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I witnessed the events as they unfolded yesterday, I'll try to give as objective summary as possible. Here's what happened:
The bitcoin blocksize is currently limited to 1MB. Two out of five bitcoin developers who have access to repository are worried that this is not enough to compete with VISA (in the number of transactions processed per second). The dispute to increase the blocksize has been ongoing for months. The two developers suggested to use the bitcoin built-in voting process (which has been designed in it ages ago), where the voting goes as follows:
1. the software is updated in such a way that larger block sizes are not used unless 750 out of past 1000 blocks are mined by miners who in the blockheader say "yes to bigger blocksize".
2. If such blocks (which are still below 1MB, but simply have this "yes" vote) are not mined, then the status-quo remains and nothing happens.
Three other developers have blocked any commits, and dedicated themselves to maintain the even stronger status-quo, by simply disallowing such vote to proceed. The two other developers finally decided to publish a new bitcoin client, called bitcoin XT, which has only one small change that would allow such voting to proceed. The linked blogpost presents one side of this argument, honestly I couldn't find a blogpost that would present the opposing viewpoint. If someone here has a link to nice writeup done by the other side of this argument please let us know.
The bitcoin reddit got furious yesterday night (to the point of a civil war with moderators), when the top voted and most discussed thread "why is bitcoin forking?" was deleted by one of the moderators. Interesting to note, that it had 528 upvotes at the moment of deletion and currently it has 687 upvotes, and also googling for 'why is bitcoin forking' links to this deleted thread. Before it was deleted the discussion seemed reasonable, now it's just a Streisand effect about censorship and about how few influential people are trying to prevent the voting from happening.
What it means for regular bitcoin users? Here's how it goes:
1. If the voting rejects the larger blocksize then both bitcoin clients, 'bitcoin' and 'bitcoin XT' will work as normal on the same blockchain. And in fact nothing will happen, people will be able to choose which client to use and eventually the 'bitcoin XT' will lose its momentum, fade out and stop being used.
2. If the voting goes in favor of larger blocksize, then both bitcoin clients will start operating on two different blockchains. The 'bitcoin XT' blockchain will have 75% of hashing power (by the definition of how this vote is implemented), and the 'bitcoin' blockchain wil have the remaining 25% of hashing power. Shops and exchanges will run aghast in circles trying to protect from double spending by quickly upgrading their software to use the stronger 'bitcoin XT' blockchain. The weaker blockchain with only 25% hashing power will be susceptible to attacks. And whatever bitcoins you have right now will co-exist twice in each of those blockchains. You would be able to spend them in one of the blockchains and keep them for yourself in the other blockchain. People who have changed to 'bitcoin XT' client beforehand will be safe from whatever might happen with the weaker chain, since their clients work with both blockchains, until they acquire the voting 75% majority.
The voting process as it happens can be seen live on site that shows number of clients and mined blocks that opted for larger blocksize.
I know that perhaps I am not as objective as I wanted to be. I tried to present the facts only, if I failed, then blame me and correct me in the comments. Happy discussing!
(Score: 5, Insightful) by SubiculumHammer on Sunday August 16 2015, @05:15PM
And the lack of sufficient inflation for growth or ability to set monetary policy according to economic conditions is why Bitcoin won't ever be a primary currency anywhere. Bitcoin is a rentseekers wet dream, but we will not stand for it.
(Score: 3, Interesting) by JNCF on Sunday August 16 2015, @05:53PM
the lack of sufficient inflation for growth
Bitcoin is designed to be deflationary, but other crypto currencies (like Dogecoin) are inflationary. I feel taht the inflationary/deflationary argument can be totally separated from your next point, which goes to the heart of this blockchain business.
or ability to set monetary policy according to economic conditions
The ability to set monetary policy is also the ability to game monetary policy. I understand that this power can be used in ways that encourage a stronger economy, but I also understand that it is currently being run by corrupt bankers. I don't even think we can effectively reform it (or any part of this system). Replacement seems like a better option, in the long run.
Here's a video [youtube.com] of a US Senator (Sanders) asking Ben Bernanke to disclose which banks got 2.2 trillion dollars worth of loans. That knowledge is a secret which the Federal Reserve does not have to disclose.
(Score: 1) by Francis on Sunday August 16 2015, @08:14PM
Inflation is barely any better than deflation. Ideally it should be set up so that coins come and go roughly proportionally to the amount of coins actually being used. Which is an incredibly difficult problem to solve.
I've never been opposed to the concept of virtual currency, but one that's designed to be deflationary where people early on pay very little for wealth that becomes very expensive with no contribution to anything is a really bad idea.
(Score: 1, Informative) by Anonymous Coward on Monday August 17 2015, @03:37AM
Do you rent or own?
If you rent the deflation can be fine.
If you buy *anything* on credit you do not want deflation. When I say anything I mean anything. Such as a budget deficit or a home loan.
Do you buy or sell?
If you buy things it can be a bit tough because today you buy something but if you waited 1 day deflation would have made your cash worth more and you could buy more.
If you sell you can have a hard time selling things unless you sell goods people absolutely need.
That is what deflation does.
(Score: 2) by JNCF on Tuesday August 18 2015, @04:00AM
I'm not making an argument for or against inflation.
(Score: 5, Informative) by Justin Case on Sunday August 16 2015, @06:47PM
> the [Bitcoin] lack of [government] ability to set monetary policy
That's a feature, not a bug.