Bitcoin as on 1/8/17. Why everyone is talking about this date?

A cold war has been brewing for a while already. It gets hot on the 1st of august.

I’m going to give you the shortest version possible. It’s still long because it’s a complicated problem. But fear not, it’s full of drama, backstabbing, last stands and other epics. So it’ll be a fun read.

With Bitcoin's current block size, we can only have 3 transactions per second. Two months ago, we hit that wall. This had been a long-known issue in Bitcoin, and there are two way of fixing it:

Make the block bigger.
Optimize transactions so that more fit per block.
The cold war is between proponents of those two solutions.

Making the block bigger is a final solution. As in : we'll never have the problem again. We just program the block to become as big as needed. The problem with that solution is that bigger blocks make mining more difficult, which will drive out the small miners and concentrate power with the big server farms. "Concentrate power" is a four-letter word in cypherpunk. Also, changing the block means we need a hard fork of the blockchain, which is a bit like a hard Brexit. It'll hurt.

Fitting more transactions per block isn't a final solution. It just kicks the can down the road. However, by the time we reach the can again, a new technology might render the block size issue moot. It would happen by moving a lot of transactions off the blockchain, without losing trust. I am talking of course of the much anticipated Lightning Network.

It's a bit of a gamble, to wait for the Deus Ex to solve everything, but it's totally a possibility.

Note that block optimization does not at all preclude blocksize increase. We could totally go with optimization now, and increase size later.

Pretty much everyone recognizes this and wants block optimization right the fuck now. I don't know if you noticed, but the transaction costs have gone through the roof lately. It's affecting real people like me. Who's going to buy my book for 1mB when they pay ½mB of transaction costs? Nobody, that's who. So following this plan makes sense to everyone in the community:

Activate block optimization now.
See if the Lightning Network delivers. If yes, we all win.
If not, increase block size, we all win too.
But the big miners are blocking it, for two reasons:

They kind of like the idea of concentrating power in their own hands. So they'd rather go with the blocksize increase.
As far as they're concerned, there's no rush. High transaction fees is pure dope for them. They collect transactions fees
Since we've been relying on miners to implement important changes to the blockchain since forever, when their interests and that of everyone else diverges, they absolutely can block everything. It’s the first time it happens. We never had a way of dealing with this.

The community built a LOIC of sorts, the User Activated Soft Fork. It calls for all Bitcoin node software makers to update their software so that it stops connecting to miners who don't signal that they are ready to go with the block optimization after the 1st of August. If, on D day, enough nodes cut ties with the miners that refuse to fall in line, those miners will be mining on an invalid branch of the chain. That's cypherspeak for "not getting paid". Which, in turn, is four-letter grade in minerspeak.

The UASF has been saluted with hails of “About fucking time !” by pretty much everyone that’s not a miner or working for one. Nearly all Bitcoin node operators have agreed to go with it. The UASF will happen, that much we know. And since it is widely supported, it will most likely succeed. Which means that past the 1st of August, transactions costs will start falling back to acceptable levels, and I can sell books again.

The only way the UASF could fail is if miners band together and insist on mining the chain that the Bitcoin nodes are refusing to connect to. This would result in a soft fork, and we’d end up with two bitcoins currencies. One that accepts block optimization, and a miner-bitcoin. In that case, current bitcoin owners would end up having bitcoins on both blockchains. So, even in case of utter fiasco, no one will lose their money. Lots of things can happen to tokens, but value will remain. So don’t panic.

Miners are typically a profit-driven bunch. They are standing in the way of block optimization because it's the option that makes them less money. In a world where nodes threaten them with the UASF, it suddenly becomes more profitable to go with block optimization. The UASF is basically a tool to make it make sense for miners to agree with the community.

But let's not kid ourselves, we're totally pointing a doomsday device their way. That’s how bad things are.

PS: If you have bitcoins on an internet wallet of some sort, stop everything you’re doing and repatriate it right now to a local wallet on a machine you own. Don’t you know the old Chinese proverb: A bitcoin you don’t control the keys of is someone else’s bitcoin.

PPS: If you store your bitcoins on your own node, then you get to vote for or against the UASF. If you use a wallet that connects to an offshore node, check with your wallet maker which of their nodes support the UASF. You can vote by pointing your wallet to the one you like. If you have bitcoins and have no idea what I’m talking about right now, wisen up. Or not. It’s your money after all.