“Emergent Consensus: What is It? Will it Even Pass?”
Back in the Headlines!
The Bitcoin scaling debate rages on. The trade price of Bitcoin may have recovered, but new developments have brought the topic back in the headlines.
During the recent Consensus event in New York, an agreement was made between several influential Bitcoin-based companies, including influential icons such as Jihan Wu (Bitmain) and Barry Silbert (Digital Currency Group).
The terms of the fragile agreement consist of the activation of SegWit, followed by a hard fork that enables the block size limit to be raised from 1MB to 2MB, with some saying this could be completed by September 2017.
Can This Agreement Go Through, or is the Bitcoin Community Just Too Diverse?
The Bitcoin community is a passionate one. If anything has been gained from the scaling debate, it’s that Bitcoin cannot be changed easily. In fact, it shows an underlying strength in Bitcoin and the community that uses its network, however, it’s become a victim of its own success and in order to survive the coming challenges and face off innovative rivals that function as payment networks/stores of value, such as Dash and many others, Bitcoin needs to adapt.
Popular icon in the crypto space Trace Mayer has been involved with Bitcoin before most and doesn’t think the new agreement will last. It’s not the first time agreements and proposals have been announced and fell apart. The slow progress of SegWit demonstrates this, which sits at just 32%.
Miners’ Overwhelming Control Makes Bitcoin Centralized!
With miners wielding so much control over Bitcoin’s network and holding conflicting political viewpoints on the trajectory of Bitcoin, if no overall majority is in agreement, Bitcoin, in a worst case scenario, could be pulled apart and forked into two blockchains. The market would then have two versions of Bitcoin bringing confusion, and a likely battle for the position of the true Bitcoin would begin.
Newer cryptocurrencies, such as Dash, have attempted to resolve the issue of governance. Rather than large mining pools having dominion over the network, users who own Master Nodes can vote on proposals, creating a more democratic system. However, to have a Master Node, one must own 1,000 Dash as collateral. Meanwhile, PIVX, which is a fork of Dash, boasts an even better governance system than Dash.
Long-Term Consequences for Investors and the User-Activated Soft Fork (UASF)
Despite the new agreement, the blunt reality of this scaling debate is that on August 1st, 2017, SegWit will activate regardless of miners signalling or not. Another proposal, called BIP148, popularly known as User-Activated Soft Fork, is another alternative to activate SegWit, which requires miners to signal for it.
With the majority of the market wanting SegWit activated and the scaling debate over, support for this proposal has rapidly grown, with some saying this is what influenced the agreement in New York as a solution to avoid the risks involved and two separate Bitcoin chains forming.
For investors, the scaling debate doesn’t seem to be a problem. The price has doubled in recent weeks, with news of Japan and many other nations adding Bitcoin as a payment in commercial outlets. If Bitcoin splits into two versions, the level of confusion could scare investors to other cryptocurrencies, or even other commodities, like precious metals.
Many investors are looking to alternative digital currencies, such as Dash, Litecoin, Ethereum, and many others as faster and more unified hedges against Bitcoin’s future uncertainty and the possibility the new agreement doesn’t materialize.