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Bitcoin.com and ViaBTC Claim SegWit Support is Overblown

The two mining pools claim "censorship" and "marketing tricks" to blame for inflated support

The percentage of Bitcoin’s network hashrate signaling support for Bitcoin Unlimited has more than doubled from 16 percent to 35 percent over the past month. During this period, various Bitcoin businesses and organizations have become increasingly critical of Bitcoin Unlimited’s concept of Emergent Consensus.

Emergent Consensus is the idea that the hard-coded limit on the size of blocks on the Bitcoin network should be replaced with a configurable variable for miners and full nodes. Users and miners would need to coordinate with each other before changing their block size preferences if the goal is for everyone to remain on the same chain.

The general lack of support for Emergent Consensus among Bitcoin companies and organizations has led some to question why some mining pools, such as Bitcoin.com and ViaBTC, are running the Bitcoin Unlimited software client (or at least signaling support for it).

To gain a better understanding of various mining pools’ reasons for signaling support for Emergent Consensus, Bitcoin Magazine reached out to Bitcoin.com and ViaBTC, the latter of which recently raised 20 million CNY ($2.91 million) to launch a new, global bitcoin exchange.

Representatives from both pools claimed that support for Segregated Witness (SegWit), which is implemented in Bitcoin Core and not Bitcoin Unlimited, is overstated and that Bitcoin Unlimited is the best option for solving issues related to transaction backlogs and historically high U.S. dollar-denominated transaction fees.

Bitcoin.com and ViaBTC Claim Bitcoin Businesses Don’t ‘Support’ Segregated Witness

In the view of Bitcoin.com and ViaBTC, support for SegWit has been overstated, as there is a difference between technically implementing a proposal and actively supporting it.

“Segregated Witness is technically supported by wallets and exchanges,” Emil Oldenburg, the CTO at Bitcoin.com, told Bitcoin Magazine. “SegWit was implemented in these wallets at a time when it looked like SegWit had bigger support [in the community] than it actually had. Just because someone implemented SegWit into their wallet doesn't mean they support it and would vote for it.”

Coin Dance segregates support for SegWit into two separate categories: those who support it technically in their software and those who advocate for the adoption of the proposal on the network. Currently, SegWit is technically supported by 61 of the tracked companies and is advocated for by 68 of the tracked companies. There are seven companies listed as opposed to SegWit, two of which are bitcoin mining pools.

Of course, it should be noted that all companies tracked by Coin Dance are not equally relevant. For example the largest bitcoin exchanges and wallet providers have a greater impact on the discussion due to the large amount of economic activity that takes place on their full nodes.

No bitcoin exchange or wallet provider is listed as opposed to SegWit on Coin Dance. In fact, many of the most economically relevant Bitcoin companies, from Blockchain.info to Coinbase, BitGo to Xapo, have publicly advocated for the change.

“The wallets we talked to said they implemented SegWit in case it will activate, not because they love SegWit or want it activated,” Oldenburg continued. “This is a marketing trick from Bitcoin Core. Just because someone says they will use SegWit, doesn't mean they want it or politically support it.”

Representatives from Bitcoin.com did not name any specific companies as supporting evidence for the claim that they only implemented SegWit because it may eventually be activated on the network; however, as Bitcoin.com CEO Roger Ver commented to Bitcoin Magazine, “I’m sure there are lots of them that implemented SegWit because the censorship caused them to mistakenly assume that it was going to be adopted. Now some of them are falling victim to the sunk costs fallacy as well.”

Ver has routinely criticized the moderation policies of certain Bitcoin-related discussion forums, most notably the /r/Bitcoin subreddit. This is the perceived censorship Ver is blaming for the adoption of SegWit by various Bitcoin companies.

“The fact that Bitcoin businesses, exchanges, wallets are ‘ready’ for SegWit activation doesn’t mean they ‘support’ it,’” Haipo Yang, CEO of ViaBTC, said. “They are just preparing in advance for what is needed if it happens.”

Does Bitcoin Unlimited Have Any Support?

According to Oldenburg, developers who contribute to Bitcoin Core are trying to pitch a narrative that users don’t want Bitcoin Unlimited. Much like Ver, Oldenburg pointed to “extreme censorship” on the most popular discussion platforms as a reason it’s difficult to tell what users want.

Oldenburg also disputed the “narrative” from Bitcoin Core contributors that only those who run a full node are “real” Bitcoin users. “The truth is that most Bitcoin users are not Core users,” Oldenburg claimed. “The most popular wallet in the world is Blockchain.info. They are responsible for more bitcoin transactions than all other wallets combined.”

“Blockchain.info supports bigger blocks and wants Bitcoin to scale,” Oldenburg continued. “Breadwallet is the most popular wallet for iPhone users and they also support bigger blocks for Bitcoin and a block size increase.”

It should be noted that both Blockchain.info and Breadwallet have made no public comments in support of Bitcoin Unlimited’s Emergent Consensus proposal. On the contrary, Blockchain CEO Peter Smith tweeted “I don’t think [Bitcoin Unlimited] is ready for prime time,” back in January.

As mentioned previously, Smith has also publicly advocated for SegWit on behalf of Blockchain.info.

Representatives from Bitcoin.com and ViaBTC did not share examples of any companies that explicitly support Bitcoin Unlimited’s concept of Emergent Consensus (and not an increase in the block size limit more generally). According to Coin Dance, 27 companies advocate for the adoption of Emergent Consensus, eight of which are involved in bitcoin mining. Of those 27 companies, OKCoin is the only exchange or wallet provider.

Why Bitcoin.com and ViaBTC Are Running Bitcoin Unlimited

According to Oldenburg and Yang, Bitcoin Unlimited is a solution to the problem of a congested Bitcoin network, which users would like to see solved as soon as possible.

“What all these users want is an uncongested network with faster confirmations and lower fees,” Oldenburg said. “This can only be achieved by bigger blocks that currently is only supported by Bitcoin Unlimited and Bitcoin Classic.”

“SegWit is a solution for malleability, but not one for the most urgent block scaling issue,” Yang added. “We support Bitcoin Unlimited because it focuses on the most dire problem. And a well-planned hard fork can also resolve malleability issues in a simple and safe way.”

Oldenburg also claimed that most people at the meetups he attends across the world are supportive of the removal of Bitcoin’s one megabyte block size limit.

“At most meetups we attend, nine out of ten people want bigger blocks and want Bitcoin to scale properly,” Oldenburg said. “When we talk to exchanges we also hear that they are worried about the congestion and high fees. It's hurting their business and most exchanges now are busy integrating altcoins. If [there is] one team that [is] not listening to the users, it's the Core developers who have utterly refused to do anything about the block size limit for years.”

It should be pointed out that, as evidenced by this 3.7 megabyte block mined on Bitcoin’s testnet, SegWit would enable larger blocks on the Bitcoin network. “[SegWit] is not a block size increase for the type of transactions that everyone on the network is using today,” Ver said when asked about this point. “To the extent that it is a block size increase, it is nowhere near a big enough one.”

According to Oldenburg, Bitcoin Unlimited is gaining more support and more people are starting to understand it. However, recent public statements from Bitpay, BitGo, Colu, GreenAddress, Armory, BHB Network, economically-relevant Bitcoin nodes in Canada, and others indicate the opposite trend is true. According to Coin Dance, 47 of the companies they track are explicitly against Bitcoin Unlimited’s concept of Emergent Consensus.

One member of Bitcoin Unlimited, Rhett Creighton, has also left the project in the aftermath of the recent ASICBOOST controversy.

Note: In addition to ViaBTC and Bitcoin.com, Bitcoin Magazine also reached out to Antpool, Chandler Guo, and GBMiners via email. No responses were received from these additional three entities.

Kyle Torpey

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