BitPay CEO Stephen Pair: Bitcoin Unlimited Would Materially Degrade the Network
BitPay CEO Stephen Pair has been more vocal about his company’s stance on Bitcoin’s scaling debate over the past few weeks, and his most recent attempt to further clarify the Bitcoin payment processing giant’s view on the matter was on episode 325 of Let’s Talk Bitcoin!
During his discussion with co-hosts Adam B. Levine and Andreas Antonopoulos, Pair shared his thoughts on the potential of Bitcoin without any further protocol changes, the issues he sees with Bitcoin Unlimited, and user-activated soft forks.
“Our viewpoint on this issue is nuanced, and it changes,” said Pair when initially asked about the best way to scale Bitcoin to more users in the future.
While BitPay’s thoughts on scaling have evolved over time, the potential for a contentious hard fork by way of Bitcoin Unlimited and rising transaction fees on the network have turned this issue into their main focus.
Bitcoin Doesn’t Need Any Changes to Reshape the Global Payments System
Before getting into the details of possible future improvements to Bitcoin, Pair made it clear that he believes Bitcoin, as it is today, would be enough to completely reshape the global payments infrastructure.
“If Bitcoin did not change one bit — even kept the one-megabyte block size limit forever — we’ve got enough tools at our disposal that we can completely reshape the global payments system,” said Pair. “Sometimes we like to remind ourselves of that. We don’t have to change one bit about Bitcoin to make that happen.”
Bitcoin’s block size limit has been a major area of contention on the scalability debate. Some would like to see the limit increased via a hard fork, while others see the risks associated with such a move as too costly.
“That’s not to say we don’t want to see Bitcoin grow and evolve and become better; we absolutely do,” Pair later clarified.
BitPay Does Not Want a Contentious Hard Fork
During the conversation on Let’s Talk Bitcoin!, Pair also shared BitPay’s operational playbook in regard to an attempted contentious hard fork of the Bitcoin network. In such a situation, Pair claimed the cheapest thing for BitPay to do would be to shut down their services and wait until the dust settles after the fork.
A contentious hard fork has the potential to split the Bitcoin network into two separate digital currencies. Civic CEO and Gyft Co-Founder Vinny Lingham and others have argued that such a scenario would be disastrous for Bitcoin.
“To just say that due to factors beyond our control we’re going to shut everything down and it may be minutes, hours [or] even days before we can bring it back online — that’s awful,” explained Pair. “So we don’t like a contentious hard fork, primarily for that reason.”
Pair added that a non-contentious hard fork would be a different situation. In his view, a non-contentious hard fork “should allow a very smooth transition from one set of consensus rules to a new set of consensus rules.”
The Problem With Bitcoin Unlimited
According to Pair, one of the key areas where BitPay has changed its stance in terms of scaling Bitcoin has to do with the idea of entirely removing the block size limit. While in the past they believed this sort of system could have worked well, they now see the value in having a limit on the size of blocks on the network and allowing a fee market to develop.
Bitcoin blocks are where new transactions are stored on the blockchain. A new block is created by a bitcoin miner roughly every ten minutes. The block size limit of one megabyte limits the number of transactions that can fit in each block.
“We are very concerned about this concept of Emergent Consensus and Bitcoin Unlimited,” said Pair. “My sense is it’s not a good idea, and I would say it’s definitely not a good experiment to put on the Bitcoin blockchain.”
Bitcoin Unlimited’s concept of Emergent Consensus allows miners and users to signal their block size limit preference on the Bitcoin network. If activated, the implementation of Emergent Consensus would remove a hard cap on the size of blocks and have it set by participants on the network in real-time.
While Pair admitted that “emergent consensus” is involved when making changes to Bitcoin’s consensus rules, he does not believe this process should play out on the blockchain. “Once consensus is reached, you want to express that in very well-defined rules in the software about what is valid and what is not valid,” he said.
In Pair’s view, the problem with allowing people to come to consensus directly on the network rather than through out-of-band channels is that it would increase the incidence and severity of blockchain reorganizations that could be as much as eight blocks long. “That materially degrades the operation of the Bitcoin network,” he added.
“You start to introduce a whole lot of usability problems when people’s balances in their wallets go from showing one number to a different number as the chain is [reorganized],” Pair continued. “That is really degrading [to] the Bitcoin network, and we don’t think it’s a good idea.”
The Balance of Power in Bitcoin and User-Activated Soft Forks
One final area of discussion around Bitcoin scaling that took place during this episode of Let’s Talk Bitcoin! had to do with the balance of power between different entities on the network. “I think that the users ultimately have the final say on what they will use; it’s as simple as that,” said Pair when asked for his view on the matter. “The users of Bitcoin are going to determine the future of Bitcoin, not the miners [or] anybody else.”
Pair pointed out that users have the power to move to another digital currency, such as Litecoin, or a fork of Bitcoin if they feel as if what they’re using is not meeting their needs.
“I really like this idea of the user-activated soft fork followed by a miner activation,” added Pair.
In Pair’s view, the way to make changes to Bitcoin’s consensus rules is to build consensus among users and then allow users to express that consensus before miners begin signaling for changes. For this reason, Pair has become more interested in the concept of a user-activated soft fork rather than the traditional, miner-focused soft-forking mechanism outlined in BIP 9.
“The miners basically have a very simple economic decision to make, which is: Is it profitable for me to adopt this new set of consensus rules or not?” said Pair in reference to a user-activated soft fork. “And if it is profitable, then they’ll enforce it; if it’s not, then they won’t. To me, that’s the right way to go about building consensus.”