Big Blocked: Examining Bitcoin's Block Size Debate

There has been a lot of drama surrounding Bitcoin's block size debate for years. The community has historically been mostly divided on the subject. Several attempts were made to increase Bitcoin's block size by forking the protocol, such attempts as: BIP 100, Bitcoin XT, Bitcoin Classic, and Bitcoin Unlimited (to name a few). However, all of those attempts were largely rejected by Bitcoin's community.

On August 1, 2017, some proponents for raising Bitcoin's block size rallied around a hard fork (aka. a completely separate cryptocurrency from Bitcoin) that split off of Bitcoin at block 478558. This fork is known as Bitcoin Cash, and traded under the BCH ticker symbol. The most well-known proponents were Roger Ver (an early Bitcoin investor), Jihan Wu (Bitmain's CEO), Craig Wright (who once falsely claimed to be Satoshi Nakamoto... the creator of Bitcoin), and Calvin Ayre (the billionaire behind the online gambling unicorn Bodog).

Then on August 24, 2017, Bitcoin's miners voted with a supermajority (95%) amount of hash power to alter the protocol with a soft fork that implemented an optional technology named Segwit (or Segregated Witness). Segregated Witness increases the efficiency of Bitcoin transactions by decreasing their size, which allows for more transactions per block and lowering transaction fees. Lower transaction fees are a direct result of being able to fit more transactions into a block, and because transaction fees are partly determined by the size of a transaction.

Big Block Pros:

- Quick scaling solution
- Websites/Services don't need to spend time implementing anything
- No complicated software protocols are necessary

Big Block Cons:

- Eventually succumbs to centralization due to bandwidth requirements, and hardware requirements to run a full node
- Less efficient solution compared to protocol upgrades

Segwit Pros:

- Efficient solution
- Fixes other problems
- Optional
- Easier to create second layer solutions like the Lightning Network

Segwit Cons:

- More complicated than changing a parameter (like the block size)
- Requires websites/services to implement support
- An enabler of moving transactions off the blockchain

Increasing Bitcoin's block size is highly touted by its proponents as being the ideal scaling solution.

But is it really?