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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: 0) by Anonymous Coward on Sunday August 16 2015, @11:04PM
Except a currency does not need government backing to have a societal role, it only needs societal backing - at any scale of "society".
Just look at any nation where the government totally fucks up monetary policy. People use the "official" currency only for taxes, and something else to perform every other transaction - dollars, euros, yuan, etc. This happens even when said government expressly refuses to back the alternative currency, or forbids it from being used to pay taxes, etc.
And before anyone points out that those dollars are backed by the US government, I'd like to point out that the people of Zimbabwe didn't give two shits that they could pay US taxes with the dollars they were using amongst themselves. What they cared about was accessibility (enough volume available to keep the local economy going), stability (will be worth approximately the same tomorrow as today), and reliability (difficult to counterfeit).
In the short term, that's all Bitcoin needs to be an acceptable currency to the masses - availability, stability, and reliability.
(Score: 3, Interesting) by Thexalon on Sunday August 16 2015, @11:33PM
The reason government backing matters is that government has the option, with a fiat currency, of enforcing that currency's value with the legal use of force.
For the purposes of this discussion, assume I am paying a restaurant bill in the US, and the restaurant has not given me any prior instructions about how they expected to be paid.
If I attempt to pay the bill in the US by leaving sufficient amount in US cash to cover the bill on the table as I walk out, I have not committed theft, even if the restaurant doesn't normally accept cash, because as is written on the bill "This note is legal tender for all debts, public and private". If the restaurant tried to either get the police or a civil lawsuit to intervene, they wouldn't succeed because I made a legal offer of payment and it's not my fault that the restaurant was unwilling to take it. And if they decided to engage in another action to recover the value (say, opening my car and taking something worth the same amount as my meal), I can use the governmental authority, including police officers making use of lethal force if necessary, to get my stuff back (yes, it's highly unlikely that anyone's going to get into a shootout over a hamburger, but theoretically it's possible).
If I try the exact same thing with Bitcoins or any other non-governmental currency, the restaurant now has a legal right to refuse my proffered payment and demand I use something else in order to settle my debt with them.
The US government also requires that employers pay their employees a certain number of dollars per hour (again, enforced by lethal force if necessary), which pretty well guarantees that most people will have dollars on hand, which makes dollars a pretty convenient way to ask people to use to pay their bill.
Both of those make it likely that US-based businesses will only invest in charging people in dollars, because they have to accept them no matter what, and their customers will generally have them on hand. Which makes them by far the most convenient medium of exchange.
"Think of how stupid the average person is. Then realize half of 'em are stupider than that." - George Carlin
(Score: 1) by khallow on Monday August 17 2015, @12:35AM
The reason government backing matters is that government has the option, with a fiat currency, of enforcing that currency's value with the legal use of force.
In Zimbabwe? I wouldn't be surprised if a good portion of the US Dollar currency in Zimbabwe is relatively high quality counterfeit currency. Even that is better than the native currency when hyperinflation happens.
The point of the previous poster was that the US dollar and other currencies get used in a lot of places that are outside the reach of the legal issuers of the currencies. A good currency has an inherent value beyond what the issuing authority can do.
(Score: 2) by Thexalon on Monday August 17 2015, @11:45AM
In Zimbabwe, the US dollar is valuable because it can be used to buy things from the US at its US-government-enforced value.
"Think of how stupid the average person is. Then realize half of 'em are stupider than that." - George Carlin
(Score: 1) by khallow on Monday August 17 2015, @11:44PM
In Zimbabwe, the US dollar is valuable because it can be used to buy things from the US at its US-government-enforced value.
The US government doesn't enforce any particular value. And once again, Zimbabwe is not the US. The US government has no power to enforce value there.