Recalling some of the last year’s events, Erik Voorhees says the community is already deeply split and, unfortunately, there were no winners in the stand-off between the Bitcoin Core and Bitcoin Cash proponents.
2017 can be rightly considered one of the most controversial years in the short history of Bitcoin. Before multiple forks that span off the main chain by the end of the year, there was some true drama surrounding SegWit activation in August preceded by the so called UASF, the sudden appearance of Bitcoin Cash and the failure of the New York Agreement (SegWit2x proposal).
Today things look way more settled with different projects going their way and the block size debate seemingly being over, or at least paused. Bitcoin is still here, just as is Bitcoin Cash and a number of other forks, and it could be a good time to take a look back and try to assess those events with a calmer head.
One of the persons heavily involved in some of those events was Erik Voorhees, founder and CEO of the instant cryptocurrency exchange ShapeShift. He was one of the signees of the New York Agreement, which wanted to introduce SegWit and the double block size increase a couple of months later, with the latter happening through a softfork. However, a week or two before the scheduled date the proposal was called off with no detailed explanation behind the decision.
Talking to ForkLog’s Andrew Asmakov during the recent UNCHAIN Convention in Hamburg, Germany, Erik Voorhees recalled some of the things that happened last year claiming in the process that the division of the community is now a fact that has to be accepted and that, in his opinion, there were no actual winners in the stand-off between the Bitcoin Core and Bitcoin Cash proponents.
He also shared his thoughts on why SegWit2x was called off, discussed the general state of affairs within the industry today and hinted at future ShapeShift integrations that can be expected in the near future.
ForkLog: Hello Erik, what’s your take on the current state of the industry? There’s no secret that many were attracted by Bitcoin and other altcoins during last year’s spikes and now when the markets have plummeted so heavily since then there’s pretty much pessimism around.
Erik Voorhees: I’ve been through four of these bubbles already with the first one being in 2011, and each time it’s all very similar. There’s a huge run up and then press peak and the fall. And with these falls lasting for months a lot of people are getting very negative. Still the same people turn very positive when the price goes up.
So in other words they don’t understand or care much enough of the technology, they just get tricked into watching the price movements seeing this as the major indicator. They don’t get the bigger picture thinking that when Bitcoin price goes up things are great, or when it goes down that Bitcoin is failing. However, it will be going in cycles for a long time and what we saw was just another bubble.
ForkLog: After recent controversial events in the crypto industry, do you believe Bitcoin still serves as a means of payment as envisioned in Satoshi’s white paper? And what does it take to boost Bitcoin’s mass adoption?
Erik Voorhees: Early on, when there was only Bitcoin, people generally thought that mass adoption would be in form of paying for things with Bitcoin. The number of merchants in the world that accept Bitcoin has grown, but it grows somewhat linearly and slowly. Meanwhile we see adoption happening much faster in other areas than payments, it’s adoption in interest investment in assets, digital assets as a class.
So, I don’t know if there’s a particular thing that will make payments widely used, maybe it will take a huge platform like Telegram if they integrate cryptocurrency and there are tens of thousands of millions of people who use it instead of the ten million Bitcoin users today. Maybe this will be the catalyst needed. But if it’s the payments that will be that driver, I really don’t know.
ForkLog: There’s a wide spread opinion that Bitcoin industry needs better infrastructure, which in turn would help with wider adoption. How do you rate today’s crypto infrastructure in general, and what do you think it’s lacking?
Erik Voorhees: I think the infrastructure is pretty good today. Just to compare, four or five years ago there was only Mt Gox, and that was the only available exchange. With each year things are getting bigger and everything is growing.
The problem is the overall perception of people, how do we convince them to hold their value in cryptocurrency that is volatile instead of fiat? It’s difficult, it takes time and patience, but ultimately what happens is that new waves of people are coming and that’s a very organic process. And I also think that number-wise it’s a very good progress as well.
ForkLog: Bitcoin community was and still is pretty much divided on the block size debate. You personally happened to be under some heavy criticism for your opinions during last year’s SegWit2x controversy. Taking a look back, what do you think of all this today? Is there’s still a possibility of seeing the community united again?
Erik Voorhees: I don’t think it will be united again. For a few years people were starting to debate whether Bitcoin block size should be increased, it all was very contentious, and ultimately since there was no increase it ended in fracturing. Some people who really wanted this, they split it off and created Bitcoin Cash. Some people who really wanted this, and that’s including myself, created the SegWit2x project. It failed with the block size increase even though there was SegWit, however that group of people is still aligned with Bitcoin rather than Bitcoin Cash.
What I think is that all this points to that the debate is over and it’s kind of that everyone lost that debate. Because the whole point of having that debate was about creating the consensus to the group, but the consensus wasn’t found and we had all those forks. Bitcoin Cash, Bitcoin Gold or any other fork, a lot of people in the community realize that it’s not that much on technical level but rather on social level that makes them create new coins. The same was actually with Ethereum earlier, although it was a bit different, so it’s not only Bitcoin.
However, as for the debate, I think everyone lost and what we have now is fracturing of the community and different coins competing with each other. That’s totally OK and I am glad that the debate is over because it really took people lots of time. I also think the whole story was really disheartening because people who should be friends and allies became enemies with each other for no good reason. It’s sad that the community really turned on itself instead of realizing that they want the same thing. So everyone lost here, and that’s a big tragedy.
ForkLog: Can you share some insights on why SegWit2x actually failed? It was a very sudden announcement on the fork being called off, just a week or two before it was supposed to happen.
Erik Voorhees: SegWit2x basically stemmed from two pieces. There was the New York Agreement to create 2x block size plus SegWit. If 95 percent of the miners were to agree with this SegWit would be implemented and then, two months later or so, the actual fork should have happened. So it started really well and SegWit was activated, but then out of nowhere comes Bitcoin Cash led by a group of people who weren’t involved in SegWit2x. They didn’t want SegWit at all, what they actually wanted was block size increase.
So ever since Bitcoin Cash appeared on August 1, 2017, it hurt the ability of SegWit2x to complete its mission because many of the people who wanted bigger blocks saw Bitcoin Cash as a solution. So we ended up with the split within the community, and ultimately there was no majority supporting the SegWit2x fork. It’s a little hard to assess how many people actually supported SegWit2x but by the time it was a week or two before the date it was pretty clear that there was no enough support and it would be kind of dangerous to proceed with it. So seeing all decided we called the whole thing off.
ForkLog: So you could call this a common sense prevailing?
Erik Voorhees: Yes, I would say so. When the New York Agreement happened it had a really wide spread support, especially among the miners. But, as I said before, by the time the fork should have happened there was Bitcoin Cash already in place and not so much support for SegWit2x. So ultimately it was a half failure and I am happy it didn’t happen. We didn’t have the block size increase, but we still have SegWit.
ForkLog: Well, in fact, if you look at the charts and statistics, SegWit not only takes some data off blockchain, it also brings actual block size increase. And that’s a very valid argument when you talk about SegWit and people insisting it didn’t change that much and kept the 1 Mb block size limit.
Erik Voorhees: Correct. SegWit essentially doubles the block size, so had the full SegWit2x happened we would have blocks like 4 Mb or 8 Mb. What we have now is basically 2Mb blocks, it was a very good improvement, and I am very happy that SegWit actually happened.
ForkLog: Do you agree with claims that Bitcoin Cash is the true vision of Satoshi’s original idea about Bitcoin?
Erik Voorhees: No, I think people who are saying this they appeal to Satoshi’s vision, but it’s not a good argument. It basically became a marketing trick. Anyway, to me it looks more like a religion with two fractions talking about what Bitcoin is supposed to be, and I don’t think that’s healthy at all, it’s not good for the whole crypto industry.
I mean, if people want to talk about increasing block size limit or Bitcoin’s security appealing to Satoshi’s vision is stupid because this sort of debate can go on forever.
ForkLog: In many aspects these fight between two different camps seems inevitable. Still, is there any receipt for having a healthier ecosystem, conducting proper business and trying to work for the same goal?
Erik Voorhees: I think people need to avoid tribalism and they have to realize that the virtue of decentralization is best served when we have many different chains and many different projects. There’s no decentralization if there’s only one chain, and anyone who appreciates decentralization properly should appreciate that crypto has gone off that one chain concept to the idea of Bitcoin plus thousands of other chains. That’s far healthier, and people should realize that the enemy is no particular chain.
The enemy is central banks, fiat currencies and the traditional financial system. In the end all people in crypto should be helping each other instead of fighting each other.
ForkLog: What you can tell about ShapeShift’s current challenges and future plans?
Erik Voorhees: Well, since 2013 we grew from 10 people to over 100, and that in itself was a challenge to get the organization to that size and scaling the technology to be able to handle
These were the big things we were working on, and since the market has fallen in December and January and things are calm now again we can focus more on a little more practical things. So, last couple of quarters we, of course, continued working on Prism and general ShapeShift improvements, but we also have been working on a new product that we haven’t announced yet.
In a couple of months, I think, we’ll be able to make an announcement on the latest product, just not ready to do it yet.