The New York Agreement which ostensibly solved Bitcoin’s scalability crisis may actually end up causing a third Bitcoin to be created.
The agreement resulted in the creation of the SegWit2x plan, calling for the immediate implementation of Segregated Witness and agreeing to a November hard fork that will double the Bitcoin block size.
While this sounds entirely logical, the problem is that SegWit2x is a compromise. Like all compromises, neither side gets everything they want.
Not an ordinary compromise
SegWit2x isn’t an ordinary compromise, though. One side, the big blockers, had to grant an immediate concession by activating Segregated Witness. They now have to trust that the other side, SegWit supporters, will follow through with their promised block size increase in a few months.
However, having received what they wanted, the implementation of Segregated Witness to be exact, the SegWit camp could easily renege on their promise to increase the block size.
If this happens, miners who support big blocks might go ahead and launch the hard fork anyway. This could result in BTC-SegWit (what we have today), Bitcoin Cash launched on Aug. 1 with little miner support at present, and BTC-SegWit2x.
Such a split would actually be significantly more damaging than the Bitcoin Cash chain split since it would presumably have the support of a large number of miners.
It’s also likely that some non-big block miners would go along with the fork since they promised to do so when they signed the agreement.
Jameson Lopp, software engineer at BitGo, tweeted today:
Sooooooo now thats we have 2 Bitcoin forks thanks to Bcash, are folks still doing SegWit2X? Because that’s how you get 3 Bitcoin forks…
— Jameson Lopp (@lopp) August 2, 2017
Back to the Middle Ages
Bitcoin’s present situation is reminiscent of the Middle Ages when the Catholic Church split over the legitimacy of the pope.
Much of Europe believed that the pope supported by the French cardinals was legitimate, while the rest of Europe thought that the Italian pope was the rightful heir to the throne of Saint Peter.
In an attempt to solve the so-called “Western Schism” and reunite the church, theologians from all over Europe summoned an ecumenical council which met at Pisa. The Council of Pisa ordered both popes to abdicate and elected a new pope to replace them.
Unfortunately, neither the French nor the Italian pope would resign, resulting in the Catholic Church having three claimants to the papacy. The split was not resolved for 39 years until the Holy Roman Emperor stepped in to force a resolution.
Mark Twain is said to have commented that history doesn’t repeat itself, but it does rhyme. Could Bitcoin’s future echo a medieval religious split? If it does, how would the crisis be solved?