For two years, the digital currency bitcoin has been deadlocked by a caustic debate—some call it a "civil war"—about how to best scale the technology up to allow for worldwide adoption. As the two opposing sides argued their positions, the rancor became so intense that at one point a former lead developer declared the entire bitcoin experiment a failure.
It"s all been leading up to today, Monday July 31. In the 12-hour period between 8 PM on Monday (midnight in the UK) and 8:20 AM on Tuesday (all times EDT), the fate of bitcoin and its promise of a more libertarian kind of cash will be decided.
Here"s what"s at stake, and what could happen.
The "Civil War"
Bitcoin is a digital currency, and every transaction is recorded on a public ledger called a "blockchain" for all to see. Right now, however, the bitcoin blockchain is facing a crisis of congestion. The "blocks" of bitcoin transaction data that are continuously being added to the blockchain are full, slowing everything down. Bitcoin transactions that should take 10 minutes to be included in a block, "confirming" them as legitimate, can now be stuck in limbo for hours or even days. Imagine paying for a donut with a debit card, but you have to wait four hours until it"s approved.
This situation, if left alone, would be bad for bitcoin. Because there"s less space in the blocks of transaction data, there"s more competition to have your transaction included in the next block to speed up the confirmation process. So, the fees that users can attach to their transactions in order to incentivize "miners" (people who run huge server farms to do the work of adding blocks to the blockchain for a reward) to have their transactions included in the next block are getting more expensive. This could effectively price certain uses of bitcoin for normals, like buying a $2 coffee, out of the system.
The congestion kicked off what is essentially a battle for the very soul of bitcoin. If the size of blocks isn"t increased substantially, some believe, then the blockchain will mostly be a tool for established institutions that can afford to pay the high fees. For example, the blockchain could be used to instantly settle stock trades, and some folks think that"s just fine.
However, the opposition maintains that if the block size is increased significantly, then bitcoin can fulfill its destiny to become a low-cost, global payment system—an alternative to the banks and credit companies. A libertarian dream.
The "Fork"
...
The latest and most successful attempt to avoid such a split is called "Segregated Witness." Segwit, as it"s called, is a rule change that affects how bitcoin transaction data is stored, and would free up a good amount of space inside blocks. To ensure that segwit is adopted, the bitcoin community rallied together with the threat of a "user-activated soft fork," or UASF. Under this scheme, any miners—the people who keep the bitcoin network running by creating bitcoin blocks for a reward—who don"t support segwit will have their blocks ignored by users enforcing the new rules after 8 PM on July 31.
No comments:
Post a Comment