Coinbase remains as one of the few companies to reject the hard fork contingency statement released on March 17. The company’s CEO Brian Armstrong made an official statement to clarify the Coinbase team’s stance and viewpoint on hard fork contingency involving Bitcoin Unlimited.
Background of the Statement Itself
Late last week, leading bitcoin exchanges including BTCC, Kraken, Bitfinex, Bitstamp, Bittrex, Bitso and Shapeshift that represent the majority of the global bitcoin exchange industry’s market share released a collaborative statement as exchanges in the bitcoin ecosystem.
The statement specifically addressed hard fork contingency and the high possibility of Bitcoin Unlimited, a hard fork solution designed to reduce blockchain congestion of bitcoin, of being executed in the near future. The exchanges noted that upon the execution of Bitcoin Unlimited, its tokens will be considered as an alt-asset or an alt-coin, instead of being accepted as bitcoin.
Major bitcoin exchanges which participated in drafting the statement went as far as to say that even in the event wherein the Bitcoin Unlimited chain overtakes Bitcoin Core in terms of hash power or computing power, they will continue to support deposits and withdrawals for the Core chain as BTC or bitcoin.
“Since it appears likely we may see a hard fork initiated by the Bitcoin Unlimited project, we have decided to designate the Bitcoin Unlimited fork as BTU (or XBU). The Bitcoin Core implementation will continue to trade as BTC (or XBT) and all exchanges will process deposits and withdrawals in BTC even if the BTU chain has more hashing power. Some exchanges intend to list BTU and all of us will try to take steps to preserve and enable access to customers’ BTU. However, none of the undersigned can list BTU unless we can run both chains independently without incident,” the statement read.
Why is Coinbase Not Willing to Sign the Statement?
In short, Coinbase CEO Brian Armstrong believed the statement attempted to peg the Bitcoin network to Bitcoin Core. While Armstrong and Coinbase director of engineering Charlie Lee have voiced their support for Bitcoin Core and its scalability solutions such as Segregated Witness (Segwit) in the past, Armstrong and the rest of the Coinbase team is against fixing the Bitcoin network to one development team in Bitcoin Core.
“Coinbase didn’t sign the industry letter because I think the intention behind it is wrong. On the surface it is a communication about how exchanges would handle the hard fork, and a request to BU for replay attack protection. But my concern was that it was actually a thinly veiled attempt to keep the BTC moniker pegged to core software. I think a number of people who put their name on it didn’t realize this,” said Armstrong.
The Bitcoin Core development team represents 95% of the developers within the Bitcoin development community and 95% of the developments in bitcoin. In other words, the Bitcoin Core development team is credited for developing 95% of the current Bitcoin network.
However, Armstrong stated that some of the largest bitcoin exchanges in the industry including GDAX, Poloniex and Gemini didn’t sign the statement for a similar reason to Coinbase. The fact is, drafting a joint or unified statement to represent the views of many bitcoin exchanges, developers and miners hasn’t worked out in the past and according to Armstrong, it often leads to more drama and conflicting views.
“A number of exchanges (GDAX, Poloniex, Gemini) didn’t sign the letter, or later clarified their position on it (ShapeShift, Kraken), so I think there are a variety of opinions out there. I think creating public industry letters that people sign is a bad idea. They haven’t been very effective in the past, they are “design by committee”, people inevitably say their views were not accurately represented after the fact, and they tend to create more drama.”
Currently, there are two moving parts to the discussion on the execution of Bitcoin Unlimited as a hard fork solution. Segwit supporters believe that miners are looking out for their best interests concerning Bitcoin Unlimited and not the industry and community’s well being. Because miners believe two-layer solutions like Lighning can reduce miner revenues, they want to see an on-chain scaling solution like Bitcoin Unlimited to be activated.
Coinbase hopes to be a neutral company in this debate and hopes to provide the best solution possible while observing the rapidly changing debate.
Featured image from Shutterstock.
Last modified: March 4, 2021 4:55 PM