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ETC Labs Unveils ETC-ETH Interoperability Solution Backed by Metronome

ETC Labs announces partnership with Metronome to enable interoperability between the Ethereum and Ethereum Classic blockchains.

San Francisco-based incubator for the blockchain Ethereum Classic (ETC), ETC Labs, has announced that it has partnered with cryptocurrency firm Metronome to create a solution for Ethereum (ETH)/ETC interoperability, in an official blog post on June 27.

Per the announcement, blockchain interoperability—also referred to as “chainhopping”—is a property of a blockchain asset meaning that it can be transferred between separate blockchains. In this case, the cryptocurrency Metronome (MET) will be transferable between the ETH and ETC blockchains.

The ETH and ETC blockchains initially split in the summer of 2016 after a contentious vote to return money lost when The DAO collapsed in 2016. 

According to the announcement, MET is the first cryptocurrency to have the property of blockchain interoperability. Metronome’s website also makes this claim and expounds on its further plans for interoperability, saying:

“As the first cryptocurrency capable of being exported and imported across chains, Metronome will be initially issued on Ethereum with Ethereum Classic, Rootstock on Bitcoin, and Qtum support expected to follow. Such portability will allow users to select the chain that suits their requirements for management and security, or even upgrade the MET contract if needed.”

Another aspect of the partnership, as noted in the announcement, is that ETC Labs will provide support for Metronome’s Validator Network, a set of at least 5 decentralized, off-chain validators who will verify the validity of Metronome transactions. By doing so, this network will reportedly ensure that Metronome transactions are reliable and secure, and less prone to double-spend attacks.

As previously reported by Cointelegraph, Metronome was initially announced by veteran bitcoin (BTC) dev and blockchain wallet Bloq co-founder Jeff Garzik back in 2017, with the aim of it being the first chain-hopping cryptocurrency.

One of the recent upgrades planned for ETC, the Atlantis ECIP 1054 hard fork, has recently been confirmed for block 8,772,000, which is set for an intended launch date of September 17. In the meantime, cooperating developers are running the new ETC iteration on testnets to try and eliminate as many bugs as possible before the protocol goes lives.

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Crypto ICO Metronome Raises $12 Million in Unconventional Auction

Metronome supporters waited until the very end to buy the last available tokens.

As opposed to traditional ICOs, which have sought to reward early buyers, Metronome’s sale, completed Tuesday, was notable for seeking to sell its tokens at a progressively lower price each minute for up to seven days. Buyers let the auction run 6 days, 23 hours and 40 minutes, according to a post-mortem post by the team.

In total, the project sold 8 million MET tokens for 26,502.21 ETH – which the post valued at $12.1 million (approximately $10 million at time of writing) – from 1,443 different wallet addresses, making an average purchase of $3,623-worth of tokens each.

In its review of the sale, Metronome acknowledged that the timing proved to be a challenge for raising a large amount from the sale.

The team writes:

“Metronome’s Initial Supply Auction took place during one of the deepest dips of an already stubborn bear market for cryptocurrencies as a whole in 2018.”

This, they believe, dampened market appetite to use ETH to buy a new token, particularly if buyers’ ETH were well below the price they had initially paid for them. Still, those involved emphasized that the technical process underlying the sale went smooth.

“The functionality of Metronome on a technical level works as designed, its Initial Supply Auction operated as intended, and that all users still had the same access to the auction opportunities,” the post reads.

As we previously reported, Metronome – created by Jeff Garzik’s Bloq – is built for longevity, being a token that can easily move on and off multiple blockchains, allowing a choice of rule sets and governance models that, in theory, should facilitate smooth running.

Garzik told CoinDesk last October, “It’s sort of a best-of-all-worlds cryptocurrency,” a “boxcar” that can ride on any compatible blockchain.

Metronome image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Suspended Not Abandoned? Jeff Garzik Is Reworking the Segwit2x Code

The controversial scaling proposal Segwit2x may have been officially called off this August, but that doesn’t mean its former lead developer is giving up on plans to keep its codebase alive.

In fact, Jeff Garzik, better known as the CEO of blockchain startup Bloq, now believes his prior work could be revived in a way that promotes interoperability between the increasingly fragmented set of protocols bearing the bitcoin name (see: bitcoin, bitcoin cash and bitcoin gold). And in a new interview, he revealed that he is working on forthcoming updates to the software, called BTC1, with this goal in mind.

While he admits he’s not sure how successful the effort will be, Garzik nonetheless framed it as one aimed at unifying a bitcoin developer community that saw no shortage of infighting in 2017.

Garzik told CoinDesk:

“I hope that bringing multiple chains together in one software will, in some small way, bring multiple developers from multiple communities back together.”

Still, the development is notable given the software’s history in achieving the opposite.

After all, the BTC1 code is most associated with Segwit2x, a failed attempt by business and miners to change the rules of the bitcoin protocol. Forged at a meeting in New York in May, the agreement called for the block size parameter to be raised to 2MB, while also pushing for an upgrade called Segregated Witness, designed to both improve and expand bitcoin’s block size.

However, while SegWit was enacted, the block size increase, formally coded in BTC1, was officially called off not weeks before it was supposed to go live amid significant pushback and criticism from developers.

‘Bitcoin cousins’

But while a handful of new cryptocurrencies have been created out of new bitcoin software versions over the past few months, Garzik stressed that the goal of the new BTC1 iteration is not to create a new currency.

“It’s not a new chain. That’s the key innovation of BTC1,” he told CoinDesk.

Instead, Garzik’s concept relies on developing a new version of the Bitcoin Core software – the most popular implementation of bitcoin – though one in which the code can support multiple different cryptocurrencies. In this way, BTC1 will follow whatever changes are added to Bitcoin Core.

Garzik went on to compare the software to ethereum, which allows new cryptocurrencies to be issued on its blockchain, something that’s possible on top of bitcoin, though perhaps not as easy as it is on competing protocols.

“The focus will be on multi-coin support of ‘bitcoin cousins,'” he said, defining “cousins” as coins with software that shares 97 percent or more of the code with the original bitcoin software the Core developers manage.

With BTC1, as Garzik envisions it it, users won’t have to download one litecoin node, one bitcoin node and one bitcoin cash node. Rather they just download one BTC1 full node and it supports all of the chains simultaneously.

As far as what coins (of the more than 1,300 total coins that have sprung up over the years, many with code nearly identical to bitcoin’s) will be supported by BTC1, Garzik plans to be choosy, at least at first, adding only “successful” networks that have attracted significant attention from users. In his eyes, at least so far, litecoin, zcash, and maybe bitcoin cash meet these criteria.

He added:

“Since six bitcoin forks were created in December alone, it’s not realistic to support all of them.”

And he’s being strict with this stance, arguing for neutrality, saying that it even applies to United Bitcoin, a recent bitcoin fork for which Garzik serves as chief scientist.

“I would like to see United Bitcoin adopted, but by my own metric, it’s not there yet,” he said.

Beyond the coin

Garzik also plans to take the idea beyond cryptocurrencies.

Taking inspiration from Red Hat, a Linux company that Garzik worked at for more than a decade, he sees Bloq using the new BTC1 software to bridge the corporate and open-source worlds. Just as the open-source software Fedora feeds into the Red Hat product, Garzik believes an open-source BTC1 software can feed into Bloq.

In this way, Garzik claims Bloq developers won’t be the only developers working on BTC1. Garzik plans to open development up to anyone that wants to participate, including a “handful” of developers that worked on Segwit2x.

Although this idea sounds very different from the code’s original intent, Garzik argues this was always his plan – to move the BTC1 software forward whether Segwit2x succeeded or not.

He said:

“BTC1 was always supposed to be longterm. Segwit2x was always supposed to be a one and done. And BTC1 was always supposed to be the entity that continued even after Segwit2x’s success or failure.”

Yet, the new iteration of the codebase also has benefits for Bloq – which recently announced it’d be launching a cross-blockchain cryptocurrency called metronome – as well.

According to Garzik, many of the software implementations that forked off bitcoin, especially older coins, have vulnerabilities within them because they aren’t as heavily developed as bitcoin, for instance. These bugs can cause serious issues for Bloq’s current enterprise customers, and so the company would benefit from having open-source code that supports the development of different cryptocurrencies simultaneously.

To that end, Bloq and some of its customers (which will be announced in the next 60 days) are funding at least 50 percent of BTC1’s future development, Garzik said. Interoperability between coins is something many crypto enthusiasts are interested in, envisioning a future which Garzik calls a “multi-coin universe.”

Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Bloq and helped organize the Segwit2x agreement. 

Jeff Garzik image via TEDx video

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Interested in offering your expertise or insights to our reporting? Contact us at news@coindesk.com.

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2x or No 2x, That Was the Question

SegWit2x was supposed to be a SegWit derivative that doubled the amount of data a block could hold from 1MB to 2MB. The SegWit2x plan came into being at the 2017 Consensus conference in New York. At this event, 58 Bitcoin-related companies signed an agreement proposed by the Digital Currency Group – the company behind $GBTC. This agreement proposed that SegWit be activated as soon as possible, and that it be followed up by a block size increase in mid-November. The agreement came to be known as the New York Agreement (NYA).

CoinTelegraph was able to collect data on 57 of the original 58 companies that signed the NYA. Sixteen companies were wallet providers,15 were exchanges, nine were miners and 17 businesses can be classified as “other.” In this case, “other” means that they are businesses that provide goods or services in the cryptocurrency space.

As time passed, a number of companies began to withdraw from the NYA or decided to focus their resources on the Bitcoin Cash chain instead of Bitcoin and the proposed SegWit2x upgrade. As of early November, 12 companies had withdrawn from the NYA, eight had focused their resources on the Bitcoin Cash chain, and 38 of the original 58 companies still supported SegWit2x.

Positions of the NYA Signee's as of November 6, 2017

Reneging

Of the 12 companies that withdrew, one company was a wallet provider, three were exchanges and eight were “other.” No miners formally withdrew from the agreement, although F2Pool stopped signalling for SegWit2x in mid-October. Every company that withdrew from the NYA publicly announced their reasons.

SurBTC, a Bitcoin and Ethereum exchange in Chile, Columbia, and Peru said their reason for leaving was:

“Even though we would be happy to have moderately larger blocks to accommodate growing demand, we feel that Bitcoin needs (at least a majority) of Bitcoin’s core developers’ support in order to do this responsibly. We have not seen this support and we do not like what we are currently seeing on the btc1 code repository in terms of technical considerations and open source collaboration.”

SegWit2x received a lack of support from both the Bitcoin core developers and the wider crypto-community. Both the core devs and many in the community thought that it was too soon to upgrade the Bitcoin network. SegWit2x was planned to occur in November, barely three months after the network had upgraded to SegWit.

California-based Civic took to Twitter just a few days before SegWit2x was cancelled to express their reasons for withdrawing from the NYA. Vinny Lingham, CEO/Founder of Civic, said:

SegWit2x suspended

On November 8, 2017, Mike Belshe published a statement supported by Wences Casares, Jihan Wu, Jeff Garzik, Peter Smith and Erik Voorhees:

“It is clear that we have not built sufficient consensus for a clean blocksize upgrade at this time…we are suspending our plans for the upcoming 2MB upgrade.”

Many agreed that SegWit was a sufficient solution in the short-term for solving the congestion problems the Bitcoin network was experiencing. This congestion had led to high transaction fees and slow confirmation. However, 2X supporters believed that the implementation of SegWit merely postponed another network overload taking place. They thought that doubling the block size would give the network a little more breathing room until a permanent scaling solution could be implemented.

Although SegWit makes transactions more efficient, the Bitcoin network continues to experience significant congestion, with 115,000 unconfirmed transactions at press time. Transaction numbers are growing rapidly, and SegWit by itself has not proven sufficient to handle the load.

Market goes crazy

The morning SegWit2x was suspended, the price of Bitcoin sat at $7,200. Many have speculated that investors had increased their Bitcoin position to receive more 2X tokens. Indeed, those who received large amounts of Bitcoin Cash in the August 1 split found themselves to be well-rewarded financially. This led many to believe that forks were essentially “free money” and that all they had to do was line up to receive it. Of course, they neglected to realize the existential threat that a chain split between legacy Bitcoin and Bitcoin 2X could have brought about.

Immediately following the announcement of SegWit2x’s cancellation, the price of Bitcoin jumped to $7,800 before rapidly retreating. At first, it seemed that the cancellation of a dangerous hard fork had increased investors’ confidence in the Bitcoin network. Since the split didn’t occur, the network was more unified in terms of hash power and cooperative nodes, which both play a vital role in the Bitcoin Economy.

Yet by November 10, the price of Bitcoin dropped as low as $6,400. Why? With the fork suspended, investors may have felt like they pumped up their position in Bitcoin for no reason, since they wouldn’t end up receiving this “free money” after all. It’s also likely that the remaining “big blockers” decided to leave Bitcoin altogether, perhaps migrating to Bitcoin Cash or Dash.

Ultimately the price of Bitcoin dropped as low as $5,500 before rebounding to about $6,600 at press time. While the price of Bitcoin dropped, that of Bitcoin Cash surged from $600 to $2,600 in a matter of days. The alternative currency has since lost half its value, and sits at about $1,300.

What next?

Although the plan to implement SegWit2x may have been a bit hasty, scalability is definitely going to be an issue for the Bitcoin network in the future. The volume of transactions that occur on the Bitcoin network is increasing everyday and transaction fees are skyrocketing. Many have placed their hopes on the lightning network which is expected to move many transactions off-chain, increasing the network’s capacity. As of yet, lightning network has not been deployed, and use of the Bitcoin network is prone to delays and high expenses.

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“A Couple of VCs and CEOs”: WhalePanda Delivers Final Verdict on SegWit2x

Cryptocurrency commentator WhalePanda has published what he describes as “final thoughts” on SegWit2x prior to its fork date Nov. 16.

One of the most outspoken sources against SegWit2x and its proponents, the Twitter personality released a dedicated blog post Monday in which he repeated accusations that the hard fork is “just another attack against Bitcoin.”

“Do you really want to give up your financial freedom and independence and put it in the hands of a couple of VC’s and CEO’s?” he questioned readers.

Mimicking the SegWit2x obituary published by news media outlet CoinDesk today, WhalePanda outlines five ways in which it has or will impact the Bitcoin industry.

“Financial incentives,” “slow blocks after the (hard fork),” as well as considerations about the oft-touted line that “the chain with the most accumulated difficulty is Bitcoin” join issues about scaling misinformation and pace of development.

Regardless of the outcome, fees will be higher and the network slower for users WhalePanda forecasts, with the effects lasting “a month or two.”

“Whatever Jeff, Bobby or any others like to tell you: This is not an upgrade, this is an attack. Prepare for very slow blocks and high fees, whatever that means for you,” he added.

Jeff Garzik is the principal developer of 2x, who is also launching his own ICO token, while BTCC CEO Bobby Lee most recently came out in support the “proposal”, to much criticism.

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Jeff Garzik’s New Altcoin Will ‘Jump’ Blockchains to Avoid Infighting Fallout

Principal SegWit2x developer Jeff Garzik has announced he is already working on a new separate cryptocurrency called Metronome.

As Bloomberg reports Tuesday, Garzik is seeking to create the altcoin – which unlike 2x will not be a fork of Bitcoin – as the first of its kind to ‘jump’ between different Blockchains.

“If I had a clean slate of paper this is what I would design,” the publication quotes Garzik as saying.

SegWit2x continues to provoke controversy throughout the cryptocurrency world, with figures and businesses both split as to whether the fork is a beneficial addition to Bitcoin or an attempt at a so-called “hostile takeover” of the network.

Metronome’s unique selling point – insuring holders against “infighting” from a certain development team – is thus more than a little ironic.

“The mobility means that if one Blockchain dies out as the result of infighting among developers or slackened use, Metronome owners can move their holdings elsewhere,” Garzik added in paraphrased comments.

Metronome is the developer’s brainchild as co-founder of Blockchain enterprise platform Bloq. Fellow co-founder Matthew Roszak was extremely upbeat about the coin’s long-term prospects.

“Institutional investors should be very excited to see something like this,” he said. “We’ve built a thousand-year cryptocurrency, something that’s built to last.”

The ongoing Money20/20 conference in Las Vegas will form the official unveiling of Garzik’s creation this week, while SegWit2x is slated for forking Nov. 18 and its release soon after.

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Jeff Garzik Startup Bloq to Launch New Cryptocurrency in Token Sale

“‘Tis what it ’tis.”

Call it a statement on the times, but Bloq CEO Jeff Garzik isn’t exactly expecting a warm reception to the news his startup is launching a new token.

Long a controversial figure at the center of the debate on how best to scale the public bitcoin blockchain, Garzik’s company is today announcing what it believes will be a solution to the infighting he perceives as keeping money out of the established cryptocurrency market.

Revealed at Money2020 in Las Vegas, Bloq is unveiling metronome, a cryptocurrency that seeks to claim a series of firsts in crypto-economics, including offering users the ability to switch the same token back and forth between blockchains as desired.

“It’s sort of a best-of-all-worlds cryptocurrency,” Garzik said, describing it as a “boxcar” that could ride on top of any compatible blockchain.

Garzik told CoinDesk:

“You can run it on the etheruem, ethereum classic, quantum. That’s one of the key ways that this is self-governing, for the first time, you’re not tied to a single blockchain, you can run metronome contracts on any EVM compatible blockchain.”

As for how it will impact the Bloq business model, today focused on enterprise services, Garzik and co-founder Matt Roszak indicated they believe the project is consistent with the firm’s “multi-token, multi-network” vision for blockchain development.

Launched in 2016 with the goal of bringing Red Hat-inspired services to bitcoin, Garzik echoed a familiar refrain in an interview, voicing his belief bitcoin is still destined to form the “root of an Internet of blockchains,” others of which may have different use cases and attributes.

In this light, Garzik framed metronome as seeking to offer a utility to those who want to a more reliable store of value and foundation for distributed applications.

“We feel that there is a consistent demand for a cross-chain option. I point to the major uncertainty of proof-of-stake and proof-of-work, where the proof-of-stake system is going to change the money supply, but [ethereum] hasn’t stated how much it will change,” he said.

That said, Garzik said metronome isn’t exactly a bit to replace the prevailing public blockchains available on the market, so much as to tailor them to a different audience.

“You can expect the bitcoin maximalists’ from the ethereum maximalists’ reactions, but it’s building on the strength of existing blockchains, it’s not trying to elbow them aside,” he said.

No ‘existential risks’

But if some of the more acrimonious debates in the cryptocurrency world seem besides the point, Garzik’s involvement appears to have left him with inspiration for his latest work.

As outlined in the metronome white paper, one of the chief selling points of the token is that it boasts “zero founder control” after its launch, and as such, is resistant “to the whims of individual or community discord” by functioning as a series of smart contracts.

All told, metronome is comprised of four types of smart contracts, which allocate the distribution of new tokens, regulate supply and liquidity and move funds between accounts.

Praised as a feature by the Bloq team, Roszak believes this sophisticated automation will encourage large investors who have yet to put money into public cryptocurrencies for fear of the seemingly erratic decision-making by developer groups to do so.

“When they analyze cryptocurrency, the analysts engineers and economists sitting at the committee, they’re saying they pick the top two – bitcoin and ether. Then they say, well there’s forks, ‘civil wars,’ ‘proof of Vitalik,'” Roszak posited. “They’re cryptographically secure but these components create surprise and risk.”

In contrast, Roszak framed the Metronome token as “fixed and locked in stone,” attributes he suggested should counter these concerns.

However, Roszak seemed to shirk the idea that the nascent state of blockchain technology could pose problems give the fixed nature of the distribution system of the cryptocurrency. Rather, he sought to stress that while the monetary network is set, flexibility will be provided in the ability of the token to port the system between blockchains.

“Having that rigidity of knowing exactly what the token does and behaves, that certainty, seeing that mintage curve is not available in any other cryptocurrency,” he said.

Monetary network

Equally unique, however, is how the token will seek to operate on launch.

As described in its announcement materials, metronome is opening with an initial auction of 10 million MTN, with 8 million MTN being made available to the public and 2 million being set aside for Bloq as the principal development team.

Any proceeds of the sale will be sent to smart contracts that will manage the distribution of the funds, which Garzik said will distribute the proceeds “over decades” to metronome users.
As an example, there will be a stable allocation of new metronome tokens daily, with about 2,880 MTN created during the first 40 years.

Here, too, Garzik sees metronome as offering an innovation in a market where most cryptocurrencies are scheduled to reduce their supplies to zero.

“That’s one of the worries about the bitcoin-type supply curves, and it’s assumed and hoped that that will pay to sustain the system. But, that’s just a hope,” Garzik said.

Still, it’s here where metronome perhaps could run into issues similar to the ones it’s seeking to avoid in its designed. Noted in the white paper is how certain groups could take steps to alter the supply rate.

“A consortium could agree to fork the MTN supply with a new MTN contract on the same or different chains, by exporting funds they control to the new fork,” the white paper reads.

That such decisions could also form the subject of infighting is not addressed in the paper.

Sale details

That said, Bloq is aiming to move swiftly on the launch of the token, setting a date for the first week of December for its token sale.

According to Roszak, the Metronome code has undergone three audits since it was first written, with Ethereum Foundation member Gustav Simonson, Demian Brenner, CEO of smart contract review services provider Zeppelin, and Martin Swende, security lead at the Ethereum Foundation, auditing the code.

On release to the public, Bloq will aim to use a descending price auction model by which tokens become less expensive to purchase as the sale progresses.

Still, it’s worth noting that similar models have been tried without success, with a so-called Dutch auction system put in place by distributed application project Gnosis seeing its tokens raise $12 million, selling out in a matter of minutes.

Yet, it was the current state of the code that was perhaps the biggest selling point toward a sale.

“Today, you can raise money with a good idea, but as some of these things get pressure-tested, you’ll have to launch with code, then you’ll have to launch with users,” Roszak said.

He concluded:

“We’re launching with code that’s ready.”

Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Bloq.

Metronome image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

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Jeff Garzik SegWit2x Bitcoin ‘Upgrade’ Comments Spark Trolling Campaign

Bloq founder and former Bitcoin Core contributor Jeff Garzik is facing new criticism over his SegWit2x advocacy.

Comments by Garzik on Twitter Sunday caused well-known cryptocurrency community figures to come out in disagreement, many having already taken a public stance against the Bitcoin hard fork.

Garzik’s description of SegWit2x as an “upgrade” to Bitcoin turned out to be particularly contentious.

“Segwit is an upgrade,” commentator Vortex responded. “Segwit2x is an alt coin created by a single dev who thinks he knows more than Core.”

The debate metamorphosed Monday to incorporate dedicated troll accounts targeting Garzik, paraphrasing his previous comments.

Circumstances have become increasingly difficult for Garzik since his rejection from the Bitcoin Core Github repository in August.

SegWit2x has since hardened its position with his involvement, with the cryptocurrency industry and businesses expecting the repercussions of its genesis in November to be more wide-reaching than that of the Bitcoin Cash fork in July.

Bitcoin has shaken off initial concern about the impact of the coming hard forks to its network, with prices staying above $4500 once again over the weekend and even achieving $4623, representing a one-month high.

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Satoshi’s Best Kept Secret: Why is There a 1 MB Limit to Bitcoin Block Size

Anybody familiar with Bitcoin is aware of the vexing problem caused by the 1 MB blocksize limit and the controversy that arose over how to scale the network. It’s probably worthwhile to look back on how that limit came to exist, in hopes that future crises can be averted by a solid understanding of the past.

A long time ago, in a land far away

In 2010, when the blocksize limit was introduced, Bitcoin was radically different than today. Theymos, administrator of both the Bitcointalk forum and /r/bitcoin subreddit, said, among other things:

  • “No one anticipated pool mining, so we considered all miners to be full nodes and almost all full nodes to be miners.

  • I didn’t anticipate ASICs, which cause too much mining centralization.

  • SPV is weaker than I thought. In reality, without the vast majority of the economy running full nodes, miners have every incentive to collude to break the network’s rules in their favor.

  • The fee market doesn’t actually work as I described and as Satoshi intended for economic reasons that take a few paragraphs to explain.”

 

It seems that late in 2010, Satoshi realized there had to be a maximum block size, otherwise some miners might produce bigger blocks than other miners were willing to accept, and the chain could split. Therefore, Satoshi inserted a 1 MB limit into the code.

And he kept it a secret.

Secret squirrels

Yes, Satoshi kept this change a secret until the patch was deployed, and apparently asked those who discovered the code on their own to keep quiet. He likely kept things quiet to minimize the chances that an attacker would figure out how to use an unlimited blocksize to DOS the network.

Theymos puts it:

“Satoshi never used IRC, and he rarely explained his motivations for anything. In this case, he kept the change secret and told people who discovered it to keep it quiet until it was over with so that controversy or attackers wouldn’t cause havok with the ongoing rule change.”

It’s also likely that Satoshi never expected the 1 MB blocksize to be a problem. At the time, the average blocksize was orders of magnitude smaller than 1 MB, and it looked like there would be time enough to devise a solution. Satoshi himself said, of the blocksize limit:

“We can phase in a change later if we get closer to needing it.”

And again:

“It can be phased in, like:

if (blocknumber > 115000)

   maxblocksize = largerlimit

It can start being in versions way ahead, so by the time it reaches that block number and goes into effect, the older versions that don’t have it are already obsolete.

When we’re near the cutoff block number, I can put an alert to old versions to make sure they know they have to upgrade.”

It’s apparent that Satoshi foresaw the removal of the blocksize limit as trivial and had no idea that such a minor code change would generate a firestorm.

Foreseeable problems

Bitcointalk user “kiba” presciently commented, shortly after the cap was created:

“If we upgrade now, we don’t have to convince as much people later if the bitcoin economy continues to grow.”

In response to Satoshi’s comment that the limit could always be removed if necessary to support higher transaction capacity, Jeff Garzik pointed out:

“IMO it’s a marketing thing.  It’s tough to get people to buy into a system, if the network is technically incapable of supporting high transaction rates.”

Clearly the warnings were present.

Why not bigger?

Many have asked why Satoshi didn’t create a larger blocksize, like 8 MB. The answer is three-fold:

  • It wasn’t needed, as even 1 MB was far larger than the largest blocks that had ever been mined.

  • It was technically easy to change, simply substituting one value in the code for another.

  • Larger blocks create technical challenges.

Back in 2010, Internet technology was such that larger blocks would not have propagated properly. In 2015, Theymos recalled:

“One obvious and easy-to-understand issue is that in order to be a constructive network node, you need to quickly upload new blocks to many of your 8+ peers. So 8 MB blocks would require something very roughly like (8 MB * 8 bits * 7 peers) / 30 seconds = 15 Mbit/s upstream, which is an extraordinary upstream capacity. Since most people can’t do this, the network (as it is currently designed) would fall apart from lack of upstream capacity: there wouldn’t be enough total upload capacity for everyone to be able to download blocks in time, and the network would often go “out of sync” (causing stales and temporary splits in the global chain state).”

Segregated Witness and Lightning Network

Today’s Bitcoin uses a piece of code called Segregated Witness (SegWit) to separate signatures from transaction data, effectively allowing the network to “cheat” by creating larger blocks than 1 MB, yet still counting them as being below the cap. SegWit also fixes a vulnerability called transaction malleability, enabling the creation of something called the lightning network.

The lightning network is envisioned as a way for Bitcoin users and/or merchants to open payment channels with one another in a secure and trustless fashion. Funds can be exchanged between these parties without the transactions being written to the Blockchain. This keeps the Blockchain small, capable of being served by reasonably powerful computers. The lightning network would periodically need to “anchor” to the main Bitcoin Blockchain, but would allow enormous increases in transaction capacity with very small increases in the size of the Blockchain.

So far there is no working implementation of lightning network on mainnet, although there are versions on test net. Lightning network will be entirely optional, and users can choose to send ordinary transactions instead, if they so choose.