Xapo will integrate SegWit after all, after the SegWit2x hard fork was called off by leading supporters including Blockchain, BitGo, ShapeShift, and its lead developer Jeff Garzik.
But, Xapo President Ted Rogers cautioned the bitcoin industry and community that some of the biggest companies in the bitcoin market may move to more flexible and supposedly scalable cryptocurrencies like Bitcoin Cash or Ethereum, taking millions of users and large transaction volumes with them.
“My guess [is] biggest [bitcoin] companies are packing up to move to Bitcoin Cash or Ethereum, and will take millions users and transactions with them. Will still support bitcoin but not a focus for their future. Xapo still bitcoin only & will implement SegWit but wouldn’t waste your time pressuring the others.
Possibility of Companies Moving to Bitcoin Cash and Ethereum
The stance major bitcoin businesses like Xapo, Blockchain, and Coinbase have taken over the past few months in regards to SegWit and second layer solutions like Lightning has been that it is not the right approach force businesses and companies to adopt specific software to scale their platforms. More importantly, many of the SegWit2x supporting companies have firmly stated that the burden of transaction fees should not be placed on users.
In the upcoming months, if the bitcoin transaction fees still remain high even with SegWit, Rogers emphasized that businesses may move to Bitcoin Cash and Ethereum, given their cheaper transactions and larger blockchains that can handle a bigger capacity of transactions. As of current, the Ethereum blockchain network processes twice of the daily transaction volume of bitcoin, at around 550,000 transactions per day.
Wences Casares, the CEO of Xapo, added that although high transaction fees are more profitable for the business, the company hopes to see some on-chain scaling for its users.
“The more expensive the on-chain transaction fees are the more coins Xapo has in custody, the more off-us transactions Xapo does and the more profitable it is. October was our most profitable month ever and, with these fees, November will be even better. We want some (not ALL) on-chain scaling despite it being bad for Xapo because it is better for everyone else. Otherwise Bitcoin becomes the tool for the 1%, who already have plenty of tools,” said Casares.
Where Does Bitcoin Scaling Go From Here?
Ultimately, it boils down to a communication issue between SegWit2x-supporting businesses and Bitcoin Core-supporting businesses, community, and developers. The Bitcoin Core development team along with the community do not seem to be fundamentally opposed to some on-chain scaling. But, as per the NYA agreement and the Hong Kong agreement which was established in 2016, they expect businesses to adopt SegWit first, see how the software plays out, and then pursue on-chain or second-layer scaling thereafter.
The consensus amongst the global bitcoin community is that businesses should first adopt SegWit and in the mid-term, if it is not sufficient as a scaling solution, pursue other solutions that will not result in a contentious hard fork or controversial conflicts amongst the bitcoin industry.
Featured image from Shutterstock.
Last modified: March 4, 2021 5:01 PM