Block expansion is urgent, and the fate of Bitcoin lies in the hands of Chinese miners

There is a problem that has been plaguing the Bitcoin community since 2009, and has even hindered the development of Bitcoin to a certain extent. In the past five years, the transaction volume of Bitcoin has increased by 4475%. However, due to the limited block capacity of the Bitcoin network, the time required for payment verification and transaction processing is getting longer and longer.

Theoretically, the transaction speed of the Bitcoin network can be increased by simply modifying the code. But the problem is that any change in the Bitcoin system will trigger its "elimination system." However, miners, developers, libertarians and entrepreneurs in the Bitcoin system have reached a consensus. This month, Bitcoin enthusiasts will hold a meeting in Silicon Valley to discuss the block capacity issue. In the global Bitcoin market, China's mining pools account for 70% of the computing power and 90% of the transaction volume, so China's position in this meeting cannot be underestimated.

Bitmain operates the world's second largest mining pool AntPool and is also a large mining machine manufacturer. Bitmain CEO Wu Jihan said: This conference can be said to be a global cooperation. Block expansion involves a lot of money and emotions. It is normal for people to disagree on the future development of Bitcoin.

Regarding the issue of block expansion, perhaps Chinese miners have the most convincing words. With their geographical advantages (low electricity and labor costs and a large number of chip factories), Chinese miners have defeated all global competitors and occupy a pivotal position in the Bitcoin mining industry. From the end of 2013 to the beginning of 2015, the price of Bitcoin fell from $1,000 to below $200 in an instant, and a large number of mining companies in Western countries went bankrupt. However, with the support of low mining costs, Chinese miners have always stood firm.

In addition, since last year, the renminbi has continued to depreciate, and Bitcoin's safe-haven characteristics have attracted a large number of Chinese investors.

Mining power

The popularity of Bitcoin in China has also caused some people to worry. The Chinese government is well known for restricting capital flows and strictly regulating the network, so they worry that the Chinese government will interfere with the operation of the Bitcoin system. Libertarians are particularly worried because they are attracted by the decentralized nature of cryptocurrencies and do not want human intervention. Unlike traditional currency transactions, the Bitcoin network is not regulated by institutions such as central banks. There is also a fixed number of 21 million.

Bitcoin Core developer Peter Todd believes that the Chinese mining pools have too high a share of the hashrate and are doing more harm than good. He said that if the Chinese government wanted to, they could easily control these mining platforms.

China’s central bank has indeed said that Bitcoin does not qualify as a currency and does not intend to use it in the domestic financial system. But government policymakers have never publicly expressed their intention to intervene in the development of Bitcoin.

Therefore, the only ones who have an impact on the Bitcoin mining industry are Chinese miners, because any changes to the Bitcoin system require a vote by miners.

Block capacity

Wang Chun, co-founder of F2Pool, said: Miners hold the voting rights.

The community is divided into two camps regarding the issue of Bitcoin block expansion. One is Bitcoin Classic, who believes that the block capacity should be expanded as soon as possible to shorten transaction time. The other is Bitcoin Core, who believes that block expansion should not be rushed and requires a lot of security verification. In addition, they believe that block expansion will bring too much burden to miners, because once the block capacity is expanded, the number of miners will be insufficient, and they will face more cumbersome calculations.

Core supporters believe that it should be done slowly and that a cap should be set for block capacity. They believe that community consensus must be reached before expansion because they worry that disagreements could lead to a sharp drop in the price of Bitcoin, which has risen 56% this year.

The fun is about to begin

In February this year, China's large mining companies and Core developers reached a consensus at a roundtable meeting in Hong Kong. The block expansion code will be officially released this month. If a community consensus is reached, the code will officially take effect in July next year.

Wu Gang, CEO of HaoBTC, which accounts for 5% of the total network computing power, said: If this consensus is successfully achieved, it will become the cornerstone of future cooperation in the community.

If block expansion cannot be achieved, the transaction processing time may take hours or even days in the future. In this way, it is meaningless for users to use digital currency. It is better to use third-party payment platforms such as PayPal, which have faster transaction speeds. Currently, the Bitcoin network can process 7 transactions per second, while Visa can process 24,000 transactions per second.

The surge in transaction processing times is likely to give naysayers an opening, such as JPMorgan Chase CEO Jamie Dimon, who believes that digital currencies without central oversight cannot survive in today's foreign exchange markets.

Regardless, Wu remains positive. He plans to attend a Bitcoin conference in California this month. He said Chinese miners are ready to play an important role in this international community. We can't stand still forever. There are so many talented people in the Bitcoin community, and someone will make the right decision.