Bitcoin Mining Titan BitFury: No to BIP 101, Yes to Block-size Consensus

Bitcoin Magazine
Bitcoin Mining Titan BitFury: No to BIP 101, Yes to Block-size Consensus

In anticipation of the Scaling Bitcoin Hong Kong workshop on the 6th and 7th of this month, BitFury has re-established its belief that the current 1 megabyte block-size limit must be changed only if agreed upon by consensus.

The largest mining pool outside of China, controlling some 15 percent of hashing power on the Bitcoin network, maintains that it won’t change its code to allow for bigger blocks through a solution that’s not broadly accepted by the Bitcoin community – such as BIP (Bitcoin Improvement Proposal) 101.

“We will not use a solution if it is not based on a consensus among the Bitcoin community, as we think the idea of consensus is central to the Bitcoin protocol,”

BitFury CEO Valery Vavilov told Bitcoin Magazine. “As Bitcoin Core developers note , Bitcoin is not only software, but also a blockchain protocol. Therefore, we think that the Bitcoin protocol should be developed like other Internet protocols – by a consensus process involving all parties. This process may be lengthy, but it is better than making decisions that don’t consider all points of view.”

December might be a crucial month for Bitcoin’s future, as the block-size dispute – representing a trade-off between the number of transactions the Bitcoin network can handle and its decentralization – might reach a critical juncture. A large segment of Bitcoin’s engineering and academic community will discuss the issue of how best to scale Bitcoin at the upcoming workshop in Hong Kong starting this Sunday, while several prominent Bitcoin companies have stated they intend to change their code to allow for bigger blocks shortly afterward.

Vavilov agrees that Bitcoin’s block-size limit needs to be increased eventually, though he does not consider the situation as urgent as most proponents of a rapid increase do. Moreover, the BitFury CEO does not believe Bitcoin necessarily needs to scale ‘on-chain,’ as additional layers built on top of Bitcoin’s blockchain should eventually be able to take on most of the workload.

“Bitcoin’s block-size limit needs to be increased in order to achieve wide Bitcoin adoption, but we don’t consider this an urgent issue,” Vavilov said. “As statistics suggest, the current average block size is a little over 0.5 megabyte – well below the 1 megabyte block-size limit. We believe that most of transaction throughput would be performed off-chain in the long term using Lightning, sidechains and other scaling technologies. However, even in this case, the blocks sizes need to be increased eventually; the authors of the Lightning white paper estimate the necessary block size for global Bitcoin plus Lightning adoption at more than 100 megabytes per block.”

One proposed block-size solution designed by former Bitcoin Core lead developer Gavin Andresen, BIP 101, was implemented in Bitcoin XT, the alternative Bitcoin implementation run by Google veteran Mike Hearn. This patch is programmed to increase the maximum block size to 8 megabytes if a threshold of 75 percent of mining power accepts the change. Once activated, this limit is set to double every two years for 20 years, ultimately leading to an 8-gigabyte block-size limit. BIP 101 is favored by several leading Bitcoin companies as well as Slush Pool.

Vavilov has no plans to change BitFury’s code to allow for bigger blocks through BIP 101, however.

“As detailed in our white paper on the subject, we do not support an upgrade to BIP 101,” Vavilov said. “In our opinion, BIP 101 is not sufficiently tested nor theoretically substantiated. Its introduction could bring radical changes to the topology of the Bitcoin network. Additionally, we think that a more gradual increase of the block-size limit will help develop a transaction fee market. This would be great for the Bitcoin ecosystem from the security point of view.”

One alternative block-size proposal that has been gathering support is an incremental increase to 8 megabytes in three steps over four years time. Proposed as a temporary solution by Blockstream CEO and hashcash inventor Dr. Adam Back, this “2-4-8” option seems acceptable to a significant segment of the Bitcoin Core development team, as well as prominent industry members.

Vavilov indicated this solution could be acceptable, too.

“We would rather prefer to see a long-term solution,” the BitFury CEO said when asked by Bitcoin Magazine. “If increasing the block-size limit quickly is really necessary, a temporary solution would do fine, too, provided it would buy enough time to develop a long-term strategy.”

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Sia Launches Decentralized Blockchain-based Storage Platform Similar to Filecoin and Storj

Decentralized cloud file hosting service operator Sia has announced the launch of an automated peer-to-peer blockchain-based collaborative cloud for data storage, allowing users to create tailored storage plans with robust security protocols. Similar to decentralized storage projects Filecoin and Storj, Sia aims to create a trustless, fault-tolerant, file storage service.

The Sia platform stores personal and user data across multiple nodes and tracked by automated smart contracts. Files are protected through a multiple-stage process and encrypted with an algorithm called Twofish.

The strength of the platform relies on its Reed-Solomon-based file distribution system. All user data is split into several pieces as it enters the Sia client, leaving very few fractures necessary to recover the original data. These pieces of sensitive user information are padded to 4 megabytes, to protect user privacy. Finally, each padded piece is encrypted using unique encryption keys in the client side.

These security protocols are designed to prevent hackers from seizing user data of the Sia platform in an event of a data breach.

“Hosts receive an encrypted blob and are not given any information about where the other pieces of the file are. Even if they found out, they would still have to crack multiple encryption keys to recover the file. Cryptographic checksums are maintained by the client that alert the user to any tampering that the hosts may have attempted,” the Sia team told Bitcoin Magazine in an interview.

According to the team, the sophisticated encryption and decentralized file distribution system of the Sia platform could be used for decentralized application development. Its API enables developers to store files of the application directly into the Sia client, allowing third-party app users to directly access their customized data storage systems without revisiting the original client.

The company also announced a partnership with flexible back-end application development platform Crypti to allow its engineers to integrate the Sia API to grant access to its data storage client.

“Crypti has integrated with Sia as a storage layer for their decentralized application development. Sia provides an API that can be used to upload files to the storage network. Crypti is a flexible platform that can integrate with multiple backends, but Sia is the first decentralized offering, allowing developers to build truly trustless Crypti apps,” the Sia team told Bitcoin Magazine.

Both third-party application and the Sia platform users are given the permission to issue smart contracts for file storage. The feature allows an uploader and a host to agree on storage terms including duration of storage, payment scheduling and amount and embed the information onto the blockchain, creating an unalterable contract automatically.

“When the contract ends, the host must submit a storage proof to the blockchain, demonstrating that it still has the file specified by the contract. If the proof is valid, the uploader’s money is transferred to the host, and the host’s collateral is returned. But if the host submits an invalid proof, or no proof at all, then all of the money is given to the uploader,” explained the Sia team.

“The extraordinary parallelism of the Sia network means that upload and download speeds can saturate most connections. The vast array of distributed nodes means that Sia would make an excellent CDN. The erasure coding algorithms over the global network make Sia much more resistant to block swan outages such as power failures and natural disasters. The specifications of the Sia network are superior across the board,” claimed the team.

Currently, Sia’s cloud storage network is being sold at at $3 per terabyte per month. According to its website, the network is hosting over 1 terabyte at time of publication.

Now that the project has officially launched, the Sia team aims to onboard developers and enterprise customers. As the platform gains traction, the team plans to continue to improve the core Sia protocol and hire talented engineers to improve the platform’s security protocols and user experience.

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