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Unless you are actively involved in the bitcoin community, you probably haven’t heard that developers Gavin Andresen and Mike Hearn launched a new version of the digital currency’s software called Bitcoin XT—nor would you know why this would leave the “bitcoin community in disarray.” In the event that you attend cocktail parties or water-cooler confabs where such topics are the norm, let’s get you caught up to speed.
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Since its launch in 2009, demand for bitcoin has soared. It is accepted by major online retailers and small businesses engaged in face-to-face transactions. Its current market capitalization puts it on par with national currencies like the Guatemalan quetzal and Costa Rican colon. Indeed, the relative success of bitcoin has inspired a host of alternatives. But it still has a long way to go towards widespread adoption.
The current debate centers on a perceived tradeoff between the ability to process a growing number of transactions, on the one hand, and maintaining a highly decentralized mechanism for processing transactions on the other.
The current debate centers on a perceived tradeoff between the ability to process a growing number of transactions, on the one hand, and maintaining a highly decentralized mechanism for processing transactions on the other.
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Fears over excessive centralization are warranted. After all, decentralization is a big part of bitcoin’s value proposition. But the amount of centralization being considered at the moment still seems vastly more decentralized than traditional payment systems.
Indeed, the approach taken by Hearn and Andresen clearly indicates their commitment to a decentralized system. BitcoinXT will continue to enforce the existing blocksize limit until the protocol is so widely adopted that it is used to process at least 75% of all blocks added to the blockchain. If (and only if) that occurs—but no earlier than January—BitcoinXT will increase the limit to eight megabytes and double that limit every two years thereafter.
The commitment to gradual change based on consensus observed with the issuance of BitcoinXT is incredible, but perhaps not surprising. It reflects the core values held by bitcoin supporters. And it is also a hallmark of well-functioning self-governing systems. It bodes well for bitcoin’s future.
Indeed, the approach taken by Hearn and Andresen clearly indicates their commitment to a decentralized system. BitcoinXT will continue to enforce the existing blocksize limit until the protocol is so widely adopted that it is used to process at least 75% of all blocks added to the blockchain. If (and only if) that occurs—but no earlier than January—BitcoinXT will increase the limit to eight megabytes and double that limit every two years thereafter.
The commitment to gradual change based on consensus observed with the issuance of BitcoinXT is incredible, but perhaps not surprising. It reflects the core values held by bitcoin supporters. And it is also a hallmark of well-functioning self-governing systems. It bodes well for bitcoin’s future.