Bitcoin XT ELI5: Explain It Like I’m Five

Bitcoin XT is an alternate bitcoin client to Bitcoin Core. The official Bitcoin Core software client is used by bitcoin enthusiasts who understand that running a full node makes the Bitcoin network strong.

A full node is a running instance of the Bitcoin Core client that stays on 24/7 and may be associated with bitcoin mining. Most often it is just running on a user’s home computer. The following linked chart shows the current total of Bitcoin Core nodes (users) compared to Bitcoin XT.

Bitcoin XT ELI5

The chart is a snapshot taken on 23 August. Click on the chart to see how many computers are currently running Bitcoin XT compared to Bitcoin Core (Satoshi). As of 23 August Bitcoin XT had been published for 17 days and about 19% of all bitcoin nodes had switched to the alternate bitcoin client according to the chart.

However take the numbers of full nodes running Bitcoin XT with a grain of salt. Supporters of Bitcoin XT have been inflating the numbers by running PseudoNodes without local blockchain storage as explained in this post at reddit. Bitcoin XT Summary filters out spoofed nodes to give a more accurate count.

Why Was Bitcoin XT Introduced?

Mike Hearn is the creator of Bitcoin XT. Though he is not on the Bitcoin Core development team he became frustrated with the lack of progress among the core developers toward adopting a patch that would allow Bitcoin Core to handle block sizes greater than the current 1 MB limit.

This is important because right now Bitcoin can only handle a maximum of 7 transactions per second. As more people start using bitcoin the blocks miners publish about every 10 minutes will fill up and start causing problems. Transaction confirmation will be delayed and worst case could take days instead of one hour.

Rather than work within the system to achieve change Hearn decided to publish his own vision of what Bitcoin software should be and is using social media to urge users and miners to switch from Bitcoin Core to Bitcoin XT.

What is Different in Bitcoin XT Compared to Bitcoin Core?

Right now Bitcoin XT and the official Bitcoin Core use the same database (the blockchain) which is stored on your computer. The blockchain is a public ledger of all bitcoin transactions every made.

The main difference between the two is that Bitcoin XT has incorporated a patch called BIP 101 that increases the maximum block size from 1 MB to 8 MB on January 11, 2016. Other patches have also been applied.

BIP 101 is also under consideration by the Bitcoin Core developers and if implemented would make Bitcoin XT unnecessary.

What About A Hard Fork?

Any change to the block size limit will require a hard fork as the limit is now capped at 1 MB. It is not possible to increase the block size limit with a soft fork. Soft forks are used from time to time by the core developers to make minor changes in the Bitcoin Core software. When a change is made using a soft fork the updated Bitcoin client is backwards compatible with older versions. Older versions of Bitcoin software will therefore recognize blocks mined using the Bitcoin client patched with the soft fork.

Hard forks are dangerous. When changes are made to the bitcoin software that are not backwards compatible with older versions the change is referred to as a hard fork. Anyone using bitcoin would have to upgrade their software to the new version or their bitcoin client would not recognize blocks mined after the hard fork.

If a hard fork is required for the Bitcoin Core software the event is planned and publicized well in advance so miners have time to upgrade their software in time for the protocol change. There has only been one hard fork in the history of Bitcoin and it was thoroughly planned.

Should I Start Using Bitcoin XT Just In Case?

There is no danger to using Bitcoin XT now. The client works just like Bitcoin Core and uses the same database. If you wish you can have both Bitcoin XT and Bitcoin Core on the same computer. You cannot run both at the same time though!

However realize that you are voting with your computer for a change to Bitcoin XT if you use the new alternate client. Your Bitcoin XT node will show up in the total from the chart shown at the beginning of this article.

No matter how many bitcoin users switch to Bitcoin XT no change will take place unless 75% of bitcoin miners switch over. The earliest the hard fork will happen is January 2016. The largest bitcoin mining operations are in China and have already expressed their desire to stay with Bitcoin Core but increase block size using either the BIP 100 or BIP 101 patch.

The Chinese mining pools have even gone so far as to call Bitcoin XT an altcoin and clearly do not approve of it at present. Without support of the largest miners Bitcoin XT will fail.

The chart below actually shows how many mining pools have mined a block of bitcoin using the new Bitcoin XT software. Remember the BIP 101 patch can be adopted by Bitcoin Core also. The Chinese pools support an 8 MB block size increase as outlined in BIP 101 but they are voting against adoption of Bitcoin XT:

Blockchain Blocks Version

As before click on the chart and scroll down for latest numbers. The chart is a little confusing due to labeling. Results show how many blocks have been mined using Bitcoin XT and has nothing to do with approval of BIP 101 by mining pools. BitcoinStats provides a chart showing how miners are actually voting by including a marker in the coinbase transaction of each mined block:

coinbase markersFor latest miner votes please click on the chart. It is clear that miners support larger blocks but are voting against Bitcoin XT.

You can also visit Blocktrail to see the latest coinbase blocksize vote of the bitcoin mining pools:

coinbase blocksize voteThe largest pools are evenly split in their support of BIP 100 and 8 MB blocks.

Recommendations

There is no rush to start using Bitcoin XT. We recommend you continue to use Bitcoin Core. Should a hard fork occur you would then just have to install Bitcoin XT and start using it. According to the developer Bitcoin XT uses the same data directories as Bitcoin Core so you would not have to move your wallet.dat or private keys from Bitcoin Core.

If you are using a lightweight wallet like Mycelium or Electrum it will be the responsibility of that wallet’s developers to switch to the Bitcoin version approved by 75% of the miners. Leaving your bitcoin in a web wallet or exchange might be risky because you don’t control the private keys of those bitcoins. Unless you have possession of the private keys you do not really own any bitcoin; instead you own IOUs issued by the web wallet or online exchange.

Closing Thoughts

We think it is important to support the core developers of Bitcoin. You voice your support by using Bitcoin Core rather than Bitcoin XT.

The dissension in the bitcoin community is unfortunate as markets hate uncertainty. Bitcoin price slumped as soon as Bitcoin XT was released.

Mike Hearn also has a different vision for the future of bitcoin than the core developers. He supports the use of blacklists/redlists within the Bitcoin software that could make certain bitcoins potentially unspendable. He has lobbied to make bitcoin less private and is not a friend of Tor as this post at reddit outlines. In the event of a disagreement among Bitcoin XT developers Mike Hearn settles all debates as he has authority to make final decisions.

Designing Bitcoin XT so a hard fork will occur if only 75% of miners adopt is unfortunate in our opinion. Bitcoin was designed by Satoshi such that changing the rules is hard. This is what gives Bitcoin one of its most powerful properties: very well defined rules that cannot be arbitrarily or maliciously changed by anyone.

Billions of dollars of other people’s money is on the line here and we think any changes to the Bitcoin Core protocol should be tested first by the core developers. If testing is favorable present the proposed change to the miners for a vote. Since hard forks are dangerous and occur very infrequently the threshold to trigger a hard fork should be 90% adoption by bitcoin miners.

For more arguments for and against a block size increase you can browse bitcoin block size debate.

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