BREAKING: Bitcoin Scaling Consensus Reached. Commentary From Industry Leaders

Bitcoin scaling solution consensus has been reached among key industry players. SegWit and 2MB block size increase to be implemented.

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BREAKING: Bitcoin Scaling Consensus Reached. Commentary From Industry Leaders

Monday, Cointelegraph has reported that a number of leading players of the Blockchain industry have reached a consensus in regards to the Bitcoin scaling solution. This break in the scaling debate stalemate is a new, highly significant boost for the Bitcoin ecosystem.

According to sources, a number of Bitcoin businesses owners, including Barry Silbert (Digital Currency Group), Roger Ver (Bitcoin.com) and major mining players Jihan Wu (Bitmain) and Valery Vavilov (BitFury), have come to a general agreement at the currently ongoing Consensus conference in New York.

They have agreed to collectively enable the SegWit proposal for Bitcoin scaling, effective immediately. Additionally, their proposed solution includes a countdown to another hard fork, which will enable an increase of the block size limit to 2MB - as opposed to the current limit of 1MB.

This means that the problem of Bitcoin scaling, that has been unresolved for years, could soon become a thing of the past. This news comes quite on time, as the number of transactions being stuck in the backlog has reached record heights in recent days.

Until now, the community has been unable to come to a consensus on whether to enable Bitcoin scaling by activating SegWit, Bitcoin Unlimited, or some other technology.

Some steps towards reaching an agreement were made before, including a meeting in February 2016 in Hong Kong. However, it differed in terms, and the discussion then did not include the people who have agreed to the current consensus.

This time, the new solution has received enthusiastic approval from key members of the community. Regardless of the differences in their technical expertise and ideological outlook, industry members came to realise that a compromise between SegWit and a block size increase may be necessary for further progress.

Cointelegraph has reached out to several key leaders of the Bitcoin industry, and asked them to comment on this major event:

Sarah Maxwell, Blockchain.com:

"The consensus realized today reflects our collective desire to see the industry move forward. We are grateful to join these partners and are committed to helping Bitcoin reach its full potential to improve the lives of billions across the globe."

Valery Vavilov, CEO BitFury:

"We are glad that consensus has been finally reached. BitFury, along with vast majority, is fully supporting this historic decision. This is a very important moment for the ecosystem with this solution setting the new chapter for the Bitcoin technology."

Ben Peters of Bitso.com:

“I think it's an important step forward - it's taking Bitcoin over a major hurdle, and facilitating future scaling, while relieving what had become something of a short term crisis. I think the most significant thing about it is, however, that it was possible to reach a compromise within a community of very strongly-held and conflicting views. This bodes very well for Bitcoin's future growth and development.

Both elements of the agreement contribute to transaction capacity increase, which means greater efficiency with respect to on-chain transaction cost. Segwit in particular helps open the door to the second-tier scaling solutions that will make small/micro transactions viable, so that's really exciting.

Overall, I'm really proud that it was possible to navigate this issue. I have always felt that all parties were acting in good faith in this debate, and I think that this agreement proves that.”

David Schwartz, Chief Cryptographer at Ripple:

“We’ve been saying that governance is important for many years. That the idea that you could have a decentralized system that just magically governed itself just doesn’t seem to be realistic. There are going to be decisions that have to be made: somebody wants SegWit, somebody doesn’t want SegWit; somebody has to win, and somebody has to lose. And there has to be some process to make that decision, or you are going to have, essentially, a war over every decision.

And so I’m very pleased to hear that Bitcoin has reached some sort of agreement, and hopefully we’ll get some resolution to the block size problem. We’ve been focusing on governance from day 1. We have a system that’s governed by users, rather than miners, that we think aligns incentives better.”

Charlie Shrem:

"This is an important event because it represents the larger business and miner community who know what their users want."

Moe Levin, Director of European Business Development at BitPay:

"I think there’s a lot of disagreement and there aren’t many good forums for people to discuss this without feeling a lot of pressure. And that makes progress difficult. There are some solutions which look more promising than others, and I guess time is the only thing that will be able to tell which is best. There are protocols which support better solutions."

Konstantin Gladych, CEO at Changelly:

"I appreciate the consensus on the scaling solution. Bitcoin remains the stronghold of the crypto world. Changelly's users will be glad to hear the network will soon allow for faster transactions, as the demand increases drastically."

Charles Hoskinson, CEO & Founder at IOHK:

"Segregated Witness is actually kind of a clever idea. It's well-tested, it's been around for a few years, it solves a few real problems, like transaction malleability, and it gives us a little bit more runway. It also activates things like the Lightning Network, so I think it's overall very good for Bitcoin. I think the holdover was seeing if it worked in practice, and since Litecoin adopted it, it was kind of the last mile, and now there is a lot of support for it.

It's more of a gradual evolution of what features and functionality does Bitcoin need to adopt, to scale in a more general type of a system. So you think about overlay protocols like Lightning, or if you want to do things like microtransactions, and the system is never really going to be able to do that well with its current design. So being able to open that up is very encouraging. And it leaves the door open for future solutions, such as sidechains. Maybe in two-three years if that proves itself out, and we get better iterations, we'll see that work its way into the system as well."

Juan Llanos, Senior Advisor at One World Identity:

"There's two worlds here: there's one world that has a vested interest in seeing the capacity of the blocks grow, so that there's more transactionality, more users on the platform; rather than just holders of Bitcoin for a storage of value, as investment, as a new asset class. So if you're a transactional firm, if you're selling services that have to do with the transactionality of Bitcoin - obviously you want more throughput in the technology. You want to compete with other payment networks, you want to become a more viable alternative. And the argument against the growth of the block is that it compromises security, because the point of having a smaller block is that the system is more resilient and less vulnerable to some form of attack.

So, the more conservative thinkers, or the less commercially-focused people within the Bitcoin community want to take a more conservative approach, and they want Bitcoin to maintain the structure it has today, and they want to build the transactionality, and the speed, and the throughput on a higher-layer technology that they are building. You could also argue that they have a vested interest in the blocks being small so that their technologies and their solutions become successful. This is the way I see it - I think, it's all about commercial interest, or economics, or game theory.

It's happening, and it happens everywhere, so the question is 'what's gonna give?' and 'who is gonna compromise?' and 'how is this gonna resolve?' These are the question marks for everyone - we have no idea, and we've been in the industry for years. But it's a very interesting experiment in distributed and non-institutional governors, if you will. It's a distributed system, where people are working on technology, they have the building infrastructure, they're building services, and there's no one making decisions. It's a fascinating world, and it's part of the new revolution in distributed technology."

Brian Armstrong, CEO & Founder at Coinbase:

"I was excited to see a scaling solution come out for Bitcoin, combining 2 megabyte hard fork with SegWit. Bitcoin has been really struggling to scale for a while, and I'm looking forward to seeing a solution for that. It's great to see the industry come together and come to an agreement."

Dirk Siegel, Partner At Deloitte Germany, Lead at Blockchain Institute In ZGermany:

"Firstly, it's a debate that was obviously necessary, because the block size was being reached. It was very important to have that issue resolved. We were watching this very closely, because we see it as a litmus test for how the ecosystem works. Whether it has the ability to structure, to overcome such situations, and if it can reform from inside.

The fact that a consensus has been announced is a very important sign. A large number of important players seem to be on its side, as they have just announced. We believe that it will in all probability go ahead, and that would be a very good sign that the Bitcoin community has the capability to take these decisions. Nobody knows at this stage whether this will lead to some kind of fork - which could, of course, happen, if you don't have 100% on your side. It could be a hard fork, but maybe it clears itself out quite quickly, where the 10% or 5% that remain will join the larger community. Overall, we are very bullish and think that this is the right decision, and it will make Bitcoin a viable solution for the future."

The significance of solving the problem of Bitcoin scaling cannot be overstated, as it finally enables the cryptocurrency to be used by the vast mainstream audience - something, which was considered impossible before.

UPDATE: the official statement on the Bitcoin Scaling Agreement at Consensus 2017 has been released by the Digital Currency Group.