At the start of the year, we made a prediction that a single Bitcoin would be worth between $2,000 and $3,000 by the end of 2017 and we are already more than halfway to the upper level of that prediction!
It has been a spectacular week for Bitcoin and the extraordinary bull run took place during Bitcoin’s biggest week of the year: the Consensus 2017 conference! This is an annual event where the Bitcoin and blockchain community get together and discuss everything from new developments to ICO’s. However, one topic that has been a growing concern for Bitcoin since 2012, is scalability.
So, what are the new developments in the Bitcoin scaling debate?
Well, it was announced that a meeting between many Bitcoin startup executives and Bitcoin miners took place, which resulted in a new scaling solution proposal. The proposal is reported to have been signed by more than 50 companies and has allegedly gained the support of 83% of the Bitcoin network's mining operations.
The new scaling proposal consists of 2 changes.
The first element of the proposal is to lower the activation limit for the scaling solution Segregated Witness (SegWit) from the initial 95% consensus required. SegWit is solution that aims to fix transaction malleability as well change the way segments of data, within transactions, are counted towards the overall block size limit. Specifically, it suggests that the witness data, i.e. the data used by the miner and node confirming the transaction, will only be counted as a fourth of its size, meaning that the available space within a block may theoretically increase by up to 4 times, presenting an immediate, short-term solution to the 1MB limitation issue.
The next part of the proposal is an agreement that all signed parties will run software that will result in a hard fork to increase Bitcoin’s block size limit to 2MB, doubling from its current 1MB block size.
This new proposal is a combination of both proposals from Bitcoin Core and Bitcoin Unlimited however, Blockstream, the company that funds the development team behind Bitcoin Core, have declined their invitation to sign the agreement, suggesting they do not feel that ‘middleground’ has been reached.
So, are we closer to scaling Bitcoin?
Well, not just yet.
Without Blockstream’s support we are still very much in a Mexican standoff when it comes to scaling, but with projects such as Rootstock and Lightning Network patiently waiting, an agreement is needed sooner rather than later, and at least the willingness of the majority of mining operations to commit themselves to the proposal offers a glimmer of hope that we are making some level of progress, albeit slowly.