Segregated Witness (Segwit) supporting miners and mining pools are taking over Bitcoin Unlimited miners such as Antpool and HaoBTC. Due to multiple bug exploitations and controversial development errors from the Bitcoin Unlimited team, the entire bitcoin market including bitcoin exchanges, wallets, users, developers and miners are switching over to Bitcoin Core team’s scaling solution.
Particularly, the Bitfury group, leading blockchain technology company and mining facility operator, officially took over Antpool to become the industry’s largest miner in terms of hash power. According to the most recently updated hashrate distribution chart, Bitfury accounts for 15 percent of bitcoin’s hashpower, 1.5 percent higher than that of Antpool.
How Did Bitfury Takeover Antpool?
While Bitfury continues to be one of the most respected and highly regarded companies within the bitcoin industry for their innovative projects including their successful testing of the Lightning Network in late 2016, the major factor that allowed Bitfury to overtake Antpool was Bitmain co-founder Jihan Wu’s questionable statements and strategies.
On September 27, Bitfury CEO Valery Vavilov stated:
“This success exemplifies why The Bitfury Group is committed to research and to supporting the implementation of Lightning Network. Our dedicated engineers as well as our fellow Blockchain companies are committed to the success of Lightning. We are now one step closer to bringing the Lighting Network into reality and solving the scalability issue of the Bitcoin Blockchain.”
Over the past few weeks, Jihan Wu has been consistently expressing his support toward Bitcoin Unlimited. The reasoning for his support toward the software is that off-chain transactions made by two-layer scaling solutions such as Lightning significantly decrease miner revenues.
Essentially, Lightning is an off-chain scaling solution which enables multiple payments to be combined as one single transaction to be broadcasted to the public bitcoin blockchain. For instance, if Alice, Bob and John play a game of Poker and make several bets as the game progress, the Lightning transaction will be closed only when the game of Poker ends and all of the transactions between Alice, Bob and John are combined.
Wu’s theory on off-chain transactions decreasing miner profitability was later proven wrong by multi-signature technology development firm BitGo’s lead engineer Jameson Lopp and bitcoin researcher Christian Decker.
“Lightning does not reduce the fees that the miners may collect, it increases their reach into transactions that they could not otherwise collect. Lightning requires strong guarantees that the transactions will be settled in a certain time frame, for its security. Hence, Lightning will always attach higher than average fees to the on-chain transactions for setup and settlement of its channel.”
However, despite the technical inaccuracies in his theories and reasons as to why Segwit is not a viable scaling solution, Wu continued to claim that two-layer networks like Lightning will hurt miner profitability if they are ever approved.
“If 2nd layer protocols become a reality, many bitcoin transactions will go through 2nd layer networks and not via miners. Miners won’t receive transaction fees for them. The mining community obviously feel unhappy about this. The malleability loophole is what’s preventing change from happening. This bug inadvertently became the main obstacle preventing developers from creating new functions. Without removing this bug, 2nd layer protocols are difficult to implement,” said Wu.
Pro-segwit exchanges, miners and businesses are receiving support from the community while Bitcoin Unlimited miners are being criticized for supporting software that is untested, buggy and will cause a large economic and technical problems to bitcoin permanently.
Image Via: Dawn
If you liked this article, follow us on Twitter @themerklenews and make sure to subscribe to our newsletter to receive the latest bitcoin, cryptocurrency, and technology news.