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Bitcoin XT debate overshadowing growth opportunities

Tim Hornyak | Aug. 24, 2015
Controversy has clouded the future of the digital currency, which is still trying to gain mainstream acceptance.

Bitcoin

Bitcoin is no stranger to controversy, but debate about a new version of the cryptocurrency announced recently is overshadowing its potential appeal.

On Saturday, bitcoin developers Gavin Andresen, chief scientist at the Bitcoin Foundation, and Mike Hearn, a former Google software engineer, released Bitcoin XT, a competing version of bitcoin software that allows for larger "blocks" of data in which  transactions are processed. 

Bitcoin XT would let the blockchain, a public database of transactions that can be modified by all users, accept blocks of data that are larger than 1 megabyte. The limit had been incorporated into the current system by Satoshi Nakamoto, the mysterious founder of bitcoin, but has been debated because it limits the number of transactions that can be processed by the block chain system -- currently about three to seven per second.

Under Bitcoin XT, the system would support blocks of up to 8MB, which would allow up to 24 transactions per second. While that's far below the capacity of major credit card networks, it could be an important step in widening the appeal of bitcoin for mainstream users. If users have long wait times to confirm transactions, bitcoin will struggle to gain adherents beyond its current niche. 

To succeed, Bitcoin XT will have to gain enough supporters so that it's seen as the legitimate form of bitcoin. Traditionally, if 75 percent of blocks are processed with a new release of the software, it is seen as adopted by the community. A disastrous scenario would be two competing and incompatible versions of the software. 

The promise of bitcoin is that it can be a decentralized vehicle for transferring currency through the Internet quickly, anonymously, at minimal cost and without needing a third party to confirm the payment. The possibilities are vast, not only with cryptocurrency but other applications for blockchain technology including improving traditional financial transactions.  

Ideology is of course integral to bitcoin and Bitcoin XT has sparked debate along philosophical lines. The proponents of XT believe not only that the block size must increase to match the growing user base of bitcoin, but that growth of the network is something Nakamoto envisioned. 

"The idea of a global system used by ordinary people is what motivated many of us to join him," they proclaim on the Bitcoin XT site. Andresen was appointed successor to Nakamoto, who originally published a paper outlining bitcoin in 2008 before bowing out of development two years later. 

"The decision-making process in Bitcoin Core has broken," Hearn wrote in a post on Medium, adding that "the block size debate has been allowed to drag on for years."

 

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