by Jamie Holmes
Last week saw a pincer movement against Bitcoin. On the one hand, you have the threat of a split in the network, with Bitcoin Unlimited looking to make its own path and forge ahead without submitting to SegWit and Bitcoin Core. On the other hand, China’s central bank is preparing draft legislation which, if approved, would aim to identify every bitcoin user that uses an exchange, with the possiblity of physical outlets popping up, so that traders would have to verify themselves in person. PBoC officials are due to meet with the heads of Chinese exchanges this week, which could precipitate another upset for BTC-USD.
This week’s review is compiled from contributions by Alexander Lielacher, Christine Chiang, Christoph Bergmann, Jamie Holmes, Joseph Young, Michael Scott, and Nigel Dollentas.
The Bitcoin community is at risk of bifurcation in all senses of the word. We are now witnessing a contentious political split between “small blockers” and “big blockers” while simultaneously facing the possibility of a hard fork. On the afternoon of March 14, SegWit “small block” supporters aimed, fired, and reloaded round after round of 150 character tweets, aimed at the “big block” proponents behind Bitcoin Unlimited about yet another catastrophic failure of their implementation. We detail the chain of events that unfolded over the span of twenty-four hours.
As the likelihood of a Bitcoin hard fork increases, a document published March 17 details a contingency plan that nearly 20 exchanges plan to be a part of in the event of a split in the Bitcoin network. Exchanges include ones with massive amounts of volume, such as Bitfinex, BTCC, Kraken, and ShapeShift, as well as some lesser-known exchanges. The reasoning behind these actions was not philosophical as the document claims, but “rather for practical and operational considerations.”
There is a new proposed solution that is flaring up the scalability debate once again. The proposed solution, referred to as “Super UASF” (Super User-Activated Soft Fork), was suggested on the Bitcoin development mailing list by a pseudo-anonymous developer with the name of ‘shaolinfry’. Shaolinfry suggests that a user-activated soft fork could be the solution for Bitcoin scalability issues. He suggests that instead of miners determining the next upgrade to the Bitcoin blockchain that the economic players in the ecosystem, such as exchanges, wallet providers, merchants, and payment processors, determine a soft fork that will upgrade the blockchain to make it more scalable.
BTC-USD dipped below $1000 to a five-week low, temporarily trading below $975, the low in the market following the COIN ETF’s disapproval. Two factors which precipitated the panic in markets are the possibility of a split in the network due to the standoff between Bitcoin Core and a substantial proportion of miners and the proposed verification of bitcoin users’ identities in China.
The Bitcoin ecosystem evolves. Coinbase, with six million users the largest exchange platform in the US, reacts to the emerging fee market and does no longer pay the transaction fee for its customers. Off-chain transactions, from Coinbase account to Coinbase account, however, are still free. Besides some minor updates in its so-called “Spring Cleaning” Coinbase also adjusts its wallets to the emerging fee market.
The blockchain-powered custom tokens platform Waves launched a secure, reliable speedier bitcoin gateway for holding bitcoins on the network on March 11. This move comes amid continued concerns within the Bitcoin community about block sizes and slow transaction confirmation times. Amid Bitcoin’s strengths are some well-documented weaknesses, however. Development has been slow, and efforts to gain consensus related to protocol changes have been contentious.
BTC.com successfully completed midwife duties for the very first Bcoin block that made it onto Bitcoin’s mainnet. Block #457010 timestamped 04:30:51 on March 13 was found; some blocks were orphaned in the making. On February 10, Bcoin, Purse.io’s Bitcoin full node reimplementation of the Bitcoin consensus protocol, was publicly released into the wild. BitPagos had been the first to run Bcoin in production, followed by Purse.io on 31 October 2016. Only about one month after the official launch date, a user going by “bitkevin” announced on Bcoin’s github that its very first block had been mined.
Several conventional economists including Ann Pettifor are still pushing the “Bitcoin is criminal money” narrative with the sole intention of misleading the general public. Pettifor firmly believes that bitcoin is a pyramid scheme. However, like many other conventional economists and analysts including Marathon Asset Management CEO Bruce Richards, she struggles to provide a viable reason to supplement her argument. For that, Pettifor was criticized for her inability to understand the structure of bitcoin, gold, and pyramid or Ponzi schemes.