Bitcoin miners and companies meet in Beijing

April is coming to an end, and with the number of Bitcoins to be halved in the next three months, it’s time to decide on Bitcoin’s scalability. After a year of heated debate, a consensus has been reached to increase the maximum block size, deploy Segregated Witness (segwit), and support the Lightning Network. The only undecided question is timing. Will Segwit be ready before the halving occurs? If not, should the maximum block size be increased to provide a short period of relief?

Since the CSV softfork is currently running, the deployment of segregated witness will be delayed. The relevant meeting was held in Beijing on March 30. Eric Mu's Weibo revealed that the chief marketing officer of HaoBTC, representatives of Coinbase, 21inc, Blockchain.info, Okcoin, Antpool, F2pool, BTCC and KNC, and Gavin Andresen, chief scientist of the Bitcoin Foundation, all attended the meeting.

The exact details of what was discussed at the meeting have not been made public. However, Bitcoin scalability may have taken center stage. They may discuss Bitcoin’s current transaction capacity running at maximum capacity, as well as potential ways to safely upgrade the network before the halving occurs.

While there have been claims that money was involved, it is unlikely that anything sordid took place at a conference that included many very prominent Bitcoin users, Bitcoin businesses, and a majority of Bitcoin miners.

Samson Mow was not invited to the meeting. He was a newcomer to the BTCC having joined in 2015. Many have viewed Mow’s recent behavior as highly unethical and divisive, which may have been a factor in the rumors. However, representatives from the BTCC were present at the meeting.

Is SegWit delayed?

On February 20, 2016, Blockstream Chairman Adam Back, Matt Corallo, Luke Jr, Cory Fields, Peter Todd, Johnson Lau, and the majority of miners agreed in a secret meeting lasting 18 hours to have Segwit running in production when a hard-fork is released in Bitcoin Core. This will happen in April.

However, it looks like Segwit will be delayed. In a brief interview with Eric Lombrozo, one of the main developers of Segwit, we asked:

Currently, the soft-fork has been deployed in version 0.12.1, which cannot be activated before May 1. Segregated verification will be deployed in the subsequent version 0.12.2, which will take about two to three months. So segregated verification will not be able to start running until August, right?

“Yes, 0.12.1 contains the soft fork activation code for CSV (CheckSequenceVerify). Everything you said is correct. Finally, we are not sure whether the last soft fork (CheckLockTimeVerify) will activate with less time, so the activation time of Segregated Witness may also be earlier, but we are not sure. And the speed of miner acceptance of the product is not up to us.”

Lambrozo doesn’t think a delay will happen, but Peter Todd doesn’t seem to think so. In an email we asked him if he thought Segwit has been delayed, he responded:

“Yes, the rough timeline for reaching a consensus in Hong Kong was the end of April, and it now looks like there will indeed be a delay.”

In a blog post, Todd said that if Segwit is delayed, he would be willing to help the coin vote on a hard fork using a shorter timeline than two or three months to give “the industry some breathing room.”

Businesses are hurting

The halving will be around July 12. At that time, the supply of Bitcoin will be reduced to 12.5 every 10 minutes. The current demand seems to be relatively stable, so it is expected that the price of Bitcoin will increase in the future. However, according to Bitcoin Metcalf's law discovered in early 2013, there is a surprising correlation between its price and transaction volume.

A simple explanation for this significant correlation is: more Bitcoin users - more demand for Bitcoin - more users transacting - more demand for trading space. The correlation was somewhat different in 2015, probably due to the market hitting a trading ceiling at the time. However, it seems that price will catch up with trading volume sooner or later.

The lack of transaction capacity that miners may be able to produce before the halving could limit prices. This could be hugely disruptive to the mining industry, especially as difficulty has doubled in the past six months.

Meanwhile, businesses are facing a lot of complaints. Peter Smith, CEO of Blockchain.info, a popular wallet provider with more than 5 million customers, said in March that Blockchain.info had "set a new record for the number of complaint tickets it received" related to transaction times or fees. More complaints were received in the first week of March than in the entire month of February, which itself saw a 110% increase in complaints over January. "The number of tickets is going up every ten weeks," Smith said.

Will this massive discussion end amicably?

As a result, the mining industry may consider different options to keep their operations running efficiently in the short term. Thankfully, there is little disagreement other than timing, with nearly everyone supporting three options - a maximum block size increase, the deployment of Segregated Witness, and the use of lightning.

This is the first time that consensus has been reached in this atmosphere, and neither the maximum block size nor SegWit seem to be relevant to ordinary users. Therefore, it is hoped that influential Bitcoin users and developers will come together to support it before the halving, rather than advocating for it without real technical and political reasons, or questioning that there is no real consensus.

Therefore, an amicable end to this discussion is possible. However, it remains to be seen whether some influential Bitcoiners will put the interests of Bitcoin and the Bitcoin community above their personal ideals and interests.