The Future of Bitcoin Network Blocks Decided Upon By Chinese Mining Pools?

One of the most pressing topics in the Bitcoin world right now is whether or not the block size should be increased. Bitcoin Core developers are proposing to change the size to 20MB, whereas Chinese mining pools want to keep it at 8MB maximum.  What the final block size will be in the end is still up in the air at this point, but there is a heavy debate going on between Core developers and mining pool owners.

The Game of Block Sizes

It goes without saying there is no direct need to increase the block size itself, but that doesn’t mean we can’t start looking ahead. As more and more Bitcoin transactions take place – while blocks are only generated once every 10 minutes – something will have to change soon. And while we cannot speed up the block generation process, developers can allow for more transactions per block.

Every Bitcoin transaction represents a small piece of data, which is submitted to the Bitcoin network to get validated or rejected. But as more transactions are propagated into each block, these blocks of data will become larger in size. To accommodate for an increasing amount of transactions per block, the maximum network block size has to be increased.

As it stands right now, blocks on the Bitcoin network can be 1MB in size maximum. Bitcoin Core developer Gavin Andresen would like to change this to 20MB, which would allow for many more transactions to be included in every network block. However, to process 20MB blocks – which are “discovered” by mining pools, every Bitcoin user in the world will need a proper infrastructure to process huge amounts of data.

And there within lies the problem, as most of Bitcoin’s mining power – and network stability and security – is coming from China. Even though most of China has access to some form of internet, the average internet connection is not all that fast, especially when compared to the Western world. Thus, the increase in Bitcoin block size to 20MB may not be the best solution at this time.

Five of China’s largest mining pools – F2Pool, BTCChina, Antpool, Huobi and BW Mining – came to an agreement to increase the maximum Bitcoin network block size to 8MB. This agreement came to be at the National Conference Center in Beijing a week ago. And with over half of the Bitcoin hashing power belonging to these five mining pools, it looks like they hold the fate of the block size in the palms of their hands.

“After undergoing deep consideration and discussion, the five pools agree that while the block size does need to be increased, a compromise should be made to increase the network max block size to 8 megabytes. […] We believe that this is a realistic short-term adjustment that remains fair to all miners and node operators worldwide.” – Chinese Mining Pools Statement

Current Internet Infrastructure To Blame For Disagreement

As mentioned before, the reason for the proposed change to 8MB per block has everything to do with the Chinese internet infrastructure. With the average Chinese internet provider offering limited bandwidth – due to the infrastructure not allowing for much wiggling room – which could lead to disastrous results for mining pools.

But that is not the only bandwidth concern to take into account, as Chinese ISP’s effectively throttle outgoing bandwidth beyond China. This is one of the reasons why you will hardly see American or European Bitcoin miners try their luck on a Chinese mining pool, as the latency is too high.

Last but not least, increasing the block size to 20MB could lead to a cluster of orphan blocks across Chinese mining pools. It goes without saying these orphan blocks would undermine the Bitcoin network stability. Therefore, the increase to 8MB solution makes much more sense at this point, even though it is only a temporary measure.

“Raising the block size limit to 8 MB is the first step of an improvement plan for the Bitcoin network. There is no clear and definite block size to completely solve the transaction jam. 8 MB is, therefore, a good start for the improvement of the Bitcoin network, and at the same time, a relatively mild solution. But it is undeniable that increasing the block size limit to 16M or 32M might be needed in the future.” – Huobi’s Digicoin CEO Evan Mo told the media.

Source: Reddit

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