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Microsoft Engineer: Bitmain Has ‘Zero Clue’ About Bitcoin Decentralization

Last Updated March 4, 2021 4:57 PM
Joseph Young
Last Updated March 4, 2021 4:57 PM

Following Trezor CEO and lead architect Marek “Slush” Palatinus, Daniel Buchner, head of decentralized identity at Microsoft, harshly criticized Bitmain, the largest bitcoin mining equipment manufacturer and the operator of Antpool, for its controversial statement in regard to the execution of a user-activated hard fork (UAHF).

As a response to the rising popularity of a user-activated hard fork (UASF) to activate the Bitcoin Core development team’s transaction malleability and scaling solution Segregated Witness (Segwit), the Bitmain development team released an official blog post entitled “UAHF: A contingency plan against UASF (BIP148)” to introduce the company’s plans to lead the execution of a hard fork.

The majority of companies, developers, organizations and users within the bitcoin community and industry are trying to prevent the occurrence of a chain split. Ethereum had its network split following its development team’s controversial decision to essentially bail out investors in the DAO and rescue hundreds of millions of dollars worth of Ether. The execution of a hard fork by the Ethereum development team led to the creation of Ethereum Classic, which has gained massive popularity after a major alteration was in its monetary policy.

In the long run, Ethereum’s market cap recovered and continuously reached all-time highs. Although analysts expect bitcoin to recover from a chain split if it occurs, two persistent blockchains of bitcoin may cause bitcoin to lose its network effect over the cryptocurrency market. It could also allow investors to panic sell, leading to a major market correction.

The possibility of chain split is important to consider because Bitmain is willing to take the risk of segregating bitcoin, its industry, users and community into two. As the Bitmain development team wrote: 

“We must also be prepared for the disruptive risk that UASF activation will bring to the Bitcoin network. The New York agreement is very conservative and aimed at bringing peace within the Bitcoin community on a simple but artificially escalated scaling issue. If somehow the New York agreement cannot prevent a chain split, we will have to be prepared.”

Microsoft head of decentralized identity Daniel Buchner criticized Bitmain’s perception of the entire bitcoin scalability issue and its rejection of Segwit without conditions. Bitmain wholly supports the New York Scaling Agreement led by Digital Currency Group and 57 other companies that represent over 80 percent of the bitcoin network’s hashrate, which translates into the company’s support for Segwit.

However, Bitmain is not willing to support Segwit without a guaranteed 2MB block size increase and such condition is acting as the root conflict between Bitmain and the supporters of Bitcoin Core. Buchner argues that the activation of Segwiit that will immediately lead to a 75 percent optimization of bitcoin blocks and opens door for two-layer solutions such as Lightning will be sufficient to address current scaling issues.

In its blog post, Bitmain emphasized that Lightning requires powerful authorities to enable and implement. As a response, Buchner explained: 

Bitmain attempts to assert a false dilemma: that not upping the block size and squeezing out indy nodes [equals] high transaction fees for users. That is a lazy fallacy at best, a bald-faced lie at worst – 99% of user txns will be processed over secure L2, fees would be microscopic. Bitmain caps it off by asserting the superior scaling of L2 requires powerful authorities. False: L2 operation is even more decentralized.

Bitmain is currently looking into other methods of running Lightning Network “more securely” and efficiently. The company is considering using Bitcoin NG by Emin Gun Sirer and Lumino by Sergio Lerner of RSK Labs to run Lightning.