It's Possible to Increase Bitcoin's Block Size Without a Hard Fork: Blockstream Co-Founder

Mark Friedenbach, a bitcoin developer and co-founder of the popular Blockstream company, has recently revealed a scaling approach he called “forward blocks,” which could essentially help increase BTC’s block size without a hard fork.

Currently, bitcoin can accommodate a small number of transactions per second, and is unable to compete with traditional payment networks such as that of Visa. While some believe the cryptocurrency should scale through a block size increase – which would require a hard fork - others argue this approach will lead to centralization, and prefer other solutions.

A hard fork is essentially a change to the network that isn’t backwards-compatible, meaning all of the cryptocurrency’s users need to upgrade to keep up with the change. A soft fork, on the other hand, can be backwards-compatible.

Friedenbach’s approach, according to a transcript of his presentation at the Scaling Bitcoin workshop, would be able to boost the flagship cryptocurrency’s on-chain transaction capacity through a Proof-of-Work (PoW) alternation achieved through soft forks and “privacy-enhancing alternative ledgers (side chains).”

According to Friedenbach, a former space apps developer at NASA, the forward blocks approach could ultimately help increase the cryptocurrency’s “settlement transactions volume to 3584x current levels,” while improving censorship resistance via sharding.

Here, the developer refers to sharding as a change to the PoW system and a series of developments that would see bitcoin’s blockchain scale. Most cryptocurrency users refer to sharding when mentioning Ethereum’s scaling solution, which would see multiple network computers divide transaction workload between them to scale the blockchain. These two, per Friedenbach, are “largely not” the same.

Speaking to CoinDesk, the former NASA employee noted his approach could help with the scaling debate, as the community often opposes hard forks because of how hard it can be to do them safely. He was quoted as saying:

Forward blocks makes that whole argument pointless. We don't need a hard-fork to scale bitcoin, if and when we decide to do so. It can be accomplished as a soft fork, like SegWit was.

SegWit, as CryptoGlobe covered, was launched one year ago and recently saw its usage go over 50%. During his presentation, he further suggested it could be good to replace bitcoin’s current halving mechanism, which halves block rewards every four years. To him, a more linear approach could be more beneficial to the cryptocurrency, as it wouldn’t suddenly affect the ecosystem.

Notably, Friedenbach reportedly got to his forward blocks approach by starting out thinking about a “development of a dual PoW change where you introduce a new PoW with a soft fork.” While he noted this wasn’t a proposal, it’s a “good place” to start thinking about the solution.

 

A Controversial Solution

While some could look at the former NASA contractor’s approach as revolutionary, CoinDesk reports not everyone is excited about it. Pseudonymous bitcoin developer “Shinobimonkey” was quoted as saying it was a “network attack being called an upgrade.”

Blockstream’s CEO Adam Back noted that “it’s OK,” as discovering mechanisms “can be useful and separate from whether it would be practical technically and in terms of user consensus.” To him, it’s so far just another tool.

Per the news outlet, Friedenbach isn’t advocating to use forward blocks on bitcoin either, but is merely trying to put the option out there. He’s reportedly set to test it on “Freicoin,” an altcoin he created.

Current Bitcoin Pullback is Healthy, Says Tom Lee

Neil Dennis

Bitcoin enthusiasts and critics alike have responded strongly on social media to a Tweet sent this week by Fundstrat co-founder Thomas Lee, who said the current bitcoin pullback is healthy.

"It's healthy to see bitcoin pullback here," said the managing partner and head of research at Fundstrat Global Advisory. He added:

As for the search traffic for bitcoin being low, I also think that is a good sign. It means the rise in bitcoin has not been accompanied by massive hype.

According to Google Trends analytic service, search for bitcoin in the US have fallen by around 45% since their end of June peak. But this has not stopped Lee, and many others, making some very lofty price predictions.

Optimistic Price Predictions

Lee has become one of bitcoin's biggest advocates and his price predictions are among the loftier. Not on the scale of cyber-security provider John McAfee, who believes bitcoin will reach $1 million in 2020, but Lee thinks bitcoin's $20,000 high will be taken out and a run up to $40,000 is possible this year.

But the critics are never far away: Peter Schiff, chief executive of Euro Pacific Capital - an arch gold bug who has likened interest in bitcoin to "tulip mania", replied to Lee's Tweet, saying "every sign is bullish according to you".

He added: "Fewer searches shows that new buyers are scarce.  Existing speculators pressing their bets, many using leverage, have pushed prices up.  But without new buyers prices will collapse."

Schiff's comments prompted several of Lee's followers to jump to his defence, with one of them Tweeting that "trolls like you makes every bull run so much more enjoyable".

Trump Effect

US president Donald Trump has also been weighing in on bitcoin recently, slamming the cryptocurreny market as "highly volatile" and values "based on thin air". While the crpto-community thanked him for the free publicity, prices have been weaker ever since his July 11 Twitter outburst.

Bitcoin's price has fallen from just above $12,100 on July 11 to around the $10,400 on Tuesday June 16.

Indeed, as Lee stated, pullbacks in asset prices can be healthy. They may only be a sign of some traders taking profits before buying back in, but whatever the cause, a lower price during what has - very obviously - been a strong bull run can be an alluring buy signal to tempt fresh investment into the market.