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How China Took Center Stage in Bitcoin’s Civil War

128 points by tpatke 10y ago

zekevermillion 10y ago
The article presents the blocksize debate as Americans vs. Chinese. I see it more as an effort by payments companies (some of which are US-based) to capture the bitcoin protocol.
- aminok 10y ago
  Oh yea we wouldn't want those parties who benefit from growing Bitcoin usage to influence Bitcoin protocol decisions, because then Bitcoin might see mass adoption and that would be a terrible fate because ???
klunger 10y ago
For those who prefer audio/podcasts, the Planet Money companion piece covers a lot of the same material: http://www.npr.org/sections/money/2016/06/29/484029238/episode-708-bitcoin-divided http://www.npr.org/sections/money/2016/06/29/484029238/episo...
Hermel 10y ago
As someone who has been closely following Bitcoin since 2011, I do not think that article captures the current situation very well. Yes, there is a concentration of mining power in China, owed to their low costs of electricity. But it does not seem like the Chinese have found a way to use that power yet. In practice, it is a number of Western developers around Gregory Maxwell and Blockstream that calls the shots, aided by /r/bitcoin admin Theymos who recklessly removes posts that do not fit their agenda (I've received two temporary bans myself for mentioning ethereum in a comment). I really hope that the Chinese miners start to make use of their power and move Bitcoin back towards its original vision. The block size limit of 1 MB was a temporary hack and the core devs who oppose an increase are in an obvious conflict of interest: if Bitcoin can scale the way its inventor envisioned (namely by simply increasing the block size limit every now and then), the business case of the company they work for falls apart. (Blockstream, who develops the Lightning Network, which aims at scaling Bitcoin by building another layer on top.) What makes me hope is this sentence from the article: "He said in an email this week that if the core programmers did not increase the number of transactions going through the network by July, he would begin looking for alternatives to expand the network." Recently, I spoke to an executive of another large Chinese mining company, and he shares that opinion. If the "core team" continues to refuse to increase the block size limit, they will stop applying core's updates. For that case, some members already threatened to go nuclear and change the proof-of-work protocol, making all existing mining hardware obsolete - which is quite worrying and shows that Bitcoin development currently is not in the best possible hands.
- redcalx 10y ago
  > threatened to go nuclear and change the proof-of-work protocol, No miner with any significant amount of hash power would install such a release.
  - riprowan 10y ago
    I think the point is that fullnodes / holders would raise their own hashpower and mine the spinoff coin themselves.
- CydeWeys 10y ago
  > if Bitcoin can scale the way its inventor envisioned (namely by simply increasing the block size limit every now and then) It's not nearly that simple. There are two main reasons why "simply increasing the block size" is neither safe nor simple: 1. Centralization. Running a full node is already quite a commitment. The bandwidth requirements are high, the storage requirements are high, and it takes many days to sync the full blockchain. Many people already do not bother doing it because it is such a bother. Running a VM in the cloud as a full node is not that cheap. All of these problems scale linearly with increased block size. A really large block size that causes most existing full nodes to give up and stop relaying would not be worth it for the network in the end. 2. Bitcoin is vulnerable to (and has been subject to) attacks by way of computationally expensive transactions that scale polynomially with the maximum size of a block. This has not been completely solved yet. Right now the worst possible block verification time is on the order of 10-30 minutes for an average CPU acting as a relaying node. "Simply" increasing the block size a great deal without first fixing this issue (and it's a hard issue to fix) could potentially lead to entire network collapse if a single attack block gets mined and then chokes all nodes for days.
  - Hermel 10y ago
    > Centralization. Running a full node is already quite a commitment. The problem is not the resources needed to run a full node. The problem is a lack of incentives. If you want to have lots of full nodes running in the long run, you need to focus on those that do not do so for idealistic reasons, most notably the miners, payment processors, and exchanges. They all have advantages by doing so. Blockchain.info, for example, runs a full node to be able to display incoming transactions and to monitor the network. Adopting this view, the way forward is to grow Bitcoin as much as possible. The more users there are, the larger the ecosystem becomes and the more players there are that benefit from running a full node. We can't rely on the early enthusiasts. We need growth. > Bitcoin is vulnerable to (and has been subject to) attacks by way of computationally expensive transactions If you are referring to what I think, then there is a simple fix: do not allow larger transactions than before when increasing the block size. AFAIK, this is what Bitcoin Classic does.
nefitty 10y ago
People with no necessary loyalty to a currency are dangerous.
amq 10y ago
The photos are amusing, but certainly misleading. One could cherry-pick similar places for any kind of activity anywhere in the world.
ianpurton 10y ago
Ultimately, Mr. Armstrong said, “We were unable to convince them.” Brian Armstrong from CEO of Coinbase along with some other major Bitcoin startups proposed a hard fork in the protocol to increase throughput. This proposal was to raise the block size. The Bitcoin core developers rejected this along with a lot of the Bitcoin community as it may cause decentralization. An alternative proposal was created that would not produce a hard fork but still allow an increase in transactions per second. A further proposal called the lightning network is in testing to allow for thousands more transactions per second that then get settled on the main Bitcoin blockchain. In my opinion consensus won. Everyone will get what they want with out taking any risks with centralization. The Chinese miners were right to stay on the main branch. If they had forked and the Bitcoin economy didn't follow them, they would be out of business. The Bitcoin block size debate is like the Brexit. Only this time everyone wins.
- wallace_f 10y ago
  >The Bitcoin block size debate is like the Brexit. Only this time everyone wins. How so? Not in disagreement I honestly just don't see the connection (but I don't follow bitcoin)
- Jarwain 10y ago
  > The Bitcoin core developers rejected this along with a lot of the Bitcoin community as it may cause decentralization Isn't a core aspect of bitcoin decentralization? Or am I missing something
  - aianus 10y ago
    Yes, he meant to write 'centralization'
- bduerst 10y ago
  If the chinese miners adopted the fork, then everyone would follow them because they are the consensus. That's why he tried so hard to convince them. The lightning network (or any other private side chain) are not a solution because it still requires the bitcoin network to verify, which means they can't scale for users. Example: It takes minutes for a side chain to process 20 million transactions for just 2 people, but it takes over a month for a side chain to process just 2 transactions for 20 million people.
rdlecler1 10y ago
Ironic that Bobby Lee calls the Americans imperialistic given that BitCoin wasn't invented in China, but Chinese firms have clearly taken control.
- Kristine1975 10y ago
  >Ironic that Bobby Lee calls the Americans imperialistic He doesn't: He said the American companies failed to understand the power dynamics in the room that day. “It was almost like imperialistic Westerners coming to China and telling us what to do,” almost like And as the article states Chinese firms are hardly a hive-mind. But even if they were, "taking control" by virtue of mining the most coins is a feature, not a bug. And not "imperialistic."
- placeybordeaux 10y ago
  We don't know for sure where bitcoin was created.
known 10y ago
We should strive for a better world, not perfect world.
wallace_f 10y ago
I don't really follow bitcoin but the NPR podcast that linked to this NYT story claims that 'some bitcoin transactions are not getting processed at all.' Is that really true?
- mcherm 10y ago
  Yes, it is. Bitcoin transactions pay a transaction fee which the person creating the transaction can specify. It can be any amount INCLUDING ZERO. The theory is that paying higher transaction fees will get your payment processed faster. Recently, low fees have not even been being processed and many are paying around 3% for prompt processing
  - wallace_f 10y ago
    So I pay someone in bitcoin, it doesn't get processed. I say ok, then I put another transaction through and this time pay a fee to get my transaction processed. Now, that one gets processed, but later on my initial transaction also was processed. It seems like these problems would make it more and more difficult to really use bitcoin.
    - joosters 10y ago
      Yes, this happens regularly. It's very difficult to prevent, because unconfirmed transactions are not guaranteed to expire after a known time. Your first transaction has been broadcast across the whole network of nodes, all of which have different retention settings. Even if one node drops your transaction, it is possible that another node will re-broadcast it again.
      - curiousgal 10y ago
        Just to clarify, unconfirmed transactions get dropped from the mempool after 3 days (default setting).
        joosters 10y ago
Abimelech 10y ago
To follow in the best way possible Bitcoin's situation, don't use /r/Bitcoin because it's censored. Only positive propaganda is allowed there. Use /r/btc instead!
fencepost 10y ago
I was surprised by the photos because I thought that these days most mining was being done via USB-connected ASICs, but the clear implication of the photos was for CPU mining. Perhaps this is just a case of "we're not showing how it really works" but it was a surprise nonetheless.
- toomim 10y ago
  Nope, those are ASICs. They aren't USB-connected, though. They are mostly antminers from bitmain.com. Motherboards aren't used for CPU mining, but for controlling GPUs that mine Ethereum. There aren't ASICs for Ethereum.
cloudjacker 10y ago
always some drama in bitcoin land its almost kind of weird how my transactions get mined immediately in the next block as if there was absolutely nothing different going on
- TD-Linux 10y ago
  It's because all sane wallets have a fee estimator and will pay the appropriate fee to confirm quickly.
  - cloudjacker 10y ago
    I know My experience using bitcoin between addresses is the same as it was in 2013
riprowan 10y ago
I think it's important to note that it's unclear that Bitcoin Core will ever allow for a block size increase to occur: several influential Core developers have publicly stated that that are still very much opposed to any increase, and the team uses a consensus process that makes it easy to veto change.
- TD-Linux 10y ago
  SegWit landed in Bitcoin Core master last week. Once activated, it increases the size of an average Bitcoin block to ~2MB.
  - deftnerd 10y ago
    That's not true. At most, the amount of data in a block stays the same but attaches an associated data structure to the block that is estimated to equal, at most, 1.7mb. That's a best case scenario once every piece of software that created Bitcoin transactions has been altered to use the new transaction format. That software upgrade process could take years.
    - TD-Linux 10y ago
      No, the 1.7MB figure was an average, the max for base+witness is about 4MB. https://bitcoincore.org/en/2016/01/26/segwit-benefits/ https://bitcoincore.org/en/2016/01/26/segwit-benefits/ It's true that to reach the maximum capacity, all Bitcoin software has to be upgraded. But that's also true for a 2MB bump hardfork.
Animats 10y ago
Most of the comments here are missing the point. Read the article more closely. From the Bitcoin miner in China perspective, Bitcoin is an investment vehicle and a way to get yuan out of China. Bitcoin for retail transactions is irrelevant. More capacity for small transactions is a nuisance, not a feature. The big miners are thinking wholesale, not retail. Read the view of the CEO of Huobi.[1] He sees the functions of Bitcoin as 1) a global financial asset, and 2) a financial tool for improving money transfer. (By "money transfer" he means reasonably large transactions, comparable to wire transfers.) As a payment network, he wrote "Bitcoin already works as a payment network today, but relative to competitors like PayPal and Visa, Bitcoin is very small." A bigger block size is useful mostly for the payment network application, which is not a priority for the big miners. [1] http://www.coindesk.com/bitcoin-in-china-an-insiders-view/ http://www.coindesk.com/bitcoin-in-china-an-insiders-view/
kristianp 10y ago
Bitcoin miners don't have any incentive to make possibly risky changes to the software. Recent congestion and changes have increased fees which seems to me a strong incentive to keep the status quo of limited scalability. As a network Ethereum is much more scalable, fast and more decentralised by design, Buterin has learnt from bitcoin's problems (but obviously Eth has it's own problems). https://www.cryptocoinsnews.com/ethereum-announces-unlimited-scalability-roadmap/ https://www.cryptocoinsnews.com/ethereum-announces-unlimited... Bitcoin is the slow moving Java to Ethereum's c# or scala.

128 points by tpatke 10y ago

The article presents the blocksize debate as Americans vs. Chinese. I see it more as an effort by payments companies (some of which are US-based) to capture the bitcoin protocol.

aminok 10y ago
Oh yea we wouldn't want those parties who benefit from growing Bitcoin usage to influence Bitcoin protocol decisions, because then Bitcoin might see mass adoption and that would be a terrible fate because ???

klunger 10y ago

For those who prefer audio/podcasts, the Planet Money companion piece covers a lot of the same material: http://www.npr.org/sections/money/2016/06/29/484029238/episode-708-bitcoin-divided http://www.npr.org/sections/money/2016/06/29/484029238/episo...

Hermel 10y ago

As someone who has been closely following Bitcoin since 2011, I do not think that article captures the current situation very well. Yes, there is a concentration of mining power in China, owed to their low costs of electricity. But it does not seem like the Chinese have found a way to use that power yet. In practice, it is a number of Western developers around Gregory Maxwell and Blockstream that calls the shots, aided by /r/bitcoin admin Theymos who recklessly removes posts that do not fit their agenda (I've received two temporary bans myself for mentioning ethereum in a comment). I really hope that the Chinese miners start to make use of their power and move Bitcoin back towards its original vision. The block size limit of 1 MB was a temporary hack and the core devs who oppose an increase are in an obvious conflict of interest: if Bitcoin can scale the way its inventor envisioned (namely by simply increasing the block size limit every now and then), the business case of the company they work for falls apart. (Blockstream, who develops the Lightning Network, which aims at scaling Bitcoin by building another layer on top.) What makes me hope is this sentence from the article: "He said in an email this week that if the core programmers did not increase the number of transactions going through the network by July, he would begin looking for alternatives to expand the network." Recently, I spoke to an executive of another large Chinese mining company, and he shares that opinion. If the "core team" continues to refuse to increase the block size limit, they will stop applying core's updates. For that case, some members already threatened to go nuclear and change the proof-of-work protocol, making all existing mining hardware obsolete - which is quite worrying and shows that Bitcoin development currently is not in the best possible hands.

redcalx 10y ago
> threatened to go nuclear and change the proof-of-work protocol, No miner with any significant amount of hash power would install such a release.
- riprowan 10y ago
  I think the point is that fullnodes / holders would raise their own hashpower and mine the spinoff coin themselves.
CydeWeys 10y ago
> if Bitcoin can scale the way its inventor envisioned (namely by simply increasing the block size limit every now and then) It's not nearly that simple. There are two main reasons why "simply increasing the block size" is neither safe nor simple: 1. Centralization. Running a full node is already quite a commitment. The bandwidth requirements are high, the storage requirements are high, and it takes many days to sync the full blockchain. Many people already do not bother doing it because it is such a bother. Running a VM in the cloud as a full node is not that cheap. All of these problems scale linearly with increased block size. A really large block size that causes most existing full nodes to give up and stop relaying would not be worth it for the network in the end. 2. Bitcoin is vulnerable to (and has been subject to) attacks by way of computationally expensive transactions that scale polynomially with the maximum size of a block. This has not been completely solved yet. Right now the worst possible block verification time is on the order of 10-30 minutes for an average CPU acting as a relaying node. "Simply" increasing the block size a great deal without first fixing this issue (and it's a hard issue to fix) could potentially lead to entire network collapse if a single attack block gets mined and then chokes all nodes for days.
- Hermel 10y ago
  > Centralization. Running a full node is already quite a commitment. The problem is not the resources needed to run a full node. The problem is a lack of incentives. If you want to have lots of full nodes running in the long run, you need to focus on those that do not do so for idealistic reasons, most notably the miners, payment processors, and exchanges. They all have advantages by doing so. Blockchain.info, for example, runs a full node to be able to display incoming transactions and to monitor the network. Adopting this view, the way forward is to grow Bitcoin as much as possible. The more users there are, the larger the ecosystem becomes and the more players there are that benefit from running a full node. We can't rely on the early enthusiasts. We need growth. > Bitcoin is vulnerable to (and has been subject to) attacks by way of computationally expensive transactions If you are referring to what I think, then there is a simple fix: do not allow larger transactions than before when increasing the block size. AFAIK, this is what Bitcoin Classic does.

nefitty 10y ago

People with no necessary loyalty to a currency are dangerous.

amq 10y ago

The photos are amusing, but certainly misleading. One could cherry-pick similar places for any kind of activity anywhere in the world.

ianpurton 10y ago

Ultimately, Mr. Armstrong said, “We were unable to convince them.” Brian Armstrong from CEO of Coinbase along with some other major Bitcoin startups proposed a hard fork in the protocol to increase throughput. This proposal was to raise the block size. The Bitcoin core developers rejected this along with a lot of the Bitcoin community as it may cause decentralization. An alternative proposal was created that would not produce a hard fork but still allow an increase in transactions per second. A further proposal called the lightning network is in testing to allow for thousands more transactions per second that then get settled on the main Bitcoin blockchain. In my opinion consensus won. Everyone will get what they want with out taking any risks with centralization. The Chinese miners were right to stay on the main branch. If they had forked and the Bitcoin economy didn't follow them, they would be out of business. The Bitcoin block size debate is like the Brexit. Only this time everyone wins.

wallace_f 10y ago
>The Bitcoin block size debate is like the Brexit. Only this time everyone wins. How so? Not in disagreement I honestly just don't see the connection (but I don't follow bitcoin)
Jarwain 10y ago
> The Bitcoin core developers rejected this along with a lot of the Bitcoin community as it may cause decentralization Isn't a core aspect of bitcoin decentralization? Or am I missing something
- aianus 10y ago
  Yes, he meant to write 'centralization'
bduerst 10y ago
If the chinese miners adopted the fork, then everyone would follow them because they are the consensus. That's why he tried so hard to convince them. The lightning network (or any other private side chain) are not a solution because it still requires the bitcoin network to verify, which means they can't scale for users. Example: It takes minutes for a side chain to process 20 million transactions for just 2 people, but it takes over a month for a side chain to process just 2 transactions for 20 million people.

rdlecler1 10y ago

Ironic that Bobby Lee calls the Americans imperialistic given that BitCoin wasn't invented in China, but Chinese firms have clearly taken control.

Kristine1975 10y ago
>Ironic that Bobby Lee calls the Americans imperialistic He doesn't: He said the American companies failed to understand the power dynamics in the room that day. “It was almost like imperialistic Westerners coming to China and telling us what to do,” almost like And as the article states Chinese firms are hardly a hive-mind. But even if they were, "taking control" by virtue of mining the most coins is a feature, not a bug. And not "imperialistic."
placeybordeaux 10y ago
We don't know for sure where bitcoin was created.

known 10y ago

We should strive for a better world, not perfect world.

wallace_f 10y ago

I don't really follow bitcoin but the NPR podcast that linked to this NYT story claims that 'some bitcoin transactions are not getting processed at all.' Is that really true?

mcherm 10y ago
Yes, it is. Bitcoin transactions pay a transaction fee which the person creating the transaction can specify. It can be any amount INCLUDING ZERO. The theory is that paying higher transaction fees will get your payment processed faster. Recently, low fees have not even been being processed and many are paying around 3% for prompt processing
- wallace_f 10y ago
  So I pay someone in bitcoin, it doesn't get processed. I say ok, then I put another transaction through and this time pay a fee to get my transaction processed. Now, that one gets processed, but later on my initial transaction also was processed. It seems like these problems would make it more and more difficult to really use bitcoin.
  - joosters 10y ago
    Yes, this happens regularly. It's very difficult to prevent, because unconfirmed transactions are not guaranteed to expire after a known time. Your first transaction has been broadcast across the whole network of nodes, all of which have different retention settings. Even if one node drops your transaction, it is possible that another node will re-broadcast it again.
    - curiousgal 10y ago
      Just to clarify, unconfirmed transactions get dropped from the mempool after 3 days (default setting).
      - joosters 10y ago

Abimelech 10y ago

To follow in the best way possible Bitcoin's situation, don't use /r/Bitcoin because it's censored. Only positive propaganda is allowed there. Use /r/btc instead!

fencepost 10y ago

I was surprised by the photos because I thought that these days most mining was being done via USB-connected ASICs, but the clear implication of the photos was for CPU mining. Perhaps this is just a case of "we're not showing how it really works" but it was a surprise nonetheless.

toomim 10y ago
Nope, those are ASICs. They aren't USB-connected, though. They are mostly antminers from bitmain.com. Motherboards aren't used for CPU mining, but for controlling GPUs that mine Ethereum. There aren't ASICs for Ethereum.

cloudjacker 10y ago

always some drama in bitcoin land its almost kind of weird how my transactions get mined immediately in the next block as if there was absolutely nothing different going on

TD-Linux 10y ago
It's because all sane wallets have a fee estimator and will pay the appropriate fee to confirm quickly.
- cloudjacker 10y ago
  I know My experience using bitcoin between addresses is the same as it was in 2013

riprowan 10y ago

I think it's important to note that it's unclear that Bitcoin Core will ever allow for a block size increase to occur: several influential Core developers have publicly stated that that are still very much opposed to any increase, and the team uses a consensus process that makes it easy to veto change.

TD-Linux 10y ago
SegWit landed in Bitcoin Core master last week. Once activated, it increases the size of an average Bitcoin block to ~2MB.
- deftnerd 10y ago
  That's not true. At most, the amount of data in a block stays the same but attaches an associated data structure to the block that is estimated to equal, at most, 1.7mb. That's a best case scenario once every piece of software that created Bitcoin transactions has been altered to use the new transaction format. That software upgrade process could take years.
  - TD-Linux 10y ago
    No, the 1.7MB figure was an average, the max for base+witness is about 4MB. https://bitcoincore.org/en/2016/01/26/segwit-benefits/ https://bitcoincore.org/en/2016/01/26/segwit-benefits/ It's true that to reach the maximum capacity, all Bitcoin software has to be upgraded. But that's also true for a 2MB bump hardfork.

Animats 10y ago

Most of the comments here are missing the point. Read the article more closely. From the Bitcoin miner in China perspective, Bitcoin is an investment vehicle and a way to get yuan out of China. Bitcoin for retail transactions is irrelevant. More capacity for small transactions is a nuisance, not a feature. The big miners are thinking wholesale, not retail. Read the view of the CEO of Huobi.[1] He sees the functions of Bitcoin as 1) a global financial asset, and 2) a financial tool for improving money transfer. (By "money transfer" he means reasonably large transactions, comparable to wire transfers.) As a payment network, he wrote "Bitcoin already works as a payment network today, but relative to competitors like PayPal and Visa, Bitcoin is very small." A bigger block size is useful mostly for the payment network application, which is not a priority for the big miners. [1] http://www.coindesk.com/bitcoin-in-china-an-insiders-view/ http://www.coindesk.com/bitcoin-in-china-an-insiders-view/

kristianp 10y ago

Bitcoin miners don't have any incentive to make possibly risky changes to the software. Recent congestion and changes have increased fees which seems to me a strong incentive to keep the status quo of limited scalability. As a network Ethereum is much more scalable, fast and more decentralised by design, Buterin has learnt from bitcoin's problems (but obviously Eth has it's own problems). https://www.cryptocoinsnews.com/ethereum-announces-unlimited-scalability-roadmap/ https://www.cryptocoinsnews.com/ethereum-announces-unlimited... Bitcoin is the slow moving Java to Ethereum's c# or scala.