Bitcoin Block Size Extension Blocks

The block size debate has gotten to a point that some bitcoin observers think it could doom bitcoin. Bitcoin has defied all the bitcoin naysayers and prospered, recently setting record market capitalization. Will internal strife prove its ultimate undoing?

A recent proposal designed to appease both sides in the bitcoin scalability debate may be doomed because of the way in which it became public. Laura Shin, a Forbes columnist, reported on the Extension Blocks proposal and its role the increasingly contentious conflict over changing the bitcoin block size.

Proposal Didn’t Follow Protocol

The Extension Blocks solution was made public Monday without first being presented to the bitcoin developer community. Reception to the proposal was mixed on Reddit and Twitter.

Emin Gun Sirer, co-director of the Initiative for Cryptocurrencies and Smart Contracts and a Cornell associate professor, said the proposal is technically clever and politically brilliant.

But he expected opposition to the solution will come from a non-technical cause – the effort to sidestep protocol and engage the media before the development community.

Block size debate observers consider it to be about the size of blocks; the number of transactions that can be processed in a specific time period. Shin, however, claims the underlying goal of the debate is the control of bitcoin.

The Two Camps

The existing bitcoin network limits the amount of transaction blocks that get added to the ledger to 1 MB. The miners that add the transactions want to raise that limit.

The developers say increasing the block size will compromise bitcoin’s decentralization by putting it under the control of concentrated powers, be it individuals, institutions, governments or other entities. Increasing the block size limit will require a hard fork, which could split the network into two blockchains and possibly compromise bitcoin’s value.

The developers support Segregated Witness (SegWit), which would allow more transactions per block by making the blocks more efficient. This solution would not require a hard fork.

Andrew Lee, CEO of Purse and a supporter of the extension block proposal, said the extension block addresses both camps’ concerns. Extension blocks allow larger blocks and also deploys SegWit and doesn’t require a hard fork.

Also read: Op-Ed: A new blocksize proposal goes nowhere

The Extension Block Solution

Extension blocks process transactions outside of the 1MB block but tie them to blocks on the bitcoin blockchain. Stephen Pair, CEO of BitPay, said the extension block is a good idea since it improves the network’s capabilities and allows people to experiment. Eric Lombrozo of Bitcoin Core opposed the proposal since it is untested.

SegWit, on the other hand, has been released but has not been adopted by enough computers to make it active.

Samson Mow, formerly with BTCC, said the new proposal goes outside the norm of how open source software is developed. He said proposal supporters are falsely stating that everyone supports it and that it defies bitcoin’s principles of decentralization, openness, and transparency.

Mow said the way extension blocks were proposed has a political bent to it and could pressure developers to support it by making them think the amount of support is greater than it really is.

Shin noted the extension block proposal could already be compromised by a lack of community trust, despite assumptions about bitcoin’s “trustless” nature.

BitPay’s Pair was skeptical when asked if extension blocks will end the two-year scalability debate.

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