Major Mining Pools Make a Stand Against Bitcoin XT Fork, Support for BIP 100 Grows

Bitcoin Magazine
Major Mining Pools Make a Stand Against Bitcoin XT Fork, Support for BIP 100 Grows

It has been little over a week since Mike Hearn and Gavin Andresen included Bitcoin Improvement Proposal 101 (BIP 101) into the alternative Bitcoin implementation Bitcoin XT. BIP 101 is designed to create a hard fork in the blockchain to allow for blocks of up to 8 megabytes, doubling every two years.

Despite a major uproar on forums, chat rooms and in the media, not to mention a significant drop in bitcoin’s exchange rate, support among miners is minimal. Bitcoin XT will need 75 percent of newly mined Bitcoin blocks to trigger a maximum block-size increase, but only some 1 percent of new blocks so far included such a message – all mined by Slush Pool.

Moreover, it seems unlikely that the 75 percent threshold will be reached any time soon. A significant chunk of mining pools have taken a fierce stand against Bitcoin XT, while others are very hesitant to make such a switch.

Furthermore, a rapidly growing amount of hash power is now publicly backing BIP 100, the proposal by Jeff Garzik that grants miners the right to vote the block-size limit up or down. Both F2Pool and BTCChina, as well as several smaller pools, have come out in support of BIP 100 in the past few days.

Below is an overview of all known mining pools that had at least 1 percent of hashing power on the Bitcoin network over the past week, and their stance on the block-size issue.

F2Pool (~21%): BIP 100 / 8MB

The mining pool that is perhaps most outspoken against Bitcoin XT is also the one representing the largest amount of hashing power on the Bitcoin network: 21 percent. Instead of BIP 101, F2Pool currently supports BIP 100, which, of course, makes it the biggest mining pool to do so.

Speaking to Bitcoin Magazine, F2Pool administrator Wang Chun explained that the Chinese mining pool is open to other suggestions on raising the block size as well. Chun does maintain, however, that consensus among the Core development team is a requirement, and made it abundantly clear that switching to Bitcoin XT is not an option at all.

“We do support big blocks if it is implemented in Bitcoin Core. But we believe the whole ‘Bitcoin’ XT thing is manipulation,” Chun said. “While the question whether and how to increase the block-size limit is a technical one, the Bitcoin Core and ‘Bitcoin’ XT issue is political. By introducing ‘Bitcoin’ XT, Gavin Andresen and Mike Hearn are splitting the community. Totalitarianism and dictators cannot co-exist with the free and open-source software spirit.”

Chun’s opposition wasn’t subtle.

“Boycott ‘Bitcoin’ XT. Bitcoin Core forever. Gavin Andresen and Mike Hearn should resign,” he said.

Earlier this year, F2Pool agreed on a block-size limit increase to 8 megabytes, in accordance with other Chinese mining pools. This did not, however, include a doubling of the block-size limit every other year, as implemented in BIP 101 and Bitcoin XT.

AntPool (~18%): 8MB

AntPool, the second-largest ming pool on the Bitcoin network with 18 percent of hashing power, is also part of the conglomerate of Chinese mining pools that proposed a raise of the block-size limit to 8 megabytes in June of this year. Additionally, AntPool includes a message in support for an 8 megabyte limit in their blocks. As opposed to messages that trigger a switch in Bitcoin XT, however, the message merely broadcasts an opinion. Whether the message should be interpreted as support for BIP 101, which apart from a bump to 8 megabytes is also set to double the limit every two years, is not entirely clear.

AntPool does seem a bit more willing to potentially make a switch to Bitcoin XT in the future, compared to most other mining pools. Somewhat confusingly, CEO of AntPool’s mother company Bitmain, Jihan Wu, tweeted that AntPool is willing to make a switch to Bitcoin XT if “a majority” has switched. It is unclear, however, exactly what majority Wu was referring to.

Speaking to CoinTelegraph in June, AntPool indicated support for bigger blocks as well, although the pool also voiced concern about a contentious hard fork:

“We like the idea of increasing the maximum block size, but if Bitcoin XT is too contentious, we also don’t want the community to be divided. Doubling the block size every two years may be too arbitrary, we’d like to see the block size grow according to the real needs of the network.”

Bitcoin Magazine reached out to AntPool, but received no response at time of publication. 

BitFury (~14%)

BitFury is the biggest non-Chinese mining pool on the Bitcoin network, with 14 percent of hashing power. While the pool supports an increase of the block-size limit as well, it is currently not prepared to run Bitcoin XT and vote for bigger blocks. Despite a conservative approach, however, BitFury does not completely exclude the possibility of switching to Bitcoin XT at some point in the future – but only after careful analysis and consideration.

BitFury CEO Valery Vavilov told Bitcoin Magazine: “The Bitcoin Blockchain is not an amateur project anymore – it is becoming a platform for the Global Economy of Things. Changing the base rules can affect a lot of things, thus, any changes should be done very carefully, gradually, and with with tests.”

He added: “The proposed transition to the alternative client raises some concerns about its security: It is well known that key parts of the default Bitcoin Core client were thoroughly checked and sometimes formally verified, which cannot be said about alternative clients – including Bitcoin XT.”

BTCChina (~13%): BIP 100 / 8MB

BTCChina is part of the conglomerate of Chinese mining pools that proposed a raise of the block-size limit to 8 megabytes in June of this year as well. Since today, moreover, BTCChina has started to sign their blocks in support of BIP 100.

Speaking to Bitcoin Magazine, BTCChina’s Mikael Wang made it clear that his mining pool is not prepared to make a switch to Bitcoin XT. The Chinese pool that contributes 13 percent of hashing power to the network maintains that a consensus should be found among Bitcoin Core developers on how and when to raise the block-size limit.

“We will not support Bitcoin XT,” Wang said. “What the Bitcoin community needs now is stability and growth, and we will not do anything to jeopardize this further.” 

BW Pool (~7%): 8MB

BW Pool has not mined any blocks in support of a hard fork switch to BIP 101. The Chinese mining pool that controls 7 percent of all hashing power on the Bitcoin network does, however, include messages in support of 8 megabytes in their blocks. Additionally, BW Pool was also part of the conglomerate of Chinese mining pools that agreed to an 8-megabyte maximum block-size limit in June of this year.

Whether BW Pool’s support for an increase to 8-megabyte blocks includes support for a doubling every other year, as programmed into BIP 101, remains unclear.

Bitcoin Magazine has not been able to reach BW Pool for comment.

Eligius (~5%)

U.S.-based Eligius, accounting for 5 percent of hashing power on the Bitcoin network, is another fierce opponent of Bitcoin XT and has no plans to make a switch. Much like F2Pool, Eligius’ owner who goes by the pseudonym “wizkid057” does not even consider Bitcoin XT a Bitcoin implementation – rather an altcoin.

Speaking to Bitcoin Magazine, wizkid057 said, “I see no reason to mine yet another altcoin: ‘Bitcoin XT’ is not Bitcoin.”

Wizkid057 does agree that the block-size limit should be raised at some point, somehow, but said he prefers a careful approach, and contends that such a step should be taken only when widespread consensus is reached.

“Something should – and will – be done about the block-size limit eventually, but based on real-world data,” Wizkid057 said. “It is definitely not a dire thing to try to force people into today. When a technically sound solution gets at least the most basic of consensus from users, developers, experts, miners and services, then I’ll consider moving in that direction. At this time I see nothing that fits the bill.” 

KnCMiner (~5%): BIP 101

Sweden-based KnCMiner – controlling 5 percent of hashing power – is in favor of raising the block-size limit, and endorses BIP 101 in particular. Through a letter signed by seven of Bitcoin’s leading companies – including KnCMiner – CEO Sam Cole has expressed his support for the implementation of bigger blocks on the Bitcoin network. The letter did not explicitly state that this would entail running Bitcoin XT, but it did indicate that KnCMiner will run software in support of bigger blocks by December of this year.

Earlier this year, expressing his support for bigger blocks, Cole told CoinTelegraph: “We would like to see millions of people using bitcoin. To do that we need transaction fees that everyone can afford and is willing to pay. Putting it simply, that means many more paying transactions in each block, not less paying a higher fee.”

He added: “If bitcoin transactions end up costing the same as regular transfers then most of the world won’t see any advantages at all. Add to the fact that MasterCard’s main argument against bitcoin is the seven transactions per second limit … The sooner we fix it the better.”

KnCMiner has so far not mined any blocks that would trigger a raise of the block-size limit in Bitcoin XT.

Bitcoin Magazine reached out to KnCMiner, but received no response at time of publication.

Slush (~5%): optional

The only mining pool that has come out in support of Bitcoin XT so far is Slush Pool, controlling 5 percent of hashing power. While the Czech-based mining pool does not automatically sign new blocks in support of a block-size increase, it does allow its users to choose to do so individually. Currently, some 10 percent of hashing power on Slush is devoted to mining blocks in support of Bitcoin XT, and these numbers are slowly growing. Additionally, Slush is working to inform miners connected to its pool on the pro’s and cons of Bitcoin XT.

Speaking to Bitcoin Magazine, Slush Pool operator Marek “slush” Palatinus said: “At this moment we’re preparing some online materials and articles to explain for our users what exactly BIP 101 is and why they should vote for or vote against this proposal.”

He added: “The hash-rate is rising, and I expect more to come after we publish our articles on the topic. I see there’s lot of misunderstanding and fears about a hard fork, but I’m sure Bitcoin will resolve it smoothly in any way – even if we’ll continue with 1 megabyte blocks or switch to BIP 101 on the first day of 2016.”

21 Inc. (~4%): 8MB

21 Inc, which controls 4 percent of hashing power on the Bitcoin network, has not been mining blocks in favor of a hard fork switch to Bitcoin XT. However, the American mining pool that received a record investment for the Bitcoin industry worth $116 million earlier this year, has been mining blocks supporting an increase to 8 megabytes. Whether this includes support for a yearly growing block size as included in BIP 101 remains unclear.

Bitcoin Magazine reached out to 21 Inc., but received no response at time of publication.

 Telco 214 (~2%) 

Bitcoin Magazine has not been able to reach Telco 2014, which controls 2 percent of hashing power on the Bitcoin network. The mining pool has not been mining blocks in favor of a block-size increase.

Ghash.IO (~2%)

At time of publication, Bitcoin Magazine has not received a response from Ghash.IO, which also controls 2 percent of hashing power on the Bitcoin network. The mining pool has not been mining blocks in favor of a block-size increase.


Photo Tristan Schmurr / Flickr (CC)

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Gem CEO: Bitcoin Regulations are Trying to Fit a Round Peg in a Square Hole

Regulation has always been a contentious issue in the Bitcoin industry. Some members of the community wish to avoid any regulation at all costs, while others want to work closely with regulators to bring clarity to the space as soon as possible. A panel on Bitcoin regulation was recently featured at the American Banker Digital Currency Conference, and it was during this discussion that Gem CEO Micah Winkelspecht, Chainalysis VP of Business Development Jonathan Levin, Chamber of Digital Commerce President Perianne Boring, and Bitcoin Foundation Regulatory Affairs Committee Chairman Marco Santori were able to discuss the various challenges for Bitcoin startups in the face of impending digital currency regulations around the world.

Is the BitLicense Too Broad and Flexible?

The BitLicense has been the center of attention when it comes to Bitcoin regulation since it was first announced by Former Superintendent of Financial Services for the State of New York Benjamin Lawsky, so it made sense that it was used as an example piece of regulation throughout the panel discussion. During an early portion of the conversation, Santori offered his thoughts on one of the core issues with the BitLicense, which is the broad nature of the language found in the regulation:

“What is the difference between a pure software play and a custodial wallet? What kinds of exchanges do act as custodians? These are highly fact-specific questions, and the way that the BitLicense is drafted — for better or for worse — it seeks elasticity. It wants to be flexible. I think that’s, on one side, good drafting. On the other side this speaking in metaphor makes it difficult to apply.”

One of the clearest signs that Bitcoin is difficult to regulate is the elasticity with which the regulation was drafted. As Santori mentioned, there may be unique situations where it is unclear whether or not a startup needs a BitLicense.

Fitting a Round Peg in a Square Hole

Winkelspecht took the issue of broad regulation in another direction when he discussed multi-signature addresses. After explaining what multi-sig addresses are and what they can accomplish, he noted how this kind of innovation could force changes in various legal definitions:

“When you think about this new definition of what it even means to own something, it totally transforms the way we think about solving these problems. One of the problems that we have with the regulations the way they’re written is that they’re really geared for trying to fit a round peg in a square hole, in that they don’t take into account the fact that the entire definition of custody and control can change. And so, what does custody or control mean?”

It’s difficult to force Bitcoin into the current legal framework because, as Winkelspecht noted, certain aspects of the peer-to-peer digital cash system may require completely new legal definitions. Winkelspecht provided one such example during the panel discussion:

“We’ve actually pushed — so for the legislation in California — we’ve actually written to the senate to try to get them to add a line, which just defines what they mean by custody or control. That was actually left out of the recent legislation.”

Raising Startup Costs Decreases Innovation

The problems associated with stifling innovation through regulation were also brought up by Winkelspecht during this part of the conversation. The Gem CEO explained some of the issues that small startups face when it comes to regulatory uncertainty in the Bitcoin industry:

“It’s still very, very murky and very unclear, so from a startup company who’s trying to figure out where you fit in the eyes of the law, it’s very difficult . . . Not having that level of clarity makes it extremely hard to do things like raise investment and actually try to build a sustainable business around it . . . We work every day with brilliant developers who are building solutions, and these are the guys who are actually innovating on things. They need the flexibility to try a lot of things and fail at a lot of things. If you raise the bar of what it takes to just get started, you are massively decreasing the innovation that’s going to come out of that space.”

Boring discussed ways in which a nonprofit incubator could bring along smaller new businesses before they had the ability to comply with the BitLicense. The Chamber of Digital Commerce had submitted the incubator idea to the New York Department of Financial Services as a possible solution to the regulatory issues troubling Bitcoin startups during the second comment period for the BitLicense, but the concept was never rolled into the final draft. During his own remarks, Winkelspecht went out of his way to support Boring’s suggestion.

For now, it appears there is plenty of work to be done in creating more regulatory clarity for Bitcoin companies and ensuring that innovation is not halted in the name of various legal costs.


Photo BTC Keychain / Flickr (CC)

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