The roadmap for Bitcoin’s future is again uncertain, as April passed without a usable release of Segregated Witness (SegWit) — a proposed solution to the block size issue.
SegWit Still Not Ready
An article titled ‘Bitcoin Roundtable Consensus’ was published on February 21, 2016 and signed by a number of key players in Bitcoin development, mining, and the wider industry. It said Segregated Witness was “expected to be released in April 2016” as a soft-fork to the network, followed by a safe hard-fork solution in July 2016, to be activated one year later.
A SegWit “soft-fork” means a change that is backwards-compatible with existing Bitcoin user software (except for miners in this case). Conversely, a hard-fork requires all users to update their software and accept changes if they wish to remain compatible with the Bitcoin network.
Project originator Dr. Peter Wuille released the complete code for Segregated Witness (or ‘SegWit’) on April 19th. That code cannot be used for Bitcoin scaling and future hard-forks, however, until it has 95% of miner support and wallet software has been updated to handle it. So far those milestones have not been reached and no soft-fork has occurred.
What is Segregated Witness?
Segregated Witness was proposed by Core developer Wuille at the Scaling Bitcoin conference in Hong Kong last December. It is designed as a compromise solution to scale the Bitcoin network from its current limits of around seven transactions per second to something more like a global electronic payments network.
SegWit works by separating most signature data from Bitcoin transactions, moving it to a separate cryptographic tree. This significantly reduces the size of each transaction and thus allows more transactions per block, even if the block size remains at 1-2MB.
Keeping blocks at 1MB has long been a contentious issue in the Bitcoin community, with many arguing the network would become more centralized as nodes with less bandwidth struggled to cope with anything over 1MB.
It has been described as an elegant solution to maintain Bitcoin continuity, a “workaround” or even a “clever hack” by some. Introducing SegWit would require wallet software developers to rewrite significant portions of their code. Although a soft-fork, the amount of programming work required to make all currently-used Bitcoin software compatible with SegWit is arguably greater than for a straight hard-fork.
It also remains to be seen just how much space separated signature data would save and how many more transactions per block that would allow.
Adopting SegWit would keep Bitcoin Core and its team at the center of Bitcoin development, fending off the challenge mounted by Bitcoin Classic and its stated goal of hard-forking Bitcoin to increase transaction block sizes from 1MB to 2MB (with a view to further increases down the road). The Classic option would obviate any urgent need for SegWit and would not require wallet developers to perform extensive rewrites of their code.
Standard-Fee Transactions Getting Stuck
Entrepreneur and Bitcoin.com owner Roger Ver has been a vocal proponent of larger transaction blocks, saying mass adoption is not possible until transactions are guaranteed to complete in a timely manner.
Showing his frustration at a five-figure delayed transaction, Ver tweeted yesterday:
Despite paying the recommended fee, my $23K payment has been unconfirmed for nearly 12 hours. Bigger blocks now! pic.twitter.com/afekIAlqh9
— Roger Ver (@rogerkver) April 29, 2016
It is also Bitcoin.com’s editorial policy to support larger blocks. While no specific ideal size has yet to be determined, this publication agrees the maximum size needs to be higher than 1MB, at least.
The bitcoin price rallied in the final week of April to reach a 2016 high of around $470 USD but soon fell back to $450 or lower. While determining the causes behind price movements can be a dark art, the release of Wuille’s code and the promise of a workable transaction block solution by the end of the month may have prompted the April rise.
What are your thoughts on the Segregated Witness rollout and delayed scaling solution? Let us know in the comments section and on the Bitcoin.com forum!
Images courtesy of Roger Ver and Bitcoin.com