Goodwin Procter – As Bitcoin enters its seventh year of existence, the community that surrounds it is trying to decide how to guide and grow the currency into the future.
Currently, the size of a block (which is a bitcoin data file) is 1MB and recently there have been around 100,000 to 200,000 transactions per day on the Bitcoin network. Because of the increased demand, sometimes users are forced to pay a premium to be included on the block. For the currency to handle the number of transactions required for it to be a major, digital currency, and to reduce the unpredictable premium fees, many people argue that the block size will need to increase.
However, even within the portion of the bitcoin community that supports an increase in block size, the community is split in how to implement the size increase. There are proponents for using a “hard-fork”. A hard-fork is where the code introduced to increase the block size would also make the current software incompatible with previous version. Users would have to update their software to continue to be part of the block chain or risk the blockchain splitting.
Alternatively, there are those who advocate for a “soft-fork”, which is a way of implementing the change in block size that does not invalidate previous versions or transactions, but allows users to choose to upgrade or not without being split off from the blockchain.
On February 11, 2016, a large group of bitcoin community members including business, exchanges, minors, and wallets who are collectively called the Bitcoin Roundtable published a letter stating that they were not in favor of a hard-fork right now because premature action “may result in two incompatible blockchain version” and be risky to users and the bitcoin ecosystem. They urged the community to not rush into change, but allow the Bitcoin Roundtable to examine the situation over the next three weeks.
While the future of bitcoin is still far from clear, it will be interesting to see what the Bitcoin Roundtable proposes in the coming weeks.
Author: Michelle Knoop