Miners are winning short term

Large mining groups are supporting both sides. Ultimately, mining is like running a money factory. Belief, feelings, and drama can have little impact on your goal to maximize profit. With the increased transaction fees and the (not necessarily related) high price of Bitcoin, miners are thoroughly benefiting from the current situation. One example is Bitmain’s Antpool, which mines empty blocks to create more profit at the cost of transaction throughput. An altruistic company would not mine empty blocks, but a money factory that seeks the utmost profit possible will take any edge. Both BU and Segwit would reduce fees, so why would a miner with pure profit motives support either?

Well, the short-term obvious choice would be to either support both or support the minority to further the stalemate, and reap the rewards. One can argue that the long-term potential of Bitcoin is harmed, and ultimately supporting progress will increase value and price. This would make transaction fees less important relative to the price gain. While this is a valid point, a large portion of miners are playing the short game.

ASIC Competition

The current ASIC chip size is 16nm. It appears engineers have stalled, and it has become difficult to reduce the chip size further. As you probably know, the smaller the chip size, the faster the processing power. With an apparent halt to the continuous release of faster mining, it appears that competitors will be able to reproduce at cost and volume the same hardware, which will increase competition and decentralization, as well as lower profits for large mining farms. This creates a desperation to generate as much profit as possible in the short-term, despite the cost to progress, because the eventual over-saturation of hardware will dwindle their hashing percent of the network.

The Losers

The users of Bitcoin are the losers. Higher fees, wait times, less new features, stalled deployment of competitive technology for Bitcoin. While these are inconveniences, we cannot forget how well price has performed. Throughout all of this, people holding and speculating have been happy. Possibly miners themselves want to help hold price up to even further increase profit.

So do we fork?

Well, I’d like to step back from Bitcoin and think about technology as a whole. Ultimately, if a large company with millions of users wanted to use Bitcoin for micro-transactions, which is a sought after use case, we’re not ready currently. I think it’s a valid use case, but any major brand name business with millions of users could add almost any coin, and that coin’s value would rise and could compete. You don’t need to fork Bitcoin to get millions of users for this type of application. If you know how to tap into those companies and user bases, it would be better to build a solution to cater to the needs and change multiple factors of Bitcoin to create a great solution specifically for that use case. I’m sure many such projects are in the works and being tested, and that’s fine. The issues beyond just bigger blocks would warrant a thorough redesign of the protocol, possibly to something like Proof-of-Stake, among many other options. This would potentially lead to better performance with confirmation times in seconds and better throughput. Proof-of-Stake or its variants makes sense to me for a network dominated by major holders, and/or large businesses because they want control, and they provide the user base. So, it reduces technical fights and centralizes governance. Better yet, you can make this new blockchain a sidechain and tap into the liquidity of Bitcoin, so you don’t have to leave Bitcoin behind. This is ultimately what I think will happen with the industry as they adapt their business models to their needs technologically.

So, can we get scale Bitcoin with Segwit?

The model Bitcoin Core Developers are following relies on the layered approach and off-chain scalability with drivechain, sidechains, and other two-way-peg orientations. Bitcoin itself remains the protocol, the base for everything. It has a simple function, send and receive money uncensored, and maintain accurate balances. Over relying on Bitcoin at the protocol level for all needs opens up a large number of edge cases and issues that threaten security and basic functionality. The idea here is to keep Bitcoin simple, it doesn’t need to do that much. It becomes similar to a “secure money API” at this point, and developers can rely on it to be stable and secure, but still create novel uses and inter-operable creations. One key thing to note is that these don’t threaten the Bitcoin protocol; they allow people to innovate, but you can opt-in to using that technology or not. Ultimately, it comes down to the innovations built around this “secure money API” to solve the bigger problems. It’s how technology has always been built, and I much prefer to have the money layer as secure and stable as possible and allow innovation, then risk the core properties of the Bitcoin protocol to solve all issues.

The Loss of Innovators

Besides market cap, we’re losing brain capital. People are seeing Bitcoin as stuck and going off elsewhere to develop. We need to remember that making Bitcoin extensible and welcoming innovation will breathe new life into the ecosystem as more becomes possible. These fights unnecessarily create blockades that turn away the new developer. One can say the health of a technology is how many people are building upon it, and I think that’s true. So, the biggest thing that worries me is the loss of creative minds due to these quarrels.

Outcome

I wouldn’t be afraid, upset, or overly worried at the moment. This was an eventual problem that would arise. Despite the actors, I believe it would have come to a head as technology, business, and social factors clash. Businesses, developers, and bright minds gravitate to the version of Bitcoin that has the best development community, and continue to support innovation and new ways of interacting with Bitcoin. Security and stability will always be first and foremost. I believe there’s a clear winner on this path, but it might take awhile to play out. Bitcoin cannot do and be everything, yet, so it’s fine if a business seeks other blockchain solutions that fit their specific needs. In the mean time, don’t get sucked into every argument and article. Think of something creative you can do, take some time to learn more, or take a walk. This whole thing has been a gigantic time sink for many cryptofiends, and it’s sad to see so how salty Bitcoin can get.