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Update June 2017: The basic concept behind Lerner’s SegWit2MB has evolved into “SegWit2x” and an agreement reached by many important industry participants at Consensus 2017 in New York in May.   All the arguments for, and my endorsement of, SegWit2MB apply equally to SegWit2x. I am hopeful SegWit2x finally breaks the impasse that has afflicted Bitcoin for 2+ years.

http://www.coindesk.com/bitcoins-new-scaling-agreement-reaction/

http://www.coindesk.com/bitcoin-miners-unite-behind-scaling-proposal-segwit2x/

https://medium.com/@jimmysong/segwit2x-what-you-need-to-know-b747e6326266

*****

On March 31, Sergio Lerner and the RootStock team proposed “SegWit2MB” to the Bitcoin Core mailing list.

The basics of the proposal…

  • 95% miner support required for consensus
  • Upon consensus:
    • SegWit is immediately activated
    • 2MB hardfork countdown begins (to occur Dec 14, 2017).

SegWit is Bitcoin Core’s version (soft fork). The 2MB hardfork aspect is BIP 102, as coded by Jeff Garzik.

Stated plainly, SegWit2MB is a combination of SegWit and a hard fork to a 2MB base block size cap. The two are tied together such that 95% miner support triggers both.

What’s the purpose? In Lerner’s words, “Segwit2Mb is the project to merge into Bitcoin a minimal patch that aims to untangle the current conflict between different political positions regarding segwit activation vs. an increase of the on-chain blockchain space through a standard block size increase. It is not a new solution, but it should be seen more as a least common denominator.”

And I’d like to make the case that it should be considered…

Status Quo: A State of Atrophy Nobody Wants

Let’s start with some common ground: Bitcoin is immensely important. Can we still agree on that?

Society needs what we’re building, not to be forced upon them, but rather offered; a kind and reliable refuge from the tyranny of the world’s financial manipulators. That’s why many of us are involved. That’s why this project got off the ground.

Yet in the six years I’ve had the pleasure to be involved in this project, there has been a fundamental change in the community. The former friendship among strangers, a rare camaraderie derived from the justness of a great cause, has decayed into conflict.  We all see and feel this, and for those of us who truly care about this project, it is miserable. Perhaps many have even forgotten what the community felt like just a few years ago, when the enemy was not ourselves.

Bitcoin suffers now from a 2+ year impasse between angry factions. The anger has grown with the passing months. The cause of this impasse is a fundamental disagreement between large portions of the community (all claiming to be the important majority by one metric or another) over the technical path to scalability on the platform. Both sides have good arguments and bad arguments, and they’ve all become wound up in a horribly intricate knot. The rhetorical mess has become at least as bad as the underlying technical problem.

Further, the unfortunate context in which this is occurring is one of diminishing utility on the platform: transactions are getting more expensive and less reliable. The user experience of sending a Bitcoin transaction today is worse than it was two years ago. While the price has risen, fundamental utility has actually declined. This is unsustainable, and will be inevitably resolved by utility once again rising, or price declining to meet it.

Do not let yourself be tricked into thinking that the rising price implies fundamental soundness. Prices follow utility, and the latter may fall well before the former realizes it.

At the same time, innovation and growth on other blockchain platforms continues rapidly.  This doesn’t mean any other blockchain is “better” than Bitcoin, but it does mean other blockchains are improving relatively faster than this one. Again, this will be inevitably resolved by Bitcoin gaining steam once again, or stagnating and awaiting its day in the court of market sentiment. If measurements matter, Bitcoin is at an all time low in market dominance relative to altcoins. Valuable members of the community have become disillusioned. While new people are always joining Bitcoin as it grows, at the same time some users are leaving partially or in full, preferring other projects that are more exciting to them, or simply less antagonistic.

There is clearly a problem, and we need to fix it.  A number of technical solutions have been proposed, but fundamentally while they may fix ills on the technical level, they ignore, dismiss, or worsen ills on the social level. They thus cannot be considered solutions… especially if they aren’t happening.

The Hollow Blockchain

Bitcoin is a technical project, absolutely. Yet it is a social project as well. Some readers will scoff at that… but consider that a scoff is an emotional response, which actually proves the point.

Bitcoin, as a technical project, is a brilliant machine, but it is still a machine operated by and among people. Humans, with all their characters and personalities, are the complete benefactors and beneficiaries of this vast abacus. Without the human utility derived, the invention is irrelevant. Without the invention, the human utility is impossible. Indeed, the utility of money itself arises from our social needs; our desire to trade and exchange with each other fairly and without coercion or censorship is the ultimate purpose of Bitcoin. This is social.

To misunderstand Bitcoin as only technical is to dismiss its very purpose and utility. Regardless of the talents one contributes to the project, this truth must be appreciated. Bitcoin is as much social as technical, and always will be. The blockchain stands hollow without our souls attached.

The Cost of Conflict

This current impasse is similarly both technical and social, and it continues at great cost. It slows the growth of the project. It depresses enthusiasm, from which all great art and invention arise… and that art and invention go elsewhere. It invites competition. It signals weakness, and demonstrates disorder. It precludes harmony and the collaborative production of disparate strangers.

And while this is endured, the gears of Bitcoin’s true enemies turn slowly, yet they do turn. Bitcoin cannot afford to sit idle in this morass. It does not have the luxury of eternal opportunity. It has a window, and Bitcoin will rise to fill it, or be supplanted by another. If one doesn’t care which blockchain brings the utility of honest money to the marketplace, then Bitcoin’s situation is of little concern. But if one prefers Bitcoin to fill this role, then the situation is immensely important.

A truth many are not appreciating is that stagnation and replacement are as much threats to Bitcoin’s security model as are software glitches and coordinated attackers. Bitcoin has no monopoly on its core virtues: that of storing value without interference, and that of moving value across distance. That it is the best for these today is irrefutable, that it is the best for these tomorrow is assumption.

This assumption cannot be made by prudent caretakers.

As the contentious split in the community (Bitcoin’s social layer) grows, the risk of a contentious split in its blockchain (Bitcoin’s technical layer) grows too. Ignoring or dismissing the former invites the latter.

Indeed, we have seen each successive social rebellion (XT, then Classic, then BU) get closer to technical rebellion: a contentious hard fork. So long as the social order goes unresolved, the technical order is threatened. Even that technician with care neither in people nor politics must appreciate this dynamic if he desires to further the project. The people, the community, are in fact part of the machine itself. All technical efforts are diminished if they exist in a vacuum from the social, and dismissing the social interests of others as “merely political” is itself a political impulse.

Finding Unity

At the risk of oversimplification, there are two sides debating two paths. The one side desires the SegWit path. The other desires the hard fork path. Both want scale. Both want growth. Both want security. Both want decentralization. Both want strength. Both want innovation. Both want movement and progress and pride. Both want Bitcoin to succeed as a new form of money for the world, as the best platform on which money can be stored, moved, and protected. Both sides are of significant size. Neither side is entirely fools. Neither side is entirely saints. Both sides assert knowledge of the one true path, a warning sign that dogma has replaced productive discourse. And so tragic this is among those who should be friends, for they agree 99%, and yet can’t stop focusing and driving a wedge into the remainder.

It must be said that any plan, by either side, that discounts the desires and opinions of the other, is destined to, at best, split the community. At worst, the project itself is jeopardized in the increasingly threat of contentious hard fork… and blaming the other side for this threat only increases it. Bitcoin has so many enemies, most of whom haven’t yet woken. The ridicule and vilification of one Bitcoiner upon another must be a very pleasing development in the eyes of such enemies. There is no need to fight an adversary that fights itself.

To solve this, we should take it upon ourselves to find unity, not only among those with whom perfect agreement exists, but among those with whom any common ground can be attained at all. Bitcoiners have very much common ground, though they have forgotten it.

SegWit2MB

Sergio Lerner’s proposal is not unique in its technical suggestions, but it is unique in its potential to unify. It has the potential to unify not only disparate technical beliefs, but the social fabric of this community, which is as important. Any alternative, which even may be superior technically, while not resolving anything socially, must be said to be in fact inferior, on proper accounting. From where Bitcoin stands and the risk it faces, a good technical solution which can heal socially, is easily superior to a perfect technical solution which further inflames the community (especially if that “perfect technical solution” never comes to pass).

If SegWit2MB can reach 95% support, it cannot be said to be contentious. Upon that threshold, SegWit would activate, immediately bringing more utility to Bitcoin, and alleviating some scaling pains. It would also countdown to a conservative block limit increase, which alleviates further scaling pains and, importantly, will invite the rebellious factions to support it. Such a proposal would, I believe, take the very wind from the sails of subversion.

By enabling social unification, SegWit2MB has a greater chance of actual activation, and importantly, of preventing further schism and infighting. The risk implicit in this proposal’s hard fork must be said to be necessarily lower than today’s present danger of a contentious hard fork. For the great majority of Bitcoiners, that is a win.

The proposal grants to each side that which it desires most, and grants to both a path forward. It brings us a Bitcoin superior both socially and technically than what we have today. Utility of the very platform itself would rise substantially under this proposal, and its community of souls could rest easier, waking refreshed tomorrow to focus again on our real task at hand: changing the global financial system from its very foundation.

We should not let this project linger in its current state. SegWit2MB is the first reasonable compromise, considering the impasse’s technical and social aspects, actually put forth in code, based on well-known and studied fundamental components from Bitcoin’s best engineers. It is a good path forward, and one I hope others will rally around: to activate SegWit, to avoid a contentious hard fork, to enable greater transaction capacity, and to bring Bitcoiners back from their trenches to the great hall we share.

Please consider it.

 

 

Erik Voorhees
Erik Voorhees
http://www.ShapeShift.io
Erik Voorhees, CEO of leading digital asset exchange ShapeShift.io, is among the top-recognized serial Bitcoin advocates and entrepreneurs, understanding Bitcoin as one of the most important inventions ever created by humanity. Erik's former project, the groundbreaking gaming phenomenon SatoshiDICE, was, at its peak, responsible for more than half of all Bitcoin transactions on Earth and popularized the concept of "provable fairness." Having been a featured guest on Bloomberg, Fox Business, CNBC, BBC Radio, The Peter Schiff Show, and numerous Bitcoin and industry conferences, Erik humbly suggests that there is no such thing as a “free market” when the institution of money itself is centrally planned and controlled. This blog is about the human struggle for the separation of money and state, and about Bitcoin as the instrument by which it will happen.

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