Bitcoin Expansion Is Off the Table. At Least for Now.

Bitcoin Expansion Is Off the Table. At Least for Now.


In an email, the leaders of several of the largest Bitcoin companies said that “unfortunately, it is clear that we have not built sufficient consensus for a clean block size upgrade at this time.”

The New York Times Explains…

The price of Bitcoin shot up immediately after the email went out, hitting a new high, above $7,800, before retreating. The price has been steadily climbing and is up nearly 1,000 percent over the last year.

The rising price has attracted many new users, from places like Japan and South Korea and from big hedge funds, even as the authorities in places like China have cracked down on the currency.

All of the new people seeking access to Bitcoin have run up against a limit on the number of transactions that can flow through the system every 10 minutes, which was put in place during Bitcoin’s early years.

Because of the limit, the network can process only around five transactions a second. That has led to delays on the network and has pushed up the price of getting a Bitcoin transaction through.

Companies that help process Bitcoin payments have been pushing to lift the limit on Bitcoin transactions for several years, arguing that it will be necessary if Bitcoin wants to compete with Visa or PayPal.

The opposing camp has argued that quickly expanding the number of transactions flowing through the network would mean only large companies could track Bitcoin transactions, taking power away from individual users.

The proponents of keeping the so-called blocks of Bitcoin transactions small said Bitcoin should be viewed more as digital gold: a secure place to keep money, even if it can’t be moved around as quickly and cheaply.

Many of the programmers working on the basic Bitcoin software — the so-called core developers — said they would stop working on Bitcoin if the block size was increased.

They also complained that the companies pushing through the block size increase were doing so without properly consulting the community.

Leaders on both sides of the Bitcoin debate have complained about receiving death threats and hacking attacks, and some top developers have migrated toward other virtual currencies.

In August, some of the most outspoken proponents of expanding Bitcoin created their own version, known as Bitcoin Cash, which can handle more transactions than traditional Bitcoin.

The price of Bitcoin Cash has gone up since August, but it remains only a small fraction of the size of Bitcoin.

On Wednesday, the companies that had been pushing for big blocks said they were calling off their plans in order to restore some measure of peace to the community.

“Although we strongly believe in the need for a larger block size, there is something we believe is even more important: keeping the community together,” the email said.

The announcement said that the companies still believed that an increase in the size of Bitcoin blocks would be necessary, but that they were willing to wait until the community agreed on a way to deal with the issue.

The people opposed to quickly expanding the network say they still wanted to make it easier and cheaper to use Bitcoin. But they hope this will be made possible by new networks built on top of Bitcoin, keeping the Bitcoin network itself more secure and decentralized.

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