By most accounts, the activation of Segregated Witness (SegWit) should be a boon for bitcoin.

The code, first proposed last December, has been introduced to the network, and at least 20% of bitcoin’s hashing power is now signalling support for the software change that is expected to provide the first significant boost in capacity to the bitcoin blockchain.

While the mechanics of its rollout ensure that its implementation is not a forgone conclusion, to the technical community, SegWit is seen as a significant technical milestone. As described by Blockstream’s Greg Sanders, the change is one of the “largest ever” to the bitcoin code base.

“It touched nearly every part of the codebase – serialization, peer-to-peer, wallet, codebase. That doesn’t happen very often,” he said at the Scaling Bitcoin conference this year.

Yet, despite the promise the technology holds, the bitcoin startup community has so far only tepidly embraced the idea that Segregated Witness will bring benefits. As summed up by Blockchain CEO Peter Smith, the view from consumer-facing firms that have seen usability issues while extended debate and testing were ongoing is more measured.

Smith told CoinDesk:

“On the whole, SegWit is good technology that we are looking forward to deploying in our products if it activates. At this time, activation does not look certain however. Specifics aside, we’re firmly in support of all scaling measures and generally are in favor of the bitcoin protocol evolving as quickly as possible.”

Smith’s comments point to the effects of the months of public fighting that ultimately led to the introduction of the code, and the general sentiment among entrepreneurs that the bitcoin block size will need to be adjusted upward eventually to accommodate more users.

The viewpoint has contrasted with how Bitcoin Core, the software’s main development project, has conducted work on the bitcoin protocol, which has seen it prioritize optimizations that enable the software to be more effective within its current constraints.

Regardless of how it was created, the resulting impasse has fostered the conditions under which bitcoin businesses aren’t quite championing the change, however well-considered or beneficial it may be when (or if) it is implemented.

One bitcoin startup, for example, declined repeated attempts to discuss the news, with one of its executives ultimately explaining that there was “little upside” in commenting on the issue.

“I’m guessing some folks just don’t want to get in the middle of anything that might have to do with the Core roadmap, positively or negatively,” he said.

‘Political’ climate

The lack of dialogue has not gone unnoticed.

Industry analysts like Cato Institute’s Jim Harper said that SegWit has perhaps suffered from the poor state of community dialogue, which he critiqued as divisive and ill-meaning.

“For me, this illustrates the crying need for greater social capital in the bitcoin world – deep research into every dimension of bitcoin as a technology and as a tool,” he told CoinDesk. “Reddit subs shouldn’t dominate, but should be second-fiddle to serious, carefully framed discussion in journals, academic conferences and among computer scientists, economists and other experts.”

The comments are supported by ample observational evidence.

Bitcoin now has two dominating Reddit forums (r/btc and r/bitcoin), both of which have shown a tendency to echo the MSNBC/Fox News-style schism observed in media more broadly. While r/bitcoin appears friendlier to Bitcoin Core, r/btc has championed alternative development teams, as well as the investors willing to devote capital to such explorations.

In this light, Harper credited the lack of dialogue to the “extreme hostility” that has characterized the debates ongoing in these environments.

This view was supported by Wedbush Securities research director Gil Luria, whose firm for years has issued forecasts on the potential market impact of the technology.

“The reluctance of bitcoin companies to react to SegWit either way could be a result of the desire to keep options open and avoid getting unnecessarily involved in what is still somewhat of a political debate,” Luria said.

Faint praise

That’s not to say there isn’t positivity about the changes in bitcoin’s business community.

Smaller consumer-facing bitcoin startups appear more apt to be vocal about the protocol change, particularly because it would make way for other upgrades – including the Lightning Network and sidechains (both solutions expected to bolster capacity and functionality).

Respondents who met this profile were more likely to show an appreciation for benefits that would remove business pressures that have resulted from a lack of available block space.

Sebastian Serrano, CEO of bitcoin processor BitPagos, for instance, said he expected SegWit would reduce the time it would take partner companies to send funds, as well as reduce the cost his company pays in mining fees.

Even firms…



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