Bulldozer00's Blog

Assume you’re building a radical new financial system from the ground up intended to be useful to every human being on the planet – not just to the rich, powerful, manipulative, greedsters who lord over the current antiquated and rigged system.

In order to survive the continuous offensive onslaughts from those entrenched oligarchs, your goal is to onboard as many everyday users as needed as fast as possible to unambiguously prove that the ground breaking system is not just being used by “criminals, terrorists, pedophiles, drug dealers, and tax avoiders“. You need to surpass the World Wide Acceptance Threshold (WWAT) of, say, 1 billion users.

Satoshi Nakamoto’s Bitcoin “peer-to-peer electronic cash system” is currently the most popular system trying to reach and exceed the magical WWAT. It currently has millions of users, but the usability of the system (high transaction fees, long confirmation times) is deteriorating at an alarming rate due to network saturation triggered by the rate of growth of new users.

There are two solutions out there competing to relieve the pressure on the bitcoin network so that the rate of new user growth doesn’t go to zero (or negative!): SegWit and Bitcoin Unlimited (BU):

The SegWit solution provides a short term, hard limited, pressure relief valve to allow some network breathing room for orderly new user additions. The BU solution provides a dynamically variable pressure relief valve to achieve the same effect. It tries to adapt to the changing new user growth rate over time.

The above graphs indicate that the SegWit solution is agnostic toward the rate of new user growth and halts system progress toward the WWAT goal at some point after its introduction. The BU solution allows the system to gracefully expand in proportion to the rate of new user growth, providing friction toward progress to the goal, but not a hard stop like SegWit.

SegWit is less technically risky because it is a much more conservative approach and it has undergone more peer review and offline network testing than BU. The biggest risk that BU introduces into the system is the concept of an “Emerging Consensus“. The EC rules allow the market to dynamically decide the network saturation level over time.

Neither SegWit nor BU will push the Bitcoin protocol over the WWAT threshold alone. BOTH need another layer of help on top of the base Bitcoin protocol layer to achieve the goal. However, even though it is riskier than SegWit, I think BU allows more time for Bitcoin to grow before users start leaving in droves for alternative cryptocurrencies due to skyrocketing user fees and transaction times. But hey, that’s just my opinion.