricing strategy, Ver said he has attracted 3 percent of the world's miners and convinced them to support Bitcoin Unlimited.

“We need 60 or 70 percent of miners to join Bitcoin Unlimited,” Ver told reporters on March 9. “With the rest of the world, I think we’re close to halfway there.”

Bitcoin Unlimited is essentially a software upgrade for the Bitcoin blockchain. A few years ago, an early Bitcoin developer (Satoshi Nakamoto) placed a temporary limit on the size of its blocks. While the limit slowed down the network's processing speed, it was seen as a necessary safety measure to prevent potential attackers from overloading the entire Bitcoin network. Now, Unlimited's supporters say the Bitcoin blockchain is powerful enough that it doesn't need any limits now.

While most agree that the Bitcoin blockchain has become more powerful, critics such as Peter Todd (a core code contributor to Bitcoin Core) believe that removing the block size cap is a dangerous move that will make Bitcoin vulnerable to control by governments and global banks. He said that without the block size limit, large institutions will use their resources to marginalize the influence of small miners and effectively control Bitcoin and its blockchain itself.

“Bitcoin Unlimited is hopeless,” Todd said in a March 11 interview with the media. “Large mining companies have every reason to push for larger blocks, which can drive their competitors out of business.”

Todd's camp believes that a better way to ease congestion on the bitcoin blockchain is to make it more efficient. Last fall, the core development team released their own solution called Segregated Witness (Segwit), which uses a different method to verify transactions. Todd said that Segregated Witness has been delayed due to resistance from Unlimited supporters.

Ver told reporters that there is currently a lack of evidence that SegWit can solve practical problems. He said:

“It’s like you haven’t had a drop of water in a day and a half and you need a haircut. Do you go drink some water or go to the barbershop? Quarantine witnesses love going to the barbershop.”

Although the rift over Bitcoin’s future has lasted for two years, Todd’s camp (core) has prevailed most of the time and has the support of the majority of miners.

But Wu and Ver’s explicit support for Unlimited last week was notable, and the question now is whether other big miners will follow suit. Ver said he plans to step up lobbying, especially with miners in China.

If the Unlimited camp attracts the support of a majority of miners, Ver said the next step would be to choose a date to upgrade the bitcoin blockchain. If Todd and other bitcoin members decide not to join the new software and continue to maintain their existing system, it would effectively split bitcoin.

As for what will happen after that, we don’t know yet, but there is already a precedent in Ethereum. Last year, due to ideological differences, the other side of the Ethereum community supported another version of Ethereum (ETC), while many developers including the founder chose the split new blockchain (ETH). Currently, the two versions of Ethereum have their own prices.

Ver said that despite the risk of a split, it is worth the risk because doing nothing will only make the situation worse for the Bitcoin blockchain, saying:

“If Bitcoin is more expensive and slower than the traditional financial system, people won’t use it.”