Bitcoin Price Rises $200 Overnight on Potential Scaling Compromise?

The bitcoin price is up around $200 from last night on hopeful leaked information that some sort of scaling compromise had been made. Chatroom snapshots with people like Charlie Shrem and leaked rough sketches of a compromise, have left many people feeling different ways. I would say for many, a scaling situation that has some sort of compromise is wanted, but there have been some subtle changes apparent on the rough draft that leave questions to be answered.

If the leaked rough draft is legitimate it seems that both bitmain and bitcoin.com, controlled by Jihan Wu and Roger Ver respectively, are on board with the compromise. That being said however, blockstream or any main core developer is missing. That being said, it looks far less like a compromise and more like a plea for blockstream to meet in the middle. The consensus 2017 conference in New York started today so it is likely they are trying to reach out to the core developers there with the rough draft.

The compromise seems simple on the surface, segwit gets passed and then there is a 2MB hard fork, but things are a tad more complicated than that. First, it seems like segwit is going to be passed with a new update to the code that would only need 80% of hashpower rather than the 95%, most likely because Barry Silbert doesn’t have everyone on board. I actually don’t mind this change as I think 80% of hashpower is more than enough to push through an upgrade. You risk invalid blocks, but most miners who control large amounts of hashpower will switch instantly or risk losing profit.

In addition the new revised segwit they are talking about will most likely remove many of the features that people want in the current segwit, that will move us closer to lightning networks. We don’t know this for sure because it hasn’t been developed yet, but from what Roger and Jihan have said in the past, it doesn’t seem like they would compromise on segwit in its current form. We will just have to wait and see for this part and hope for the best if the compromise is chosen, or else it will quickly fall apart.

The second big criticism of the compromise is that the hard fork is to happen in September 2017 which is extremely hasty to let all the companies in the space plan for a hard fork. It isn’t just a simple one or two line code change. There will be a lot of logistical work needed to make sure everything goes very smoothly. This part alone seems to have many people up in arms and against the proposal, going as far as calling it a trap to delay other means of upgrading the protocol, most notably with the user activated soft fork.

It seems that ultimately the rough draft of the proposal has not pushed people towards a compromise, but more towards a user activated soft fork deployment still aimed by the end of the summer. In many people minds, they don’t trust Roger or Jihan and are taking the sign of a compromise that they are desperate. I think they are wrong in this respect and pushing this ideology will only further drive us apart. We wont be able to tell what is in the final draft of the compromise until it is officially released by Silbert, most likely at the end of the consensus 2017 conference, but what I can say is I don’t have much faith that both sides will see eye to eye.