In the month following the release of BitcoinXT, there has been much speculation regarding the future of the Bitcoin network. The ongoing block size debate resulted in the release of the alternative version of the software, which seeks to address the block size capacity issue. BitcoinXT functions as a sort of community referendum, as the initiation of a hard fork requires at least 75% of recently mined blocks to be using the alternative, XT software.
A large section of the community has rejected BitcoinXT, instead choosing to back BIP100, which proposes a different, more conservative solution to the block size limit. BIP100 would also lead to a hard-fork, but would result in a slower scaling of the Bitcoin network, as miners would be required to ‘vote’ for block size increases. The lengthy debate has caused something of a divide within the Bitcoin community, which is less than ideal for a currency built on decentralisation, trust and consensus.
BitcoinXT does have some high-profile support; Blockchain .info released a document signed by a number of CEOs of prominent Bitcoin companies, including Bitpay, Circle and Xapo. Such companies have significant VC-backing and are likely backing BitcoinXT due to its potential to scale up the Bitcoin network quite significantly in the short-term. Criticism has been aimed at the developers responsible for the release of BitcoinXT, as they avoided using the usual testnet public testing which is important in Open-Source projects such as Bitcoin.
All proposed changes must reach a consensus within the developer community before being accepted, however this was not the case with BitcoinXT, which was released without agreement. This upset some members of the developer community, but the only real alternative to be proposed is BIP100, which is yet to be implemented.
Many of the Chinese mining pools, who had expressed concerns regarding BIP101 causing issues for their operations, have opted to support BIP100. F2Pool publicly rejected BitcoinXT, and a number of smaller mining pools have joined them. Much of the community appears to have made a similar choice; at the time of writing, only four of the last 1000 blocks mined used the BitcoinXT implementation.
The concerns over BitcoinXT mostly relate to the speed with which the new block size limits will increase. If BitcoinXT becomes the majority Bitcoin software, then by January 2030 the block size cap could be over 1GB; a block size of this magnitude will likely have a notable detrimental effect on the decentralisation of Bitcoin, a feature which is of great importance to the cryptocurrency. The number of full nodes on the network would dramatically decrease, as the associated storage and maintenance costs would become unrealistic for normal users.
BIP100 is far from a perfect solution, as it hands further influence to the mining pools. A more long-term solution, suggested by Garzik within his BIP100 document, could be a dynamic algorithm-based block size limit, which can adapt as necessary to accommodate the growing network. BIP100 offers a temporary, conservative solution, which is quite different to the relatively untested BitcoinXT which has the potential to have a dramatic impact on the $2 billion Bitcoin economy.
Some members of the community even suggest that the block size ought not be changed, because this would result in a market for growing transaction fees. Others argue that this would not cause significant issues. We are unlikely to see any significant developments until closer to the deadline for a BitcoinXT hard-fork, which is set for January 2016. Although, given current levels of adoption, it seems unlikely that a 75% majority of recently mined blocks will be reached. As it currently stands, only 0.4% of recent blocks have used XT, according to xtnodes.com.
