As the bitcoin continues to soar to its all time high in the recent weeks – surpassing $1200; there persists a debate about the best protocol to be used to expand the network. This debate for the right way to increase the number of transactions that the blockchain network can process has been lingering for a while now.
In the light of this, several methods have been proposed. One method involves modifying bitcoin’s bock size. This method also known as segregated witness or SegWit proposed by Blockstream co-founder Pieter Wullie in 2015 is yet to gain enough approval. There is a consensus that SegWit is the best solution to this problem if it is accepted; as it will virtually double bitcoin’s capacity. Pieter proposed that SegWit would increase blockchain network transactions.
SegWit is yet to gain approval because a vocal minority of bitcoin miners is not in support. Their disapproval is due in part to their disagreement over “Satoshi’s – the founder of bitcon – vision” and also in part to trust issues with Bitcoin Core – which tried to split the network before now. Thus, the debate over the advantages and disadvantages of the SegWit proposal is yet to be resolved.
For those who are in support of SegWit, they argue that a mechanism called “soft work” is the best way to introduce it.
Two warring factions and the user-activated soft fork
There are two majority parties in the debate – Bitcoin Core and Bitcoin unlimited – and they are yet to reach a consensus on the issue of SegWit activation as a solution to the bitcoin scaling. While both parties aim to make the bitcoin better, they do not share the same perspectives. Moreover, SegWit which requires 95 percent of miner support to be approved is yet to reach a quarter of that number as it has remained stagnant in recent weeks.
While Bitcoin Core is promoting UASF (user activated soft fork), Bitcoin unlimited are against it. UASF is a solution proposed by a pseudonym “Shaolinify” on the Bitcoin developers’ mailing list. UASF according to Shaolinify’s proposal requires long lead time compared to a hash power-based activation trigger but offers the advantage of being permissive. Shaolinify also says that UASF doesn’t require miners’ approval unlike SegWit SegWit, but in the hands of a majority hashpower vote, it brings problems. One such problem is the fact that it draws unnecessary attention to miners which can become political.
Implementing UASF removes the compulsion for miners to produce new version blocks; moreover, non-upgraded miners’ blocks will not be orphaned as was with the IsSuperMajority forks like BIP66 or BIP34 that made it a necessary upgrade for the miners. This method advocates for miners – who are the major beneficiaries of the blockchain network – to be given less voting power in order to control the system.
By using UASF, also called Flag Day Activation or Emergent Consensus, nodes can begin enforcement at a predetermined time in the future. Doing this will eliminate the current problem with miner activation and will result in cheaper transactions on the network.
Problems with the user-activated soft fork
However, with about 6000 nodes on the network, and about half of the nodes running on Bitcoin Core, more miners are still needed to activate it. It is also argued that the Bitcoin Core while promoting the UASF is also trying to split and control the bitcoin community; just as they tried before.
Another issue with the adoption of the user-activated soft fork solution is the fact that cheaper transactions without the permission of miners will result in higher transaction fees. A possible solution to this is to implement the “Lightning Network” where miners need to compete with payment channels which could delay settlement when transaction fees become too high. Implementing the lightning network is still not the best solution as it would mean that most of the transactions would take place on the most secure and richest hubs; making it a centralized network – going against the vision of the bitcoin founder.
The proposed synthetic fork
This brings us to the main issue of this write up – the synthetic fork. Since, Shaolinfy’s idea went public; it has been a hot topic in the last few weeks as can be seen in most Bitcoin forums and in the social media. Back in China – where majority of the bitcoins are mined; miners are discussing their own ideas to solve the network scalability issue. One of such ideas is the concept of a “synthetic fork”. The synthetic fork is proposed to loosen the rules of consensus but also claims to prevent a blockchain split as is predicted by Jihan Wu.
Jihan Wu, a co-founder of a bitcoin mining company Bitmain is against the UASF as he says it will split the blockchain; thus, creating 2 or 3 kinds of bitcoin majority. He advocates for miners to mine empty blocks. While ignoring the complaints that blocks are full, Jihan Wu insists that they will go on to mine empty blocks. This is a translated version of one of Jihan Wu’s latest statements “core is promoting so called “user-activated soft fork” (UASF). If this proposal is successfully pushed through without the support of hashrate, a split in Bitcoin blockchain will be inevitable.”
The proposed synthetic fork is said to restrict current block size to 0MB and append an extra 2MB. While the appended blocks will only be visible to new upgraded nodes, old nodes would see only the 0MB blocks. In summary, there will be virtually no technical debt.
As a precaution to prevent a split in the blockchain network, the synthetic fork proposes that the majority hashrate should mine some empty blocks in order to orphan the blocks mined by the minority who did not upgrade. By doing this, there will be no extra blockchain and no “second” bitcoin. Finally, when a majority of the nodes are upgraded, then a hardfork should start upgrading to a larger block size.
The major problem now still remains on what solution will be the best to be adopted. Giving the different solutions that have been proffered by various groups and parties and seeing how heavily the topic is still being discussed online especially in bitcoin forums and the social media –particularly on Twitter – it would take a while before the scalability problem is solved.