Op Ed: A Contentious Hard Fork Isn’t the Only Nightmare for Bitcoin

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For some time, I've been preparing an argument as to why the Segwit2x proposal for Bitcoin is a poor choice, and over those weeks, I've become more and more convinced that we have an opportunity to resolve the blocksize debate once and for all this week by abandoning pools that are supporting the proposal.

In addition to taking the longest, this is probably the most important post I have written. In this lengthy article, I'll attempt to present a comprehensive case as to why miners should oppose Segwit2x by switching to pools that will not signal for Segwit2x.

Technically, Segwit is a complex solution to a much simpler problem that will make it difficult for developers to develop for Bitcoin in the future.

Interpersonally, Segwit2x doesn't address the primary issue facing Bitcoin: Logically, Segwit2x doesn't represent a "compromise," as is advertised.

Ethically, Segwit2x is about the wrong people making decisions for which they will not suffer the consequences. There are many more reasons that I can't list in this introduction. Finally, I'll propose that the entire process of solving this problem has been considered too narrowly and that the solution already exists.

The best way to address all of the issues with Segwit2x is simply to list them and review each in turn, which I'll start now. At the end, I'll explain how the best outcome bitcoin block size debate republican to simply allow the forks to occur now, and why the world isn't going to end if Bitcoin forks. Segwit2x proposes the activation of Segwit within a few weeks, followed by a hard fork to a 2MB blocksize for Bitcoin a few months later.

Since the proposal was decided behind closed doors, it is not possible to determine why the participants chose 2MB as the blocksize limit, but this limit is arbitrary and has no grounding in any mathematical formula or experimental evidence. The obvious indication that is so is because the odds are extremely low that any calculation to determine the optimal blocksize for Bitcoin would result in exactly 2MB, not one byte more or less.

The 2MB limit the participants have decided upon is permanent. There are absolutely no plans to increase the blocksize limit if the 2MB activation is achieved. This decision represents an appalling lack of foresight. Let's imagine if, when it was determined the IPv4 protocol was insufficient, the companies who designed the successor IPv6 had decided to simply double the number of IP addresses available.

What would have happened when the protocol was announced? Would Cisco immediately begin implementing it in all of its new routers? Of course not - they would have seen that the investment required to reimplement the new protocol in all of their products was absurdly high compared to the possible gains.

This lack of action is exactly what will happen if Segwit2x passes. Companies like ours, which have already switched to Litecoin, are bitcoin block size debate republican going to consider Bitcoin a serious contender with such a ridiculously small change.

Notice that Litecoin right now already has higher capacity than Segwit2x will provide in four months, if it were to activate as designed. Possible new developers and merchants aren't going to look at Bitcoin block size debate republican, be amazed by the new capacity it brings, and start developing great apps for it. What will actually happen is that the blocks will immediately become full again, nobody will be impressed by such bitcoin block size debate republican trivial change, and the growth will continue to be in Ethereum and DASH, where the blocksize issue is already solvable and communities are not poisoned by their development teams.

Speaking of development teams, Segwit2x proports to solve the blocksize issue without actually addressing the problem that caused it: While some developers have supported Marquadt, his actions are directly responsible for the current situation. Since Michael Marquadt theymos split the Bitcoin community in AugustBitcoin community participants have been at odds with each other.

Marquadt controls reddit's largest Bitcoin subreddit, the popular bitcointalk. He repeatedly uses his accounts to promote the Bitcoin Core and to disparage supporters of alternative ideas, like Bitcoin XT and Bitcoin Unlimited. Marquadt is treated by some people as an annoyance who isn't involved in any actual decisions.

While it is true that Marquadt is not a developer, and the industry is larger than his media domain, his actions singlehandedly created the current stalemate by preventing people from communicating with each other, which led to distrust and an inability to compromise. Marquadt is able to maintain control because he has been able to promote increasing current blocksize limit as a "threat" to the Bitcoin network. If the blocksize controversy were resolved, then Marquadt's influence would effectively be eliminated.

Additionally, the Core developers are unwavering on making any changes to Bitcoin's capacity whatsoever. Last year, I published a chart describing various "compromises" that have steadily declined in size until now 2MB is considered by the Core to be too large.

It should be obvious to everyone that the Core desperately wants to go its own way. People like me, who personally believe that bitcoin block size debate republican Core's actions are abhorrent, think Bitcoin would be better off without them, and I'm sure that the Core probably thinks the same of people like me.

At this point, it's not about who is right; it's about getting Marquadt out of everyone's lives so that both sides can do what they want to do. So why is everyone continuing to pretend that an agreement can be reached? What will change in 3 months that hasn't changed in years? This argument represents a lack of understanding of what these messages mean.

First, the "signaling" of Segwit2x blocks will not actually cause activation or prompt any other action. The current figures are essentially "pre-signaling. No software takes any action based on these messages except for a few websites that display statistics. But there is also a critical flaw in these signaling statistics: Miners can easily change pools. In SHA mining, the margins are bitcoin block size debate republican lower than scrypt mining, so Bitcoin mining has become a commodity service, with some pools actually offering bitcoin block size debate republican fees.

There is reason to suspect that miners are uninformed about the Segwit2x proposal, which is one of the reasons why I decided to bitcoin block size debate republican this article. Our business has found that some miners simply set their equipment and come back to it weeks later; in some cases, significant amounts of money are stolen as customers fail to notice for days that their payout addresses were changed by criminals due to password reuse.

Most miners were not invited to the secret discussions that lead to the bitcoin block size debate republican, so it is to be expected that pool owners, who were invited, would be more enthusiastic about it than miners are likely to be. To add to the issue of miners and pools, there is also the problem of changing production code on complex systems bitcoin block size debate republican a very short activation window.

I'll write more about this later, but some pools will undoubtedly fail to get Segwit2x implemented in time because we ourselves accidentally mined non-Segwit blocks during the signaling period for Litecoin given that it is far easier to change coinbase messages than to implement Segwit. Note that it is possible that these numbers have changed since.

Segwit2x is presented as a "compromise" solution for the blocksize debate, but relatively few people consider it an acceptable compromise except for the people in the room when it was decided. There are two opposing sides in the blocksize controversy. One side mostly supports Segregated Witness with no other improvements, and the other side mostly supports Bitcoin Unlimited without Segregated Witness. The compromise seems pretty obvious: That leads to a Segwit-Unlimited proposal, in which everyone can find something to like.

I don't like Segwit, but can just use normal transactions because there is space in the large blocks. Lightning Network supporters don't need the large blocks, but the Segwit transactions will allow them to move forward. That's a win-win proposal that would satisfy almost everyone. By contrast, Segwit2x is a lose-lose proposal, which is why I'm mystified that the owners of mining pools have come up with it.

The Core developers will not support it in any way because they view anything created without their input as unacceptable. The user-activated-soft-fork supporters are rightfully mad that Segwit2x essentially co-opts their planned fork, which they should be entitled to execute if they choose to do so. Bitcoin Unlimited supporters see the absurdity bitcoin block size debate republican the arbitrary choice of 2MB. The "compromise" is unacceptable to everyone because it doesn't contain any element that any side wants so much that they would be willing to give up something else.

A review of the positive press surrounding Segwit2x focuses on one primary theme, which even insiders frequently acknowledge: Many of these people openly state that their main goal is to avoid a split solely to keep bitcoin block size debate republican price of Bitcoin high so that they can earn money, rather than taking the hard steps necessary to actually solve the problem and create a technology that will change the world.

This is what happens when a group who is out of touch with the people who actually use bitcoin for daily commerce and transactions draws up a proposal. We've seen this happen around the world where citizens vote against "elites" they perceive to be dictating policy to them. Bitcoin block size debate republican suspect that users, who are disgusted with the lack of transparency surrounding this deal, will not sit idly by and do nothing about it.

Segwit has bitcoin block size debate republican its deployment on Litecoin demonstrated unintended consequences.

For the past year, the Core has been trying bitcoin block size debate republican frame Bitcoin Unlimited as an unstable, insecure, poorly developed piece of software. To accomplish this goal, they have revealed denial-of-service vulnerabilities in the client that can cause it to crash but have never caused any losses of money.

While it is possible that Bitcoin Unlimited actually does have more bugs than Bitcoin Core does, my experience leads me to believe that all software has lots of bugs, and the major reason that Bitcoin block size debate republican Unlimited has crashed so often is because Core developers are spending their time trying to find issues and publicize them. The way in which the issues were revealed publicly instead of notifying developers or submitting pull requests for patches is questionable practice.

When Litecoin's Segwit implementation activated, a major pool that represented about half the hashrate of the network had issues with publishing blocks. At the bitcoin block size debate republican time, we tested and deployed code that successfully published Segwit blocks - and which then stopped working because a race condition had been very lucky and had made it appear that the code was working when in reality the timing was just right for the first few blocks.

The rapid deployment schedule of a two-day activation period! The first concern is obvious: The testnet is not a complete substitute for the real world. During long activation periods, different pools and miners make the switch at different times, so the risk of chaos is diminished. With Segwit2x, there is a good chance that the Bitcoin network will have extremely poor usability initially, because blocks will be lost due to bugs and they will therefore be infrequent.

When enough independent trials of a rare event are undertaken, rare things tend to happen. The second issue is that since the activation period is so short, there is no time to recover from mistakes. It's difficult for me to believe that with everyone using new software over that period and rushing to make these changes with just a few weeks to prepare, fewer than 9 blocks will be orphaned or lost as a result.

Segwit2x is far riskier than Bitcoin Unlimited. In addition to introducing new data structures on the Bitcoin network whereas Bitcoin Unlimited just increases the size of existing data, Segwit2x attempts to do this over the course of two days, with almost no advance preparation time.

Segwit2x will be a different fork from bitcoin block size debate republican original Bitcoin with no capacity increase with Segwit enabled because the capacity increase does not occur at the same time as Segwit activation.

People who support only Segwit but not the capacity increase cannot be compelled to uphold their end of the bargain and continue mining the "single" chain. Also unique to Segwit2x across any of the presented options is the effect it will have on cryptocurrency in general.

Not only will there be the 2MB hard fork, but Segwit2x will result in at least three coins that are derived from Bitcoin: The problem of multiple forks is guaranteed by the signatories' lack of foresight.

In their haste to come to an agreement and to avoid a "contentious split" at all costs, they may achieve the opposite effect: A large part of this danger is a result of a precedent having been set by the action of taking temporary action.

If many miners mine the new chain, then bitcoin block size debate republican likely that many will see Segwit2x as having "worked. Whatever bitcoin block size debate republican is taken for the first chain split will be the standard against which future actions are measured.

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Many people, myself included, believe that this downturn is only temporary. But as new data rolls in, it is time to take seriously the alternative theory: This is a direct challenge to the logic of network effects. Furthermore, many of Bitcoin strongest defenders have jumped ship, and a few of these are even socially secure enough to admit so openly. Roger Ver, indefatigable promoter and angel investor, owner of the Bitcoin. Furthermore, services ShapeShift, Poloniex, et al have evolved to make these markets user-friendly and liquid.

These days, if you can accept one crypto, you can accept them all. They also offer permissionless innovation. Certain ideas, such as Monero, Siacoin, Namecoin, and Zcash, cannot efficiently be tested in any other way. Of course, these experiments should have been done on sidechains which we will turn to in a moment. As to the first value proposition cheap payments , much has already been said. I have written an article with my nuanced views on the subject.

More important is to discuss the second value proposition. For, while the Altcoins try new ideas a day, most bad, but occasionally one or two good 2 , Bitcoin instead has retreated into an overcautious and highly-pretentious paternalism. It is not so much a passenger-laden plane, but a flight simulator virtual-reality videogame.

The Altcoin ideas are judged, appropriately, by the user. Bitcoin, in contrast, is now tending to choose its ideas based on how impressive they are to other members of a pseudo-academic pseudo-bureaucracy.

A scientific environment requires certain features, including: Altcoins represent one method of falsification — trying the idea and watching to see if it fails. Sidechains are an even better method.

Otherwise, peer review becomes a self-referential popularity contest. The point, since so pervasively and consistently misunderstood, bears repeating: It is not a popularity contest! Unfortunately, for the significant questions 3 , the atmosphere of science is departing from Modern Bitcoin. One smoking gun is the reaction of both LargeBlockers and SmallBlockers to the idea of fork futures.

For that very reason, they have the unique ability to singlehandedly predict the fate of any fork 4. Despite this, there was no interest in creating such markets. When they were created anyway, the losing side refused to acknowledge them as legitimate. When I proposed a way of making them more legitimate , the losing side was not interested!

This is a root and branch rejection of the value of experimental testing. It exploits the power in the remaining network effects, and uses it to enable a monopoly — in other words, uses it to ensure that dissatisfied customers have no recourse. As the scientific atmosphere declines and, please, do not confuse science with engineering , standards of discourse have declined as well. Clever Altcoiners have noticed these deficiencies and the insecurities they inspire and exploited them.

One can dismiss these maneuvers are mere campaigning, but they are only possible because of real flaws that actually exist in the Bitcoin community.

No one alive is in a better position to answer than I. After Blockstream gave up on sidechains in 6 , I wrote my own idea in November of that year.

It remains, to this day, the only concrete proposal for P2P sidechains, let alone the only implementation. My view is that the scaling conflict is important, and that sidechains are the best way to resolve it. In fact, my current view is that sidechains are the only way to resolve the conflict. But since each person is different, there is a limit to how large a community can grow before there is infighting.

Sidechains resolve these issues. Despite this, interest in Drivechain has consistently been low, among Democrats and Republicans alike. But they are not interested. MimbleWimble, originating deep in Republican territory bitcoin-wizards , now plans to launch as an Altcoin.

Perhaps sidechains are just a bad idea? I think that the causality here is reversed: Instead, there is profound evidence of bad claims that sidechains are a bad idea — most critics admit that they made no effort to understand the idea before criticizing it 7. However, more fundamentally, even if drivechain were bad, it is a soft fork.

So, it can be freely and completely ignored by disinterested users. And it actually cannot be prevented if miners decide to use their hashrate to unilaterally activate it. If bad, it should be talked about, because it is unpreventable. But this explanation would apply equally well to every new idea. And drivechain is a very old idea, it is much older than SegWit and the spec was published in Nov I can get principled developers to review the code, if I pay them.

Disinterested third parties have also offered to pay for drivechain code review, with some success. So the potential for interest in sidechains is there, but the inherent interest is just disproportionately low. And sidechains, along with their benefits, do present a scary new risk.

These risks are freedom-enabling, and entirely opt-in. For existing Bitcoin Core developers specifically, the above position might be taken even further. It is a clear conflict of interest — if society adopts the pill, the doctors will be out of a job. Even though by the time that absolute safety is established, many people will have likely died needless deaths. Since sidechains take control away from current elite Core developers, we would expect them to oppose sidechains.

Human disputes, of all kinds, will reliably collapse onto a single dimension. This is simple math: If you join one of the two major groups, your influence will be very small. But if you join neither it is likely to be zero. A LargeBlock sidechain is a competitor to both the LN favored by Republicans and a hardfork blocksize increase favored by Democrats.

Thus, to support a largeblock sidechain would be to oppose the party leadership. So commentators wisely downplay their interest in a sidechains solution. Today, nearly every person, and every media outlet, has allowed themselves to be captured exclusively by one party. This one is very simple. The free rider problem is a one of immense practical importance.

For Altcoins, of course, there is no free rider problem, because there are alt-owners who profit disproportionately to everyone else from the success of the Altcoin. But with sidechains, we have a situation where someone must do the work, at some cost to themselves, and yet the benefits are diffused across all Bitcoin owners.

Miners, Users, and [Republican] Developers. My point is that incentives do not always align. For better or for worse, the dumb people of the world form an intransigent minority , because they literally cannot appreciate good ideas.

English is the international language, despite being awkward and hard to learn — Esperanto, in contrast, is very easy to learn but is spoken by no one. If you disqualify Esperanto, then consider French: Yet today they all speak English in Quebec. The fact of the matter is that anything with network effects is going to ultimately be ruled by the middle of the bell curve: In these analyses, timing is important: But as time goes on, the project will attract more users, and so the network effects will become more important.

Eventually, the network effects outweigh the meritocratic effects. And, if the playing field is too ambiguous, these un-knowledgeables are going to glue the future to whatever shiny object can attract their attention first Secondly, the marginal meritocratic effects do not seem to be that significant. Someone who needs financial sovereignty must abandon modern fiat currencies, but whether they transact in BTC or LTC or ETH will make no difference to them, and investors will need to invest in whichever money is the most recognizable.

The differences in node cost, or in privacy, are not as relevant most lay users care about neither But he did not advise me to also add drivechain to Bitcoin Gold or Diamond etc. And perhaps we only stop at 2 for a short time, before returning back to 1 for example if sidechains do, in fact, eliminate Altcoins. He argues that a system can become healthy, as long as the losing team becomes desperate upon their loss, and willing to take risks and make changes.

It had pros and cons relative to mine, some of which the two of us discussed together at Scaling Milan in late he definitely helped improve our work. It also occured to me that working on sidechains is probably perceived as disloyal to Bitcoin. For trivial, non-controversial matters , we may still see some scientific features. It was always better than nothing but highly flawed, as I discuss in the Fork Futures article. I feel it necessary to explain that Blockstream has two projects which it repeatedly claims are sidechains but which actually are not.

But most people made a strong effort to mask their disappointment. Jorge Timon still does not understand that sidechains are supposed to be optional — these are sidechain paper co-authors! And I do not believe that that is the case.