Bitcoin XT debate overshadowing growth opportunities

Controversy has clouded the future of the digital currency, which is still trying to gain mainstream acceptance.

Bitcoin is no stranger to controversy, but debate about a new version of the cryptocurrency announced recently is overshadowing its potential appeal.

On Saturday, bitcoin developers Gavin Andresen, chief scientist at the Bitcoin Foundation, and Mike Hearn, a former Google software engineer, released Bitcoin XT, a competing version of bitcoin software that allows for larger "blocks" of data in which  transactions are processed.

Bitcoin XT would let the blockchain, a public database of transactions that can be modified by all users, accept blocks of data that are larger than 1 megabyte. The limit had been incorporated into the current system by Satoshi Nakamoto, the mysterious founder of bitcoin, but has been debated because it limits the number of transactions that can be processed by the block chain system -- currently about three to seven per second.

Under Bitcoin XT, the system would support blocks of up to 8MB, which would allow up to 24 transactions per second. While that's far below the capacity of major credit card networks, it could be an important step in widening the appeal of bitcoin for mainstream users. If users have long wait times to confirm transactions, bitcoin will struggle to gain adherents beyond its current niche.

To succeed, Bitcoin XT will have to gain enough supporters so that it's seen as the legitimate form of bitcoin. Traditionally, if 75 percent of blocks are processed with a new release of the software, it is seen as adopted by the community. A disastrous scenario would be two competing and incompatible versions of the software.

The promise of bitcoin is that it can be a decentralized vehicle for transferring currency through the Internet quickly, anonymously, at minimal cost and without needing a third party to confirm the payment. The possibilities are vast, not only with cryptocurrency but other applications for blockchain technology including improving traditional financial transactions.

Ideology is of course integral to bitcoin and Bitcoin XT has sparked debate along philosophical lines. The proponents of XT believe not only that the block size must increase to match the growing user base of bitcoin, but that growth of the network is something Nakamoto envisioned.

"The idea of a global system used by ordinary people is what motivated many of us to join him," they proclaim on the Bitcoin XT site. Andresen was appointed successor to Nakamoto, who originally published a paper outlining bitcoin in 2008 before bowing out of development two years later.

"The decision-making process in Bitcoin Core has broken," Hearn wrote in a post on Medium, adding that "the block size debate has been allowed to drag on for years."

Andresen and Hearn make up a minority among the main bitcoin developers. But their move has elicited support from popular figures like Roger Ver, a cryptocurrency entrepreneur known as Bitcoin Jesus.

"I think it should be clear to everyone that bigger blocks will likely mean more full nodes around the world, and therefore more decentralization, not less," Ver wrote in a post on Bitcoin.com. "This will make bitcoin even more difficult to control, censor, or be stopped by anyone, including governments."

Others see Bitcoin XT as a departure from the consensus-oriented developer approach to the original protocol, known as Bitcoin Core, in favor of decisions made by Andresen and Hearn.

"I have followed this from the beginning & I agree that it is an attempted governance coup," John Matonis, former executive director of the Bitcoin Foundation, wrote in a Twitter message.

In an interview with IEEE Spectrum, Adam Back, a cryptographer who developed the basis for bitcoin's security protocol, also spoke of a coup, adding that it's "not clear that BitcoinXT will have the resources or expertise to maintain its safety and security" because bitcoin's core security people are unlikely to participate. He also warned that larger block sizes could benefit larger miners, the people whose computers confirm coin transactions and create new coins.

Despite the controversy, XT seems to have spread rapidly, with nearly 14 percent of bitcoin nodes running it already, according to one website tracking its adoption. Whether bitcoin miners also sign up remains to be seen. Whatever happens, the next few months could have a big impact on bitcoin's mainstream adoption.

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Tim Hornyak

IDG News Service
Show Comments

Cool Tech

Breitling Superocean Heritage Chronographe 44

Learn more >

SanDisk MicroSDXC™ for Nintendo® Switch™

Learn more >

Toys for Boys

Family Friendly

Panasonic 4K UHD Blu-Ray Player and Full HD Recorder with Netflix - UBT1GL-K

Learn more >

Stocking Stuffer

Razer DeathAdder Expert Ergonomic Gaming Mouse

Learn more >

Christmas Gift Guide

Click for more ›

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

George Khoury

Sharp PN-40TC1 Huddle Board

The biggest perks for me would be that it comes with easy to use and comprehensive programs that make the collaboration process a whole lot more intuitive and organic

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?