With the continuing issue of scaling Bitcoin’s transaction capacity, the Digital Currency Group decided to step in and announced an agreement on May 23 between a group of Bitcoin representatives to run Segregated Witness (SegWit) operated by the development team of Bitcoin Core.

A crucial part of the agreement is the proposed 2 MB hard fork to be implemented after six months. The implementation of the hard fork is for the expansion of the current block size to 2 MB in order to accommodate the increasing user base and the daily transaction volume. This was the outcome of the agreement between the Bitcoin industry and the mining corporations last February 21 in Hong Kong.

Unfortunately, a conflict has emerged between two parties – the Bitcoin Scaling Agreement companies (57 companies) and developers. Mining communities, particularly the Chinese operated companies, believe that the Bitcoin Core development team focuses all its time and resources on the operation of SegWit, stating that the Hong Kong agreement was ignored.

In order to avoid the conflict, the DCG has decided to give up SegWit activation in favor of the 2 MB hard fork implementation that focuses on the expansion of the capacity of the Bitcoin Blockchain. The recent agreement was in accordance with the Hong Kong agreement which only allows the operation of the consensus system congruent to Bitcoin Core. Basically, the 2017 Bitcoin Scaling Agreement embodies the mining community’s appeal of increasing the on-chain capacity and, in return, they will support Bitcoin Core’s developmental solution which includes SegWit.

Safe solutions for the community

The consensus will further support and develop the Bitcoin network with the use of technical mechanisms and incorporate communication tools. The ultimate goal is to create and establish safe solutions to empower Bitcoin capacity.

On the other hand, with the effort of convincing the mining community to support SegWit, several problems arose as a result. Despite the higher and optimal fees, Bitcoin suffered from serious Blockchain congestion affecting the efficiency of transactions.

75 percent optimization is anticipated in running SegWit but it would not be enough to counter and resolve the various scaling issue in Bitcoin. Both the Bitcoin Core development team and the mining industry still have to plan for the further scaling of Bitcoin.

Options: UASF vs MASF

With the larger range of features and block sizes, Bitcoin miners are still undecided on whether to accept SegWit. Several considerations are still along the way. Between 25 to 40 percent of the mining community has shown an interest in change. Furthermore, the majority of businesses and a set of developers are open to a code change.

Due to continuing Bitcoin problems, an alternative way has been proposed for SegWit adoption. Though there are several risks, a User Activated Soft Fork (UASF) was created to take over the decision making from the mining industry, as well as a Miner Activated Soft Fork (MASF).

In the case of a MASF, it would be an easy way to start and implement changes prior to any upgrades from the larger part of the economy. For instance, whenever a major portion of the mining community makes an upgrade, the MASF can give the signaling process.

Consequently, this allows nodes to implement new rules in the system. Lastly, economic nodes can come up with the final agreement because they can interact with economy activity and certify the chain. Surprisingly, even the MASF is implemented by the nodes as it is activated.

While there have been many major proposals on how to solve the Bitcoin scaling problem, the community is yet to see which will bring the most sustainable and acceptable solution for all parties involved.