Disagreement among Bitcoin believers threatens Bitcoin's future

Scaling issues split the community in two

Despite multiple concerted efforts, the bitcoin community remains deeply divided over a single line of code, and time is running out to avert an existential crisis.

For almost a year now, the bitcoin community has been divided over disagreements over scaling. The debate has moved from a technical level to a political one, with no sign of abating, with businesses and miners split into two camps, each with their own programmers.

“I think it’s like a religious sect,” said BTCC President Li Qiyuan. Both sects have names, core and classic. Core is the more conservative group, mainly miners, who want to move slowly or not at all. Classic is a group of people who are more business-focused and want a realistic, workable solution now.

It sounds incredible that a small community could have such a big civil war. But considering that there is $6.4 billion worth of Bitcoin and more than $1 billion in venture capital. Many people have even devoted their hearts and souls to Bitcoin. If this line of code is not resolved, those investments may all be wasted.

Bitcoin, which has been running since 2009, can be considered an extremely complex system, designed to be completely independent of any centralized management agency. In order to ensure that no one is at the helm, it has a built-in incentive mechanism: miners contribute computing power to a decentralized network to complete the confirmation of transactions and package transactions into blocks. For such services, they receive a reward: 25 coins every 10 minutes, whoever processes it gets it. Once processed, these blocks are bound to the public, unalterable ledger blockchain.

As the network continues to grow, problems arise. Bitcoin founder Satoshi Nakamoto set a block limit of 1MB. Now that the blocks are almost full, some transactions are forced to wait in line for a long time.

Solving this problem is more complicated than it sounds. Technically, you can just increase the limit. But doing so completely changes the profit model of miners, and today's miners have evolved from early desktop mining to enterprise-level server rooms. Large blocks make large mines more profitable, and small mines have a lower chance of mining blocks. This means that there will be fewer miners, and the concentration of computing power in the hands of a few people means that these few people control the entire network. For a movement built on the principle of decentralization, this is unacceptable. But not expanding will make transactions less reliable and unattractive to users, which will affect relevant practitioners in the entire ecosystem.

This led to a complete stalemate, and the conflict has become more intractable for a month. The whole thing shows how difficult it is to build an open, decentralized network that is not controlled by anyone, and it also provides a living example for other companies trying to do blockchain technology.

There have been sporadic reports of transaction delays. A large number of blocks have filled to the 1MB limit. Despite user complaints, the network has not completely collapsed. The price of Bitcoin has not been affected and remains above $400.

The Nakamoto Roundtable held in Florida at the end of February brought together most of the industry's important players to try to reach a consensus. The meeting ended in vain, and the two sides became more divided. After the meeting, representatives of several large companies, such as Brian Armstrong, president of Coinbase, Peter Smith, president of blockchain.info, and Gavin Andresen, the chief developer, publicly expressed their dissatisfaction with the meeting.

Armstrong said that the developers of the Bitcoin Core software believe that they are the centralized planners of the network and the protectors of the people. They can watch Bitcoin fail and still maintain their principles.

One participant, who asked not to be named, felt that the chances of reaching an agreement had further diminished after the failure of peace talks at this and previous meetings. "I think at this point, there is no room for negotiation," he said.

The debate will further face a new shock in July: the halving of coin production every four years may cause the complex system of Bitcoin to face more crises. In order to ensure a limited total amount to resist inflation, mining output is halved every four years, and each block may be reduced from 25 coins to 12.5 coins by the end of June.

Even without the block cap dispute, the halving will impact the ecosystem, making mining unprofitable for a while. This is to be expected, and supply and demand will change accordingly. What is worrying is that if the block cap is not increased by then, the slowdown in block production due to miners shutting down will further worsen the congestion of the network.

This is of course the worst case scenario, and no one knows what will happen .