Segregated Witness vs. BU supporters: who is better?

Over the past month, many Bitcoin exchanges, startups, and experts have been watching the debate between supporters of Segregated Witness (SegWit) and Bitcoin Unlimited (BU).

The main argument of SegWit supporters is that nearly 60% of Bitcoin network nodes are supporting SegWit activation. According to Bitnodes data from 21 Inc., nearly 56% of Bitcoin nodes are supporting Bitcoin Core 0.13.0 and two other minor updates to Bitcoin Core (including support for SegWit on the test network).

What exactly are they arguing about?

In contrast, BU supporters and developers, including well-known angel investor and Bitcoin.com CEO Roger Ver, claimed that more and more Bitcoin miners are beginning to support BU. Ver also shared a "Pool Proposal Support" chart provided by Coin Dance, which shows that 17.3% of miners support BU while the other 16.67% support the activation of SegWit.

BTCC COO Samson Mow and Atlanta Digital Currency Fund (DCF) Bitcoin investor Alistair Milne expressed their support for SegWit, arguing that SegWit’s transaction scalability solution opens the door to the Lightning Network, which will ultimately benefit the long-term development of Bitcoin.

Milne also highlighted the majority of Bitcoin nodes’ support for SegWit, asking Bitcoin miners to start listening to users.

A “betrayal” of the mining community?

In response, HaoBTC CEO Wu Gang expressed his firm opposition to SegWit, and believed that the segregated witness being developed by Bitcoin Core is not the 2MB block size agreed upon at the previous Hong Kong Consensus Conference, which is a "betrayal" of the mining community.

Although Good Bitcoin later released a statement expressing their neutrality towards BU and SegWit, the exchange reiterated their intention to adhere to the expansion consensus reached at the Hong Kong Roundtable.

Opportunity for a two-tier solution?

In the middle of last month, Bitcoin security expert Andreas Antonopoulos responded to Tuur Demeester's article "Bitcoin: Digital Cash or Mathematical Gold? Both" through a blog. Antonopoulos said in the blog that organizations or individuals who are opposing the Lightning Network are actually promoting off-chain trusted third-party custody or centralized platforms based on trust.

Antonopoulos later admitted that he supports SegWit, but not because of the scaling solution it provides, but because SegWit creates opportunities for the arrival of two-layer solutions, such as the Lightning Network or Tumblebit.

Antonopoulos said:

“I support SegWit not because of its scalability, but because it provides solutions to many problems facing Bitcoin.”

Efficient capacity expansion solution

Bitcoin developers such as Lightning Network co-author Thaddeus Dryja firmly believe that SegWit is an efficient scaling solution, which actually increases the Bitcoin block size to at least 2.1MB. On the test network, Dryja found a 3.7MB block, which is 3.7 times larger than the current block.

Dryja said:

“I have a script that generates 3.7MB blocks on a testnet. This 3.7MB block is not a composite of a regular 800KB block with txids and output scripts and a 2.9MB witness block with a bunch of signatures. This is a single block that looks the same as the original 1MB block, but is 3.7MB.”

Necessary conditions for the long-term development of Bitcoin

Although BU supporters, including Roger Ver and Stash Crypto architect Justus Ranvier, believe that eliminating transaction malleability and introducing a two-layer solution are necessary for the long-term development of Bitcoin, they do not think SegWit is the best solution.

Ver told Cointelegraph:

“I think eliminating transaction malleability is a good thing for Bitcoin. The current SegWit soft fork is just one of many ways to eliminate transaction malleability, and there are many other proposals that can achieve the same effect as SegWit, or even better.

“BU wasn’t even an option”

In response to Ver’s preference for other solutions, Blockstream’s Alex Bergeron said that other solutions, such as Tom Zander’s “Flexible Transactions” are not viable alternatives because they are not backwards compatible, have received little peer review, and are not technically sound.

BTCC COO Liao Yongquan has a similar view:

“Bitcoin Core contributors, the entire technical community, wallet developers, many mining pools and large exchanges believe that the SegWit soft fork is the way to eliminate transaction malleability and quickly and safely increase the block size. The “flexible transactions” from BU are not even an option, the concept has been rejected by the technical community, and more importantly, there is no working code for it - it is vaporware.

Lack of peer review is also an issue for BU, as a recent bug in the BU software resulted in a block larger than 1MB. This lack of review ultimately led to BU miners losing 13 BTC.

SegWit — The best alternative at the moment

At this stage of Bitcoin development, it is of utmost importance that the Bitcoin development community, users, companies, and mining communities push for the activation of a secure alternative. Considering the current lack of peer-reviewed and deployable software for BU, SegWit seems to be the best solution at the moment.

Industry leaders and large Bitcoin companies such as Coinbase and Blockchain.info have expressed support for SegWit. According to a recent report by Babbitt, Blockchin.info has announced that it has moved from "planning support" to "ready to support" SegWit.