Bitcoin Unlimited vs Extension Blocks

Earlier this week, a new bitcoin scaling proposal has started gaining some traction. Extension blocks, as this concept is called, aims to provide an alternative solution to Segregated Witness and Bitcoin unlimited. What is rather interesting is how this solution draws some parallels with SegWit, yet it is very different from Bitcoin Unlimited. Now is a good time to check how both solutions compare to one another.

2. Bitcoin Unlimited

Most cryptocurrency enthusiasts are well aware of what Bitcoin Unlimited proposes. People supporting this bitcoin scaling solution acknowledge there is a growing need for much larger network blocks. While SegWit also acknowledges that need, it proposes a smaller increase compared to that of Bitcoin Unlimited. BU envisions a 2MB block size increase in the short term, which is then increased exponentially as time progresses.

However, Bitcoin Unlimited would effectively serve as a hard fork, whereas SegWit is a soft fork solution. A hard fork is irreversible and requires everyone on the network to upgrade their client. Moreover, Bitcoin Unlimited seemingly puts more power into the hands of the miners, which eventually leads to centralization. Not necessarily a positive development, especially when considering their software seemingly hasn’t gone through QA at this stage.

Moreover, it appears the economic majority is not in favor of Bitcoin unlimited by any chance. A few bugs discovered in the BU source code are not helping matters either. Right now, it is doubtful this solution will activate on the main bitcoin network. Bitcoin Unlimited may continue to exist as an altcoin in the future, though. Only time will tell what will happen to BU, as all possibilities are still on the table.

1. Extension Blocks

Unlike Bitcoin Unlimited, Extensions Blocks is a proposal that can seemingly coexist with how Bitcoin Core developers envision the future of this popular cryptocurrency. Bitcoin Unlimited has no support for the Lightning network, whereas Extension Blocks does. Moreover, Extension Blocks addresses the malleability fix – similarly to how SegWit should solve this problem – yet it also allows for a block size increase along the lines of what BU supporters want to see.

To achieve this goal, Extension Blocks will use an opt-in second layer for an on-chain capacity increase. Additionally, Extension Blocks brings some intriguing features to the bitcoin ecosystem, including smart contract technology. Plus, the proposal provides fungibility, a trait bitcoin has been lacking ever since its inception. However, all of these features are opt-in and will not be enforced upon all network users. Everyone can choose to make use of these new features or simply accept the malleability fix and block size increase.

Similarly to SegWit, Extension Blocks will be activated through a soft fork. It will also increase the block size immediately,  just like Bitcoin Unlimited would do. Further block size increases can be accommodated through additional soft forks. More importantly, Extension Blocks provide a clear path for future innovations, including compatibility with the Lightning Network, MimbleWimble, and Rootstock. However, there are some drawbacks to this proposal, as can be seen in this lengthy post.

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