Segregated Verification or Block Size Increase? The Winning and Losing Pattern Is Still Uncertain

In the Bitcoin community, many people believe that the activation of Segregated Witness (SegWit) should be a boon for Bitcoin.

So far, at least 20% of the Bitcoin network’s hashrate has voted in favor of SegWit, which was first proposed in December last year and is expected to significantly expand the capacity of the Bitcoin blockchain for the first time in Bitcoin’s nearly eight-year history.

In the technical community, Segregated Witness is seen as a major milestone. Greg Sanders of Blockstream described it as the “biggest update ever” to the bitcoin codebase.

“It touched almost every code base, and that doesn’t happen very often,” he said at this year’s Bitcoin Conference.

However, despite the high expectations placed on the technology, many Bitcoin companies have yet to embrace SegWit. Peter Smith, CEO of Blockchain.info, told CoinDesk:

“In general, SegWit is a great technology and we look forward to deploying it in our products if it can be activated. But at this point, it is still uncertain whether it can be activated. Putting aside the details, we firmly support all expansion measures that are beneficial to the development of the Bitcoin protocol, and we will generally support them as soon as possible.”

Smith’s comments point to a long-running scaling debate within the bitcoin community, with some entrepreneurs arguing that the bitcoin block size needs to be adjusted upwards to eventually accommodate more users.

This view conflicts with the direction of Bitcoin Core, and a stalemate has formed between the two sides, with some Bitcoin companies not planning to support the implementation of isolated verification.

For example, one bitcoin startup declined to comment on the SegWit issue, citing a senior executive who said the benefits of commenting on the issue were minimal.

“I’m guessing some people don’t want to be in between the Core roadmap and any alternative, positive or negative,” he said.

Political orientation

Jim Harper from the Cato Institute said:

“To me, this suggests that the bitcoin world is in dire need of more social capital to delve deeper into all dimensions of bitcoin, both as a technology and as a tool,” he told CoinDesk. “This discussion should not be dominated by subreddits, but by journals and conferences, with computer scientists, economists and other experts.”

These comments are supported by a wealth of observational evidence.

Currently, there are two major Reddit Bitcoin subreddits ( r/btc and r/bitcoin ), and much like MSNBC and Forbes News, both forums have their own biases. The r/bitcoin forum is more Bitcoin Core friendly, while r/btc is more supportive of alternative development teams.

Praise from Coinbase

Smaller, consumer-facing Bitcoin startups are more likely to voice opinions on protocol changes, especially when such protocol changes pave the way for other protocol upgrades (including the Lightning Network and sidechains).

Respondents falling into this category are more likely to accept the benefits that Segwit can bring.

For example, Sebastian Serrano, CEO of bitcoin payment processing firm BitPagos, said he hopes Segwit will reduce the time it takes to wire money to partner companies and lower the mining transaction fees the company pays.

Companies like Coinbase, whose top officials have been highly critical of the Core development team, have offered (faint) praise for SegWit.

In a statement, the company said:

“Coinbase is excited to see the Bitcoin network scale, and we believe Segwit is a step in the right direction.”

The comments are noteworthy given that Coinbase has been one of Bitcoin Core’s top critics.

Calmly adopt

Representatives from Bitcoin Core believe that Bitcoin businesses appear to want to quietly adopt SegWit without much fanfare.

In response to criticism, the team argued that the long deployments were necessary given the strain of testing and the burden on Core workflows.

In a statement, representatives of the team disagreed with CoinDesk’s findings, arguing that the bitcoin community is broadly looking forward to Segwit and the benefits it could bring.

The Bitcoin Core representative further noted that nearly 70 Bitcoin businesses have indicated they plan to upgrade to SegWit.

Bigger blocks

But comments from companies such as Blockchain.info point out that companies’ readiness to support SegWit does not amount to full endorsement.

In the statement, Smith said there is still a possibility that Segwit will not be activated.

Since the activation of isolated verification requires 95%的新区块within two weeks to vote in favor of this upgrade, whether it can be activated is still an unknown.

Currently, Bitcoin.com and ViaBTC, which together account for 9.3% of the total network computing power, have pledged to support Bitcoin Core’s alternative software, BU.

Of course, both pools are made up of independent miners, which means they can withdraw or increase hashrate as they wish, but for now, the two pools have effectively blocked the activation of SegWit, Smith noted.

Other respondents pointed out that Segwit is needed, as well as future scaling solutions (including a possible block size increase).

For example, Yuzo Kano, CEO of BitFlyer, noted that he was not sure whether Segwit would adequately solve the block size issue, saying that he was a supporter of larger blocks because he believed it would make Bitcoin more user-friendly.

He said:

“Soon, it may be necessary to increase the block size.”