On Wednesday, Bitcoin developers suspended plans to introduce the controversial software update Segwit2x. The 2x update would have increased the size of each block from 1 MB to 2 MB, doubling Bitcoin’s transaction capacity. Segwit2x had been planned for several months and was set to go into effect around November 16th.
It’s evident that Bitcoin has a scalability problem. Segwit2x was intended to solve that problem by increasing block size. With larger blocks, transactions could flow faster and the currency would be able to handle continued growth.
However, Segwit2x also posed certain risks. The update would have introduced a hard fork into the blockchain, splitting it in two. If an insufficient number of users chose to adopt the 2x update, Bitcoin could have split into two competing currencies, potentially resulting in lost funds. This risk factor prompted the Segwit2x developers to cancel the update.
The cancellation was announced in an email from BitGo CEO Mike Belshe. The message was signed by five other CEOs from the Segwit2x development team: Wences Casares, Jihan Wu, Peter Smith, Erik Voorhees, and Jeff Garzik.
In the email, Belshe wrote:
“Continuing on the current path could divide the community and be a setback to Bitcoin’s growth. This was never the goal of Segwit2x.”
It’s clear why the fork was called off: too much controversy, not enough consensus (at least, that’s what the developers claim). But one thing that nobody seems to be talking about is how the fork was called off, and what that choice says about Bitcoin in general.
Bitcoin initially positioned itself as a decentralized network where users could transact freely without third party interference or manipulation from centralized powers. Yet the decision to suspend Segwit2x was made by just six developers. There was no vote. The Bitcoin community didn’t reach a consensus – instead, the decision was made for them.
The indecision surrounding Segwit2x created opportunity. After 2x’s suspension, Bitcoin’s price spiked and reached a record high. The outcome may be a sign of optimism, but it also raises questions about market influencers. Who ultimately benefits from the discord within the Bitcoin community – the users, or the central powers that control the network?
Bitcoin has not lived up to its philosophy. It’s far from decentralized. There is no consensus anymore: a handful of people control Bitcoin’s fate. The sudden Segwit2x suspension, whether it’s good or bad, is a dramatic indication of just how little power an average Bitcoin user really has.
Bitcoin’s monopolization issues stem from a basic design flaw: the mining system. Mining makes it impossible for Bitcoin to achieve its original goals. As miners receive block rewards for processing transactions, power concentrates with those who can process more. The result: a network dominated by just two or three large miners who wield a disproportionate amount of influence over the network.
Skycoin is designed specifically to address these problems. It’s a next-generation cryptocurrency that removes the mining requirement and provides a fully decentralized blockchain. Network decisions aren’t made by a few powerful people, but by the community as a whole. With peer-to-peer consensus, Skycoin protects users against the kind of manipulation we’re seeing in Bitcoin today.
Skycoin achieves consensus with a novel algorithm called Obelisk. This algorithm spreads influence across the network through a “web of trust.” The web of trust keeps the network honest by providing transparency for its users.
Each node in Skycoin’s network subscribes to other nodes. Nodes are assigned personal blockchains that publicly broadcast their actions. The community can view and audit the nodes. If a node behaves suspiciously or maliciously, its connections can be cut, diminishing its influence. Obelisk strengthens collective decision-making and creates a network that’s built on relationships, not processing power.
As Bitcoin wobbles on shaky foundations of mining and price manipulation, Skycoin is bringing the world a different option. It delivers a peer-to-peer network that’s decentralized and user-centric. Bitcoin may be controlled by a few influential individuals, but Skycoin is owned by its community. It’s the next logical step in cryptocurrency evolution.
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