A full release of Bitcoin XT became available on Saturday, heaping fuel on the fire spreading throughout the community.
The Bitcoin subreddit went so far as to ban XT-related posts, resulting in allegations that a small cabal had taken control of the community and was suppressing discussion and dissent.
The cause of all the furor is a difference of opinion over how to ensure that the Bitcoin system’s capacity keeps up with its rapid growth.
On one side are Bitcoin developers Mike Hearn, Gavin Andresen and others who support the just-released Bitcoin XT fork of the open source Bitcoin Core. Bitcoin XT increases the block size from its current 1 MB to 8 MB, allowing more transactions to be processed.
On the other side are Joseph Poon, Thaddeus Dryia and other supporters of Lightning, a proposed decentralized system consisting of a network of micropayment channels whose transfer of value would occur off-blockchain.
“This whole episode is revealing that a lot of people in the community really, really want — and believe in — some kind of benevolent dictatorship of experts who always agree with each other,” Hearn told LinuxInsider, “and up until recently, they’ve been told that this is what they have.”
The debate over block size “is revealing the truth,” he said. “Even people who know a lot about a topic can disagree.”
The Bitcoin XT Vision
Bitcoin XT is a patch on Bitcoin Core to upgrade the peer-to-peer protocol the system uses. It incorporates changes that either didn’t make it into Core or are not likely to.
It supports larger blocks, relays double spends, supports querying the unspent transaction output when given an outpoint, and makes DNS seed changes.
XT uses the same data directories as Core, so users can switch between them to redownload the block chain.
Bitcoin XT downloads are code-signed and are built reproducibly using gitian.
Mining with Bitcoin XT will produce blocks with a new version number, which has given rise to concern. When such blocks constitute 75 percent of the total, coins newly mined with Bitcoin Core may not be accepted at major exchanges or merchants.
Anyone whose system has not been upgraded by that time will have two weeks to get on board.
This has raised fears that people who hold previously minted Bitcoins will be left in the lurch, but “some enterprising person will just build an exchange where you can exchange new bitcoins for old,” suggested Mike Jude, a research manager at Frost & Sullivan.
Lightning’s Still Bottled
Lightning will use hashed timelock contracts between users to solve Bitcoin’s scalability issue.
If Bitcoin were to be used universally, it would have to exceed Visa’s transaction rate of 45,000 transactions per second during a holiday period.
That would require conducting Bitcoin transactions off the blockchain, which is the premise behind “Lightning.”
More Trouble on the Way?
Both options at the center of the controversy are problematic, observed Rob Enderle, principal analyst at the Enderle Group.
“Lightning could exchange a group of known problems for a set of as yet unknown ones,” he told LinuxInsider, while Bitcoin XT “could kill the currency by excessively forking it.”
Efforts like Bitcoin “need strong leadership coupled with a strong, consistent vision,” Enderle pointed out. “Bitcoin appears to lack both at the moment, and that’s threatening its survival.”
Much Ado About Nothing?
“I absolutely love the fundamental premise of Bitcoin, which is you’re trusting people to be dishonest, but by using validation among people who don’t trust each other, you can essentially validate the system,” Frost’s Jude told LinuxInsider.
Opponents of Bitcoin XT say it doesn’t adhere to Bitcoin’s original principles, but “it’s probably OK because Bitcoin code is based on open source,” Jude pointed out.
“If people can’t get around the campfire and sing ‘Kumbaya,’ they’ll just trot off and create their own brand of Bitcoin,” Jude said. “Having different flavors of Bitcoin isn’t a problem, because I can imagine a clearinghouse where you can bring bitcoins with different signatures.”
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