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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: 2) by Justin Case on Sunday August 16 2015, @06:55PM
> The U.S. fiat currency is backed up by something called taxes and the threat of prison
Yes and I can hand out lollipops and threaten to shoot anyone who doesn't bend the knee and worship them, but that doesn't bestow actual value on the candy. Well not more than it already had, which is more than the intrinsic value of green paper.
(Score: 3, Interesting) by tftp on Sunday August 16 2015, @08:16PM
Yes and I can hand out lollipops and threaten to shoot anyone who doesn't bend the knee and worship them, but that doesn't bestow actual value on the candy
This example demonstrates just the opposite to what you are claiming. Imagine that you are an absolute monarch, and you just decreed that anyone who does not worship a certain lollipop will be put to death. Don't you think that this will create a significant demand for lollipops? If previously out of 100,000 citizens a lollipop maker sold 1,000 on weekends, to children, now he needs to supply 100,000 per week - if not per day (don't know how long they last.) The candy maker can now dictate his prices, and people will pay because the alternative is death. As matter of fact, the lollipops will be valued more than money, and they may even become money/barter on their own.
Perhaps you were thinking that your example does not work because you had no intention to ever implement the threat. However governments do not hesitate to arrest, try and imprison people for failing to do what the government tells them to do. If a monarch requires people to own lollipops, and the same time installs gallows, people will pay attention.
(Score: 2) by Justin Case on Sunday August 16 2015, @09:16PM
I'm saying running an economy at gunpoint is not a desirable approach. Although the Soviets had a good run at it, for a while.
(Score: 1) by tftp on Sunday August 16 2015, @11:37PM
The guns come into play not because of fiat money, but because the government wants something from the citizens.