An unsustainable monthly offer of about $500,000 by Roger Ver has been identified by the Bitcoin entrepreneur, Charlie Shrem, as a key factor that could be keeping some Chinese Bitcoin miners with Bitcoin Unlimited, even as the likes of Wang Chun's F2Pool, break away to signal SegWit for Bitcoin.
Chinese miners have been caught in the middle of the unfolding Bitcoin block size debate for quite some time. The BU and SegWit debate has created a deadlock that seems to have stalled the community without innovation.
In the latest edition of Double Down, the radio program on sputniknews.com with Max Keiser and Stacy Herbert, Charlie Shrem, the Bitcoin advocate who co-founded the startup Bitinstant in 2011, notes that the debate reflects how emotion could be powerful than rationality.
"As I see in this case, the miners are being rational. Roger has as much money as he wants to spend. He is not being rational. He is being emotional,” says Shrem on air. “He is just saying whatever he wants, doing whatever he wants. He is wasting half a million dollars of his own money per month - those were his words to me directly so I know that it is true. However, these miners run a business and business is everything. It's bad business to support Bitcoin Unlimited at this point and Roger can't prop up all of the miners for so long. The only reason that this certain group of Chinese miners that have 40 percent of the hash rate are still supporting Bitcoin Unlimited is because that is the Asian culture - when you give someone your word, you have to follow it through. But at some point, it becomes economically infeasible."
He explained how the situation resulted in F2Pool's change of direction:
"These guys can't continue to make money to run their business. So as it seems, one of the largest Chinese mining pool, F2Pool broke away from Bitcoin Unlimited and started signaling SegWit and he wasn't happy about it. He (F2Pool) said 'I don't have a choice: whether I like SegWit or not, it's not economically possible for me to continue supporting Bitcoin Unlimited. We've had talks with our miners and users and they all want SegWit. Although I'm not happy about it, I'm now supporting Segregated Witness' which is the Bitcoin Core development team. That's what's going to happen: slowly, all of these miners are going to fall over into Segregated Witness. There would be one or two holdouts but eventually, they'll all fall in line."
A successful adoption of SegWit will demonstrate the possibility of resolving technical challenges through debates and collaboration and by validating nodes. Its adoption has been touted to be one of the most important financial technology milestones of the decade if accepted collectively.
However, going by the crux of the current situation, according to Shrem, the struggle between a group of Bitcoin miners whose incentives are not the same with the network's and the rest of the miners, users and nodes who keep rejecting them will continue until the right situation prevails.