With the current one-megabyte-per-block limit, the Bitcoin network can process only a few transactions per second, which could strongly limit the ability of the network to handle high transaction volumes if the adoption of bitcoin payments grows.
Lead Bitcoin developer Gavin Andresen is persuaded that the best solution to the problem is to increase the maximum block size, and has developed code for a proposed Bitcoin hard fork that would allow any block with a timestamp on or after March 1, 2016 to be up to 20 megabytes. “I believe this is the simplest possible set of changes that will work,” Andresen says.
In a post titled “Why increasing the max block size is urgent,” he argues that if the proposed solution is not urgently implemented the Bitcoin network will become oversaturated, and people might just stop using bitcoin because transaction confirmation would become increasingly unreliable. “Limit the number of transactions that can happen on the Bitcoin blockchain, and instead of paying higher fees people will perform their transactions somewhere else,” Andresen says in another post.
The MIT Technology Review just weighed in on the debate with a review, titled “Leaderless Bitcoin Struggles to Make Its Most Crucial Decision,” of the pros and cons of the proposed hard fork. Author Mike Orcutt notes that not everyone in the community of users of the Bitcoin software – which includes miners, developers, and a growing number of startups – agrees that Andresen’s proposal is the best path forward.
For example, some critics argue that Andresen’s solution could lead to a dangerous “centralization” within the mining community, which would favor bigger, richer mining operations. A counter-argument is that it’s already too late: Bitcoin mining is already centralized and dominated by large, professional mining operations, and totally out of reach of individual miners and grassroots pools. This debate reflects the tension between two increasingly conflicting aspects of Bitcoin – the DIY, grassroots spirit of the early adopters, and the mainstream need for much more streamlined and efficient operations.
Other critics, including Bitcoin core developer Pieter Wuille, argue that right now there are just too many unknowns about the consequences of increasing the block size to 20 megabytes. Wuille hints at “things we don’t even know of that could break,” and says that a smaller increase at first would be less risky.
As for all important choices in technology development, there is no clear-cut ideal solution that fits all needs. On the contrary, different requirements must be prioritized and an optimal trade-off must be found. An interesting issue is who gets to make the decision. Princeton computer science professor Arvind Narayanan observes that the core developers are the only ones with the power to change the code, and therefore they will probably make the decision themselves if they can reach consensus – which is not the case at the moment, since at least one of them is against the proposed hard fork.
The global issue is governance and leadership in Bitcoin technical development, which has been mostly “leaderless” as the title of the MIT Technology Reviewarticle emphasizes, with the Bitcoin Foundation unable to provide effective governance. Recently, Andresen and other Bitcoin Core developers joined the MIT Digital Currency Initiative, which is now beginning to assume leadership in the Bitcoin development space.
Brian Forde, director of the MIT Digital Currency Initiative, is offering to co-host an open forum for discussions aimed arriving at a rough consensus, The Wall Street Journal reports. “How this decision is made will be a good example of how the open and active community of developers, entrepreneurs, miners, researchers and users will continue to collaborate on major changes to Bitcoin core,” he said.
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Giulio Prisco is a writer specialized in science, technology and business. He is persuaded that Bitcoin and its underlying technology are about to bring disruptive positive changes to finance, business, and society.