“IT’S time for a group hug,” one of the participants joked at the end. After a long and lively exchange, programmers, who write the software behind bitcoin, and “miners”, whose computers mint the digital currency, had indeed found some common ground. But the rapport between the two camps still seemed tentative. At one point a developer asked whether miners, who now mostly hail from China, would ever collude to steal bitcoin.
Suspicions between developers and miners were not the only ones on display at “Scaling Bitcoin”, a conference in Hong Kong this week. Developers themselves have been feuding, too. The event was intended to end a dispute about how to expand the capacity of the bitcoin system. Currently, it can only handle seven transactions per second—a fraction of what conventional payment systems can manage. The number could be increased by allowing bigger “blocks”—the name given to the batches into which bitcoin transactions are assembled before they are processed.
For years developers have disagreed about how much, if at all, blocks should grow. Fearing that the system would soon hit its limits, two of them, Gavin Andresen and Mike Hearn, lost patience this summer: they called on miners to install a new version of bitcoin’s software which works with much bigger blocks. The result was a rift between developers and a spasm in bitcoin’s yo-yoing value (see chart).
Highly technical talks, lengthy debates and much socialising allowed the more than 200 participants at the conference to air their grievances and discuss all sorts of ways to allow bitcoin to grow. It helped that the two renegades did not attend (Mr Andresen is now a researcher at MIT’s Media Lab and Mr Hearn has joined R3 CEV, a coalition of banks developing bitcoin-like technology). Bitcoin XT, as the controversial new software is called, has not been widely adopted.
Although details still need to be worked out, it now looks likely that developers will first—perhaps within a few months—implement technical fixes to boost bitcoin’s capacity without increasing the maximum block size. A small increase in the block size—probably from one to as many as four megabytes—is expected to come only later; it is considered a risky move that requires all computers on the bitcoin network to install new software at the same time.
That still leaves open the question of how such decisions should be made in future. Civil wars and subsequent peace conferences are an inefficient way to create consensus. As befits advocates of a currency without a central bank, neither developers nor miners want to be at the helm (in practice they share authority, since the system could not work without both groups). Some at the conference argued that, like the internet, bitcoin needs a formal governance structure. Others presented complex technical solutions that would allow market forces to decide how big blocks should be.
Behind such debates lurks a bigger question: what does bitcoin want to be when it grows up? Should it be immutable, like gold, or should it adapt to the demands of its users, even if that means becoming more like a conventional payment system? Perhaps Satoshi Nakamoto, the mysterious creator of bitcoin, could provide guidance. Reports this week suggested he may be an Australian academic under investigation by the taxman.
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