Demystifying the crypto space: From a platform perspective, only 4 cryptocurrencies exist

As you may have probably noticed, cryptocurrencies have been causing quite an uproar all over the world. Over the past year, cryptocurrencies—and its many jargons—have been dominating news, social media platforms, and yes, even dinnertime conversations.

Despite the buzz, there’s no denying that there’s still some confusion as to what some of these terms mean, so here at CoinGeek.com, we’re breaking down the cryptocurrency space for everyone.

Demystifying the crypto space: From a platform perspective, only 4 cryptocurrencies exist
Click image to enlarge

 

Crypto space explained for the rest of us

Forget all the nonsense coins and look at the cryptocurrency space from a platform perspective. Essentially, there are only four cryptocurrencies in existence, and these are the four with the largest market capitalization: Bitcoin (also called Bitcoin Cash and BCH); Segwit (also inaccurately called Bitcoin and BTC); Ethereum; and Ripple. 

Bitcoin BCH can do everything all the other platforms can do and more. The only coin that follows the original Satoshi Nakamoto white paper, Bitcoin BCH has the best scaling and security features. It reverted to the unadulterated form of the blockchain to stay as true to Satoshi’s vision: replace-by-fee was removed, the signatures are preserved, transactions are kept irreversible, fees are kept low, and the block size is increased to accommodate more users and keep transaction processes fast.  

Ethereum is basically smart contracts, a feature that will be rolled out on Bitcoin BCH later this year. Not only does it not scale and does not work as a cryptocurrency, Ethereum also has numerous security issues—from IoT malwares to “accidental” kill commands and eclipse attacks, as well as vulnerable smart contracts. In fact, Ethereum devs have been pleading for a hard fork so they can recover funds in special cases such as hacks, exploits, and loss of funds due to bugs in smart contracts.

Like Ethereum, Ripple is also not a cryptocurrency but a blockchain that is designed to replace SWIFT (incidentally, Bitcoin BCH can do this, too).

Finally, we have SegWit, otherwise known as Bitcoin BTC. Despite inheriting the name “BTC” largely due to history, SegWit is no longer Bitcoin. It forked off of Bitcoin to SegWit technology, and, in doing so, removed many of its original abilities, including shutting off its Bitcoin powers in order to try to transfer value to side chains and away from miners. To put it simply, BTC is no longer a cryptocurrency as it does not scale and is expensive to transact in. Sidechains do not work and many current tech thought leaders believe it is impossible to get it to work.

All the rest of the “coins” are on the Ethereum platform and add nothing new so are all essentially worthless.

Note: Tokens in the SegWit chain are referred to as SegWit1X (BTC) and SegWit Gold (SWG) and are no longer Bitcoin. Bitcoin Cash (BCH) is the only true Bitcoin as intended by the original Satoshi white paper.  Bitcoin BCH is the only public block chain that offers safe and cheap microtransactions.

source: https://coingeek.com/demystifying-the-crypto-space-from-a-platform-perspective-only-4-cryptocurrencies-exist/

BTC transaction volume hits two-year low

When everyone seems set on hodling BTC, what “economy” backs its value?

BTC transaction fees are dropping, but not for the right reasons—there are very few users transacting on the network. Transaction volume has reached a record-low, the lowest it’s had since two years. This has driven transaction fees down too, yet it’s not attracting more transactions.

“Earlier this year, when Bitcoin’s price fell by more than 60% from its record close, a less-noticed Bitcoin figure also plunged: the number of daily transactions,” wrote Bloomberg. In the article, Multicoin Capital crypto hedge fund managing partner Kyle Samani is quoted saying, “Merchants, payment processors and online gambling are moving off of Bitcoin.. Our Bitcoin position as a fund is small — I believe Bitcoin is in the process of failing.”

Some argue that companies using it regularly have been batching transactions and minimizing the bulk congesting the network, which would account for the huge cut in transaction volume. Some say it’s due to a drop in interest after a string of unfortunate events, scam scares, and allegations of trade manipulation shook the cryptocurrency market down in the past few months and scared investors enough to sell off.

While pinpointing the real reasons behind the puzzling calm may take some time, it’s not unreasonable to find this troubling.

Bitcoin was meant to be a method of transferring value between users, but ended up being more of a get-rich quick investment product. There’s nothing wrong with hodling it for a time for the profits, as that is what currency (or cryptocurrency, for that matter) trading is. But now no one wants to spend it, and everyone hodling for potential profits could actually corrode the value that attracted investors in the first place.

Here’s why. If a population was so intent on foreign exchange trading and were so convinced that their local currency will be so valuable in the future that they decided to stash all their bills under their bed mattresses, sure, the value would go up due to the induced scarcity—but only for a time. This will bring the market to a bit of a halt, but again, only for a short time. At some point, everyone will concede to the fact that they all need a liquid medium of exchange, but will remain stubborn on hoarding and holding the original currency. There’s a tendency to look for alternatives, an alternative currency that can be fluidly spent and exchanged while still keeping the “profitable” one in the vault (bed mattress).

But when this goes on for a while, everyone will get used to and comfortable with the alternative currency, and the hoarded one will lose its place in the market—as well as its value. By the time hoarders realize this, they would all be competing with each other on a race to sell off their hoarded coins before it completely plummets, and the sell-off drives the value even lower.

Not sure if it needs further explaining but in case the analogy is lost, BTC is the original currency being stashed under bed mattresses. As for the alternative currency—there are around 2,000 cryptocurrencies now circulating in the market. That’s 2,000 competitors willing to scoop up whatever transactions the legacy chain fails to accommodate—be it big purchases for cars and houses, or “poor people” purchases for those who “live on less than $2 a day.”

For a currency to maintain a decent floor value, it has to have other functionalities backing it as a valuable asset outside of the trading market, regardless of hype. BTC, as some say, may not be a digital currency anymore back when fees were skyrocketing and wait times were getting longer and longer. It was positioned as “digital gold.” But even gold has intrinsic, tangible value for various real-world applications which keeps its trading value secure. And while Bitcoin as a blockchain has immense uses, bitcoin the cryptocurrency’s trading value was standing on one—it’s high-speed, low-cost value transfer proposition, and it seems users have been sifting through to competing cryptocurrencies.

Without a use case, it’s digital diamond at best—it’s valued expensively because we insist it is expensive, whether or not we can back that argument. Some argue that fiat is just the same—we value it because the government dictates that we honour its dictated value. While this is true to a certain extent, fiat is backed by the economy of a country—the market activity within it. What economy backs Bitcoin if no one uses it?

Intelligent cryptocurrency hodlers know that the drastically high-profit era for cryptocurrencies has an end. At some point, these values will stabilize and the fluctuations will not be as attractive to newbies. Maybe then, BTC will get back up as a fluid, cheap, and fast transaction cryptocurrency. By that time, perhaps most would have already made their profits and will be willing to actually start using it. The question is whether that shift would happen before other cryptocurrencies gain enough market traction to render BTC as “just an option.”

This isn’t to say people should sell off. This is to say that communities (hodlers, users, and miners alike) need to take a more mature, objective, and pro-active stance on development, rather than constantly nodding their heads to one prevailing source of proposals. One needs to ask if an update is really for the best interest of users, because like in traditional business, it’s in an investor’s best interest to make sure that they are serving their clients’ best interests. And in this case, “clients” are users of the service, not hodlers—as hodlers are more comparable to stock holders.

Meanwhile, the SegWit update to Core’s client has just been released, which means exchanges will subsequently have an easier time implementing their own updates as well. Whether this will take the legacy chain full steam ahead is yet to be seen. The results of the implementation are especially critical in an industry where the competition is tight—and quickly gaining speed: more and more exchanges have started accepting other cryptocurrencies in different countries.

Note: Tokens in the SegWit chain are referred to as SegWit1X (BTC) and SegWit Gold (SWG) and are no longer Bitcoin. Bitcoin Cash (BCH) is the only true  Bitcoin as intended by the original Satoshi white paper.  Bitcoin BCH is the only public block chain that offers safe and cheap microtransactions.

Bitcoin Core 0.16.0 is finally released with full Segwit support

It’s been a long time coming, but last week, Bitcoin Core, the development team responsible for the Segwit fork of Bitcoin, finally released an update to their client, featuring full support for Segregated Witness.

In short Segregated Witness was touted as a scalability fix in itself, but as BTC found heavy usage during the 2017 run to its ATH (all-time-high), fees shot up to astronomical heights, and congestion levels reached unprecedented levels, forcing users to wait up to and over a week at times for transactions to confirm. The aftermath of which gives strong evidence for a false news media campaign concerning the scalability capability of Segwit.

However, Segwit’s true capacity increase which is only expected to provide a mere 1.7-1.8MB on average effective blocksize (or, 5-6 transactions per second throughput), will be made apparent only when the vast majority of the eco-system adopts ‘Segwit’ transactions.

Because of the way Segwit was introduced as a soft-fork, it allows Bitcoin legacy transactions, while incentivising the newer ‘Segwit’ transaction format. Thereby, encouraging users and businesses to switch to Segwit transactions, over time. As more and more wallets, exchanges, and businesses adopt Segwit, the blockchain slowly finds itself migrating over to “Segregated Witness” addresses and transactions, abandoning the original Bitcoin transaction format as laid out in the Satoshi Nakamoto whitepaper of 2008.

While many adherents to the ‘Core’ faith have been loud in the condemnation of entities like ‘Coinbase’, for whom it took 6+ months to implement Segwit, it ought to be equally observed, that Core themselves, have taken just as long to release full native support for Segwit in their own client.

It is most pivotal that Core released this as soon as possible given that so much of the rest of the eco-system is depending on them to move first. Take for example, the major exchange Kraken, which tweeted the following:

Sounds reasonable.

Certainly, the Segwit soft-fork will now have its engine roaring a little louder, as evidenced by the below graph illustrating the rising number of Segwit transactions over-time (particularly since Coinbase and Core announced support). Take note of the rise from block number 511075 (27th of Feb 2018) onwards.

Bitcoin Core 0.16.0 is finally released with full Segwit support.
source: Segwit.party

As ascertained above, at 6+ months following the activation of Segwit on the BTC chain, the adoption rate for Segwit transaction still sits at only marginally over 30%. In order for the new capacity limits of 5-6 transactions per second to be realised, it requires near universal adoption of Segwit.

What does ‘Native Support for Segwit’ mean?

Upgrading to support Segwit transactions can be a technically tedious task, hence why many businesses have been waiting on Core to move first with their client, which in turn makes implementation a little easier for everyone else. A large part of the BTC eco-system already supports Segwit transactions, although this is done in a non-native, backward compatible manner.

The way non-native Segwit addresses work, is that they use former lead developer Gavin Andresen’s P2SH (pay-to-script-hash), which always start with a “3” instead of a “1”. Because the Bitcoin client already accepts P2SH, using it for Segwit in an effort to on-ramp usage quickly, made sense. But it has many drawbacks.

Using Segwit through P2SH is inefficient, and wastes in the mempool, and it therefore can contribute to rising fees. Native Segwit addresses are known as bech32 addresses, and they start with “bc1”. Native use of Segwit works a little more directly and more efficiently as bech32 has no non-witness SigScript (Signature Script).

However, because native Segwit addresses are a new bech32 format and “look different”, older wallets do not recognise them, and users that don’t upgrade such wallets won’t be able to send to these addresses.

What else comes with “Bitcoin Core 0.16”

Segwit Wallets aside, two very notable changes are:

– HD Wallets are the default! HD Wallets (Hierarchical Deterministic Wallets) are type of wallet that changes address every time it is used for receiving funds. HD wallets have been used for quite a while now, and all major wallets utilise this functionality.
– The highly controversial RBF is default in the GUI. Core’s “Replace By Fee” feature is now on by default.

There are a host of other changes introduced, most which will make little impact to the end user. For a full list of changes, check out the release notes.

Eli Afram
@justicemate

Note: Tokens in the SegWit chain are referred to as SegWit1X (BTC) and SegWit Gold (SWG) and are no longer Bitcoin. Bitcoin Cash (BCH) is the only true Bitcoin as intended by the original Satoshi white paper.  Bitcoin BCH is the only public block chain that offers safe and cheap microtransactions.

Damage control: Coinbase set for full SegWit activation amid BTC crash

Coinbase announced over Twitter that their engineering team has begun the final testing phase of SegWit for legacy Bitcoin (BTC) on their platform. Users in the exchange will be able to use sends/receives compatible with the feature once it activates within the first quarter of 2018.

Segregated Witness (SegWit) is soft fork implemented in August 2017 after an intense debate on scalability. It sought to bring down the size of data consumed by transactions within the BTC network, in a bid to ease the worsening mempool congestion at the time.

SegWit is a separate structure off the propagating chain which only contains signatures and scripts for signing the transactions. The implementation was meant to mitigate the issues caused by the BTC network’s 1MB block size limit. Instead of scaling the block size, the Bitcoin Core development team instead exposed user’s signatures to an off-chain solution in order to provide transaction malleability.

Coinbase has shown resilience to unsecure, off-chain solutions like SegWit, instead prioritizing the stability of its platform. Dan Romero, vice president and general manager at Coinbase, said in a blog post that their company prioritized “securely storing customer funds” while simultaneously ensuring “that our platform remains performant during periods of peak volume.”

Despite a number of BTC users requesting the feature, the engineering and development teams behind Coinbase hesitated implementing the consensus layer, citing “significant planning and consideration for the security and stability of our platform” as a reason.The recent announcement by credit card companies Visa and MasterCard that they will be placing an additional 5% processing fee for cryptocurrency transactions will result inBTC users shouldering  more fees on top of the 4% that Coinbase already charges for credit card payments.

With the recent crash of BTC values reaching record lows, the announcement by Coinbase comes late, given how BTC competitors like Litecoin, Vertcoin, and DigiByte have already been implementing the feature since 2017. The decision to finally implement it on the exchange within the year may have been influenced by a petition made in January, with at least 12,000 BTC users signing to force the company to upgrade.

Many in the legacy Bitcoin community have transferred or diversified their investments to better-performing cryptocurrencies like Bitcoin Cash which does not need an unsecure off-chain solution like SegWit, or a centralized second-layer solution like the Lightning Network to facilitate a seamless user experience.

Today, the BTC network exists as a settlement layer, with its cryptocurrency now considered a digital asset instead of a practical, usable fund. The Bitcoin Cash network continues the vision of the Satoshi Nakamoto white paper with almost-instant transactions supported by reliable confirmations at negligible fees. These features are opening the way to a future of unrestricted growth, global adoption, permission less innovation, and decentralized development working towards the empowerment of ordinary people through technological disruption.

Note: Tokens in the SegWit chain are referred to as SegWit1X (BTC) and SegWit Gold (SWG) and are no longer Bitcoin. Bitcoin Cash (BCH) is the only true  Bitcoin as intended by the original Satoshi white paper.  Bitcoin BCH is the only public block chain that offers safe and cheap microtransactions.

US agency: Bitcoin Cash is the original blockchain

The SegWit chain may have inherited the name “BTC” largely due to history, but scientists at the National Institute of Standards and Technology (NIST) said the title of the original blockchain belongs to Bitcoin Cash (BCH).

NIST, a non-regulatory agency of the U.S. Department of Commerce, published a 59-page draft report that attempts to explain Bitcoin’s underlying technology, blockchain. The document, titled “Interagency Report: Blockchain Technology Overview,” briefly discussed concepts like blockchain architecture, consensus, permissioned versus permissionless, smart contracts, and hard forks.

The report, penned by NIST’s Dylan Yaga and Peter Mell with the help of G2’s Nik Roby and Scarfone Cybersecurity’s Karen Scarfone, was fairly straightforward and “high-level” in its approach to define most of the concepts surrounding blockchain, as well as cryptocurrencies like Bitcoin Cash.

“In July 2017, approximately 80 to 90 percent of the Bitcoin computing power voted to incorporate Segregated Witness (SegWit, where transactions are split into two segments: transactional data, and signature data), which made it possible to reduce the amount of data being verified in each block. Signature data can account for up to 65 percent of a transaction block, so a change in how signatures are implemented could be useful. When SegWit was activated, it caused a hard fork, and all the mining nodes and users who did not want to change started calling the original Bitcoin blockchain Bitcoin Cash (BCC),” the report read. “Technically, Bitcoin is a fork and Bitcoin Cash is the original blockchain. When the hard fork occurred, people had access to the same amount of coins on Bitcoin and Bitcoin Cash.”

It’s worth noting how the NIST paper incorrectly distinguished a soft fork from a hard fork. Technically, SegWit was the soft fork of Bitcoin, while Bitcoin Cash is the hard fork. But SegWit became the turning point which Blockstream exploited to sabotage the network’s direction in terms of development.

The report has no legal impact on cryptocurrencies given its decentralized nature, but it adds weight to the stance of Bitcoin Cash proponents that BCH is the true remaining Bitcoin as intended by the original Satoshi Nakamoto white paper, which was immutably imbedded in the blockchain in 2009.

The U.S. agency said the document goes “beyond the hype” in order “to provide a high-level technical overview of blockchain technology.” The paper is available for public comments until February 23, 2018.

Note: Tokens in the SegWit chain are referred to as SegWit1X (BTC) and SegWit Gold (SWG) and are no longer Bitcoin. Bitcoin Cash (BCH) is the only true  Bitcoin as intended by the original Satoshi white paper.  Bitcoin BCH is the only public block chain that offers safe and cheap microtransactions.

Bitcoin Cash will scale to be the global currency

The next hardfork for Bitcoin Cash will see a max block size of 32MB, which ends up supporting close to 100 transactions per second. By comparison, Bitcoin Core’s Segwit, can muster 2-3 transactions per second. The scalability roadmap is undeniable. The only deniability comes from those who are either compromised, or from those who are intentionally working to compromise others.

A 32MB max blocksize is one of many stopgaps in the roadmap to reach 1000, 10,000 and eventually 50,000 tps and more.

Often, I find myself debating some who like to falsely claim that “moore’s law doesn’t transcend to other things like bandwidth of communication speed”. Except that it very much does.

The only technology I can think of that doesn’t experience this extreme growth, is battery capacity. Mind you, even that has been increasing over time – just nowhere near as much. But for Bitcoin, batteries are irrelevant.

It’s true that Moore’s law talks specifically about processor speeds, and even more specifically about the number of transistors in a CPU. But the fundamental outlook being, that technology improves over time. It is for this reason, that Moore’s law is often cited for overall technological growth in disciplines related.

We know very well that Moore’s law is a reality. Ironically, when looking at something like HDD space, that grows even more so. This is a little less popularly known as Kryder’s Law.

Not long ago I tweeted the following an image of three graphs, illustrating how Moore’s law, increases over time, exponentially, supporting the BCH roadmap.

These are detailed below:

Source: Wikimedia Commons

First, we have Moore’s Law itself. 120 years of it in fact. Contrary to what some say, Moore’s law hasn’t stopped… The argument that physical limitations will be reached in time is also highly assumptive. If we’ve learnt one thing in the last century, is that technology always finds a way to break boundaries. We know for instance, that quantum computing is a possibility in the future – this alone reaffirms that new ways of doing things, do come into play. Technology evolves, and progresses.

Bitcoin Cash will scale to be the global currency
Source: Wikimedia Commons

The next point of contention looks at storage capacity. This is a non-issue. Some still found it worthwhile to point out that the graph ends at 2010, insinuating that I might be hiding something. Any research into this shows that this is still going up exponentially to this day, without any reason to believe it is slowing down. This growth is what we call Kryder’s law.

Bitcoin Cash will scale to be the global currency
Source: Nielson Norman Group

This leads us to the final point of contention. For years we heard the Core camp spout that bandwidth will not cope with future bigger blocks, and that blocks won’t propagate properly, and that we’ll get orphan blocks… well you get the picture.

The above is known as Nielsen’s law. Nielsen’s law states: “A high-end user’s connection speed grows by 50% per year.” Take out variance, and you have a very accurate measure there.

Today we have over a century worth of data, proving that technology scales, advances, and improves over time. To not at the least, move with Moore’s law, is to actually move backwards. The further technology moves, and one remains stationary, the further behind one is left.

Bitcoin Cash (BCH) embraces scalability, and it embraces technological growth. It doesn’t remain tied to an absolute position. To do so, is to remain in the dark ages.

The last 4 months for Bitcoin Cash have truly been phenomenal. Development has been far more energised in the last 4 months, than Core have been in the past 3 years. Businesses and merchants are being re-engaged, the ecosystem is exploding into growth. Volume and liquidity has been soaring on the charts, and the frightening thing is, this is just the beginning. With the plan to re-enable dormant op_codes, smart contract functionality is on the horizon again, in a very computationally flexible way. Bitcoin Cash can do what Ethereum does, without the scalability woes, and without the gas complexity. The future is bright for BCH, and I cannot wait for 2018.

Eli Afram
@justicemate

Note: Tokens in the SegWit chain are referred to as SegWit1X (BTC) and SegWit Gold (SWG) and are no longer Bitcoin. Bitcoin Cash (BCH) is the only true Bitcoin as intended by the original Satoshi white paper.  Bitcoin BCH is the only public block chain that offers safe and cheap microtransactions.

Bitcoin Cash will scale to be the global currency

The next hardfork for Bitcoin Cash will see a max block size of 32MB, which ends up supporting close to 100 transactions per second. By comparison, Bitcoin Core’s Segwit, can muster 2-3 transactions per second. The scalability roadmap is undeniable. The only deniability comes from those who are either compromised, or from those who are intentionally working to compromise others.

A 32MB max blocksize is one of many stopgaps in the roadmap to reach 1000, 10,000 and eventually 50,000 tps and more.

Often, I find myself debating some who like to falsely claim that “moore’s law doesn’t transcend to other things like bandwidth of communication speed”. Except that it very much does.

The only technology I can think of that doesn’t experience this extreme growth, is battery capacity. Mind you, even that has been increasing over time – just nowhere near as much. But for Bitcoin, batteries are irrelevant.

It’s true that Moore’s law talks specifically about processor speeds, and even more specifically about the number of transistors in a CPU. But the fundamental outlook being, that technology improves over time. It is for this reason, that Moore’s law is often cited for overall technological growth in disciplines related.

We know very well that Moore’s law is a reality. Ironically, when looking at something like HDD space, that grows even more so. This is a little less popularly known as Kryder’s Law.

Not long ago I tweeted the following an image of three graphs, illustrating how Moore’s law, increases over time, exponentially, supporting the BCH roadmap.

These are detailed below:

Source: Wikimedia Commons

First, we have Moore’s Law itself. 120 years of it in fact. Contrary to what some say, Moore’s law hasn’t stopped… The argument that physical limitations will be reached in time is also highly assumptive. If we’ve learnt one thing in the last century, is that technology always finds a way to break boundaries. We know for instance, that quantum computing is a possibility in the future – this alone reaffirms that new ways of doing things, do come into play. Technology evolves, and progresses.

Bitcoin Cash will scale to be the global currency
Source: Wikimedia Commons

The next point of contention looks at storage capacity. This is a non-issue. Some still found it worthwhile to point out that the graph ends at 2010, insinuating that I might be hiding something. Any research into this shows that this is still going up exponentially to this day, without any reason to believe it is slowing down. This growth is what we call Kryder’s law.

Bitcoin Cash will scale to be the global currency
Source: Nielson Norman Group

This leads us to the final point of contention. For years we heard the Core camp spout that bandwidth will not cope with future bigger blocks, and that blocks won’t propagate properly, and that we’ll get orphan blocks… well you get the picture.

The above is known as Nielsen’s law. Nielsen’s law states: “A high-end user’s connection speed grows by 50% per year.” Take out variance, and you have a very accurate measure there.

Today we have over a century worth of data, proving that technology scales, advances, and improves over time. To not at the least, move with Moore’s law, is to actually move backwards. The further technology moves, and one remains stationary, the further behind one is left.

Bitcoin Cash (BCH) embraces scalability, and it embraces technological growth. It doesn’t remain tied to an absolute position. To do so, is to remain in the dark ages.

The last 4 months for Bitcoin Cash have truly been phenomenal. Development has been far more energised in the last 4 months, than Core have been in the past 3 years. Businesses and merchants are being re-engaged, the ecosystem is exploding into growth. Volume and liquidity has been soaring on the charts, and the frightening thing is, this is just the beginning. With the plan to re-enable dormant op_codes, smart contract functionality is on the horizon again, in a very computationally flexible way. Bitcoin Cash can do what Ethereum does, without the scalability woes, and without the gas complexity. The future is bright for BCH, and I cannot wait for 2018.

Eli Afram
@justicemate

Note: Tokens in the SegWit chain are referred to as SegWit1X (BTC) and SegWit Gold (SWG) and are no longer Bitcoin. Bitcoin Cash (BCH) is the only true Bitcoin as intended by the original Satoshi white paper.  Bitcoin BCH is the only public block chain that offers safe and cheap microtransactions.

Scaling Bitcoin Conference Day 1

November 4, 2017. The Bitcoin Scaling conference day 1 was filled with students, experts, and researchers from the world over, gathering to present and discuss various improvements to Bitcoin and its eco-system.

Among the opening lines from the host was a comment stating that “this is the place where we discuss engineering, not politics”. I’d like to think so… After all, I would also like to think that we are all there for the benefit, and improvement of Bitcoin.

There were many interesting presentations – much of which focused on layer 2 solutions. In that, I came to a bit of a revelation of sorts.

When governments around the world restrict their citizens of certain things, then the people will always go about looking, to find a way ‘around’ the block. Take for example, censored Internet. Many countries have filters on all their ISPs, ensuring that certain sites are blocked. Of course, in the case of many countries that have strict controls, citizens generally find their way around this by adopting VPNs or Tor. Such restrictions actually drive legitimate demand for VPN software and the like, and it drives improvement.

BTC (Segwit) is no different. With an artificially imposed limit, researchers around the world, are genuinely coming up with all sorts of ways of utilizing second layer technologies to enable off-chain transactions.

Ian Miers from Hopkins University for example, presented the details of a very interesting paper titled “Bolt: Anonymous Payment Channels for Decentralized Currencies”. The techniques described allow for the construction of anonymous payment channels. The purpose of which is “to reduce the storage burden on the payment network.” I caught up with Ian following the presentation, and asked of the applicability to Bitcoin development, and how likely it would be that this would be incorporated into Bitcoin. Miers responded “I’m a researcher, and I do research. I’ll present to the community and what gets put in has nothing to do with me.”, but he also stated that it would be unlikely, and that this is more likely to be implemented into ZCash.  After all, Miers is one of the key scientists on the ZCash team, but he did also state that this particular improvement is not high priority at present.

Another proposal by Johnson Lau of Olaoluwa Osuntokun, proposed modifications to the Bitcoin script to enable further functionality and to “strengthen payment channels”.

The point of all this is, that there are some very legitimate, and ground-breaking pieces of work done here regardless of whether we are talking about on-chain or off-chain. There were solid presentations throughout, on pieces of research that either looked at the best methods for layer 2 solutions, or ways of cutting down on the amount of data.

Take for example, the presentation by Benedikt Bunz of Stanford University. He proposed a new concept for Light Clients, which he termed “FlyClient” – ‘Super light clients for cryptocurrencies’. As a proponent of on-chain scalability, I found this of particular interest. Although SPVs don’t grow with the number of transactions, they do grow with downloading of blockheaders. Over-time this can accumulate. FlyClient finds a very neat trick, in which a statistical method is utilised so that not every single blockheader needs to be downloaded. This was tested on the Ethereum network, and the 2.2GB headerfiles, shrunk to an astonishingly 3MB. – There is potential applicability here for Bitcoin BCH.

For those that find sense in Satoshi’s on-chain scalability roadmap,  and see the exponential value of Moore’s law, then the real presentation that stole the show was undeniably Bitcoin Unlimited’s Gigablock Testnet results.

The presentation was titled “Measuring maximum sustained transaction throughput on a global network of Bitcoin nodes”.

Incredibly, the limitations face, were not by hardware limitations at all. In fact, the bottlenecks found, were of a software nature. Among the changes, some tweaks to Satoshi’s code, and the inclusion of “try later queue”, and VISA level scalability is achieved.

The test featured nodes across 3 continents. This was truly a global test. But the real icing on the cake for this was the fact that this ran on a standard desktop computer. That is a 4-core CPU system, with 16GB RAM, with SSD Storage, but with a solidly strong 30Mbps connection.

It is extrapolated that for 50,000 transactions per second, 500 cores and 1.5 Gbps would be required. This sort of super-computer would be the kind of thing which would be commercially available within a decade or so.

Moore’s Law is a real thing.

I do recall when world Chess champion Garry Kasaprov lost to IBM’s deep blue supercomputer. At that time, in 1997, Deep Blue was a 30 x RS/6000 SP Thin 120MHz P2SC-based system in a cluster. At the time this was among the top 300 fastest supercomputers in the world. Ten years later, and you could obtain the same power computer, as a desktop. It’s incredible what 10 years in technology can do.

Tony Vays seemingly lampooned the presenters’ efforts during question time by asking how his 350GB storage computer could store a blockchain downloading 1GB blocks.

Peter Rizun correctly responded by stating that this is not being expected to be run on 5 year old systems. This is without a doubt, not needed today. To assume so is naïve. In fact, for today’s standards, 8MB blocksizes are more than enough to process transactions consistently, and effectively, for minimal fees.

The gigablock testnet, proves that big blocks do propagate, that the limitations today, are not so much hardware related, but rather the bottlenecks were indeed software related… This is something, which could be, and was optimized.

It also paves the way forward. The work by Bitcoin Unlimited and nChain, provides important information on future bottlenecks, and ways in which we can address these issues. Many of which, have already been ‘fixed’ by the BU team. The wealth of information doesn’t only prove what is possible in the future, it provides confidence for on-chain scalability.

We don’t need Gigabyte blocks today, but when we do, we would have already proactively tested thoroughly, and would be in a position, where Bitcoin has already grown to incredible proportions.

Another point worth mentioning is that 1GB blocks aren’t something that we will just decide to switch on one day. This sort of scalability gets worked up to, over time, as the need requires. In the same way Bitcoin Cash BCH hardforked, to 8MB when it was necessary, so too, there will come a time when we move to 32MB, and so on. The team on the gigablock testnet initiative deserve nothing but praise, and they are certainly not pushing any agenda to push this onto the network of users…

I did manage to catch up with Peter Rizun for a quick chat following the presentation. And I look forward to posting the details of that Interview shortly.

Eli Afram
@justicemate

Scaling Bitcoin Conference Day 1

November 4, 2017. The Bitcoin Scaling conference day 1 was filled with students, experts, and researchers from the world over, gathering to present and discuss various improvements to Bitcoin and its eco-system.

Among the opening lines from the host was a comment stating that “this is the place where we discuss engineering, not politics”. I’d like to think so… After all, I would also like to think that we are all there for the benefit, and improvement of Bitcoin.

There were many interesting presentations – much of which focused on layer 2 solutions. In that, I came to a bit of a revelation of sorts.

When governments around the world restrict their citizens of certain things, then the people will always go about looking, to find a way ‘around’ the block. Take for example, censored Internet. Many countries have filters on all their ISPs, ensuring that certain sites are blocked. Of course, in the case of many countries that have strict controls, citizens generally find their way around this by adopting VPNs or Tor. Such restrictions actually drive legitimate demand for VPN software and the like, and it drives improvement.

BTC (Segwit) is no different. With an artificially imposed limit, researchers around the world, are genuinely coming up with all sorts of ways of utilizing second layer technologies to enable off-chain transactions.

Ian Miers from Hopkins University for example, presented the details of a very interesting paper titled “Bolt: Anonymous Payment Channels for Decentralized Currencies”. The techniques described allow for the construction of anonymous payment channels. The purpose of which is “to reduce the storage burden on the payment network.” I caught up with Ian following the presentation, and asked of the applicability to Bitcoin development, and how likely it would be that this would be incorporated into Bitcoin. Miers responded “I’m a researcher, and I do research. I’ll present to the community and what gets put in has nothing to do with me.”, but he also stated that it would be unlikely, and that this is more likely to be implemented into ZCash.  After all, Miers is one of the key scientists on the ZCash team, but he did also state that this particular improvement is not high priority at present.

Another proposal by Johnson Lau of Olaoluwa Osuntokun, proposed modifications to the Bitcoin script to enable further functionality and to “strengthen payment channels”.

The point of all this is, that there are some very legitimate, and ground-breaking pieces of work done here regardless of whether we are talking about on-chain or off-chain. There were solid presentations throughout, on pieces of research that either looked at the best methods for layer 2 solutions, or ways of cutting down on the amount of data.

Take for example, the presentation by Benedikt Bunz of Stanford University. He proposed a new concept for Light Clients, which he termed “FlyClient” – ‘Super light clients for cryptocurrencies’. As a proponent of on-chain scalability, I found this of particular interest. Although SPVs don’t grow with the number of transactions, they do grow with downloading of blockheaders. Over-time this can accumulate. FlyClient finds a very neat trick, in which a statistical method is utilised so that not every single blockheader needs to be downloaded. This was tested on the Ethereum network, and the 2.2GB headerfiles, shrunk to an astonishingly 3MB. – There is potential applicability here for Bitcoin BCH.

For those that find sense in Satoshi’s on-chain scalability roadmap,  and see the exponential value of Moore’s law, then the real presentation that stole the show was undeniably Bitcoin Unlimited’s Gigablock Testnet results.

The presentation was titled “Measuring maximum sustained transaction throughput on a global network of Bitcoin nodes”.

Incredibly, the limitations face, were not by hardware limitations at all. In fact, the bottlenecks found, were of a software nature. Among the changes, some tweaks to Satoshi’s code, and the inclusion of “try later queue”, and VISA level scalability is achieved.

The test featured nodes across 3 continents. This was truly a global test. But the real icing on the cake for this was the fact that this ran on a standard desktop computer. That is a 4-core CPU system, with 16GB RAM, with SSD Storage, but with a solidly strong 30Mbps connection.

It is extrapolated that for 50,000 transactions per second, 500 cores and 1.5 Gbps would be required. This sort of super-computer would be the kind of thing which would be commercially available within a decade or so.

Moore’s Law is a real thing.

I do recall when world Chess champion Garry Kasaprov lost to IBM’s deep blue supercomputer. At that time, in 1997, Deep Blue was a 30 x RS/6000 SP Thin 120MHz P2SC-based system in a cluster. At the time this was among the top 300 fastest supercomputers in the world. Ten years later, and you could obtain the same power computer, as a desktop. It’s incredible what 10 years in technology can do.

Tony Vays seemingly lampooned the presenters’ efforts during question time by asking how his 350GB storage computer could store a blockchain downloading 1GB blocks.

Peter Rizun correctly responded by stating that this is not being expected to be run on 5 year old systems. This is without a doubt, not needed today. To assume so is naïve. In fact, for today’s standards, 8MB blocksizes are more than enough to process transactions consistently, and effectively, for minimal fees.

The gigablock testnet, proves that big blocks do propagate, that the limitations today, are not so much hardware related, but rather the bottlenecks were indeed software related… This is something, which could be, and was optimized.

It also paves the way forward. The work by Bitcoin Unlimited and nChain, provides important information on future bottlenecks, and ways in which we can address these issues. Many of which, have already been ‘fixed’ by the BU team. The wealth of information doesn’t only prove what is possible in the future, it provides confidence for on-chain scalability.

We don’t need Gigabyte blocks today, but when we do, we would have already proactively tested thoroughly, and would be in a position, where Bitcoin has already grown to incredible proportions.

Another point worth mentioning is that 1GB blocks aren’t something that we will just decide to switch on one day. This sort of scalability gets worked up to, over time, as the need requires. In the same way Bitcoin Cash BCH hardforked, to 8MB when it was necessary, so too, there will come a time when we move to 32MB, and so on. The team on the gigablock testnet initiative deserve nothing but praise, and they are certainly not pushing any agenda to push this onto the network of users…

I did manage to catch up with Peter Rizun for a quick chat following the presentation. And I look forward to posting the details of that Interview shortly.

Eli Afram
@justicemate

The war of two SegWits: the SegWit vs SegWit2x saga simplified

As the scheduled hard fork for Bitcoin’s legacy chain draws near, SegWit Core (BTC or BT1) supporters are clashing with SegWit2x (S2X or B2X) advocates.

One big question for those who wanted SegWit but do not want big blocks is: why proceed with SegWit2x and push for the block size increase when the big blockers have already “forked off” to Bitcoin Cash (BCH), especially when everyone is saying it’s “dangerous?” Is it just to honor the New York Agreement (NYA)? Or do they just not know what they’re doing?

There’s really not much of a sophisticated answer to this other than that this is a sort of hail Mary pass—a last attempt for miners to grab some of the power and keep it in their court. Bitcoin Core developer Luke Dashjr himself said that the main intention of SegWit2x (B2X) is to stall SegWit (BTC).

“Overall, Segwit2x seems to have one real purpose*: to try to stall Segwit longer. It is a distraction from the upcoming BIP148 softfork, which is already irreversibly deployed to the network. By promoting BIP91 and Segwit2x as an alternative to BIP148, what miners are really doing is another power grab to try to take back their veto, which has no purpose other than to be used by Bitmain to block the whole thing at the last minute.” –Luke Dashjr, Bitcoin Core developer and Blockstream co-founder, on Medium.

This wouldn’t make sense to most. How can there be infighting particularly between a phase 2 and its phase 1? First off, their names are quite misleading, because they are entirely different updates.

To understand what this means and why this is going on, you first have to understand the different perspectives in the Bitcoin community, and the role they play in Bitcoin as a voting system. In Bitcoin forums (especially Reddit), you will see four major players weighing in on this drama: HODLers (BTC holders), users, miners, and developers.

HODLers

The problem with HODLers is that many of them (not all) only ever care about how much BTC is at trading value, without giving a rat’s ass about the politics and developments (or impediments) that could catapult the project into either the utopian Bitcoin 2.0 era, or into a quick and tragic bubble burst—which is bad for the whole Bitcoin system. But hey, so long as it looks like we’re shooting to the moon, who cares, right?

Apart from this, they don’t have voting power because they’re not mining, anyway. And even if they did, what percentage of that population would rather just listen to FUD and propaganda-laced group-think than to actually do their research and understand technical documents so they can form their own opinion?

Users

Users, on the other hand, would feel the impact far more than HODLers. Ironically, while the Satoshi white paper was built with users’ convenience as a priority for building the ecosystem in the first place, it is them that will primarily suffer the repercussions of flawed governance. The consequences of skewing the system in favour of corporate allegiances will end up charging users more per transaction, while also making them wait longer processing times. What a lot fail to remember is that the Satoshi white paper specifically says Bitcoin is a peer-to-peer network built to move value around. It was not intended to be a mere vault where money sits still—not that there’s anything wrong with HODLing. But above all else, frictionless transactions was originally a huge part of its value proposition.

Unfortunately, much like HODLers, unless a user is also a miner, he or she has no say in protocol changes either. It doesn’t matter how active they are in Reddit word wars, if they aren’t mining, no votes will be counted.

“No one who never mines makes any vote—it’s the person who yells and screams, and jumps up and down outside of the election booth, blocks others, hits people, fights, censors them—but doesn’t vote themselves.” –Dr. Craig S. Wright, Bitkan’s “Shape the Future” Blockchain Global Summit, Hong Kong. 20 September 2017.

Miners

Miners are the bloodline of the blockchain, they keep transactions flowing and records untainted. In exchange for their service, miners are rewarded with transaction fees as well as bitcoins for every block created. Today, they come in large groups, called mining pools. Individual miners join mining pools to minimize overhead expenses, and as a large group they are able to mine bitcoins faster. The node operator takes a small cut from these profits, keeping a mutually beneficial relationship with individual miners.

They can support or boycott a hard fork—anything that is a radical change to the protocol, by using software that supports (or doesn’t support) the upgrade. If majority of the miners support the change, the consensus will lead to a smooth transition into the update. But without this consensus, the blockchain splits, and two chains are created. These chains then compete for majority of the mining power. And, depending on development, one can either thrive or dissolve eventually.

Developers

Developers also play a crucial role in the Bitcoin system—even outside of developing the code. While being on the development team does not automate votes on your count, these people have the power to influence all the players in the ecosystem. This is especially effective when dealing with a new system that is poorly understood by a huge majority of the market—despite having already thrown their savings into the mine. As a developer who has been there early on, you get some perks which comes in the form of credibility, although this does not mean you will never be questioned, obviously.

It becomes a problem when there is a divide between developers, particularly when there are conflicts of interest (which we will tackle later on in this piece). Developers can influence the community to work towards a goal—whether with pure intentions or not. As mentioned earlier, so long as BTC’s value goes up, it seems the herd of Bitcoin holders remain blind even when the shepherds lead them off the edge of a cliff.

The tug of war

Now that we’ve defined the characters you will encounter in Reddit, Medium, and Facebook debates, we can explain who’s on what side, and why.

In the SegWit vs SegWit2x saga, HODLers and users’ opinions are moot—as explained earlier. But they do engage in the word war A LOT. Most would base their decisions on what Core developers say. Hose down all that noise and we get to what this all really is: a power struggle. The NYA is a tug of war between developers (and the corporations backing them), and miners.

So what’s behind each team’s motivations? It’s a war for profit, and power.

In the SegWit world, services are being pushed as “sidechains” which will be tasked to take some of the load off of miners. Signature data will be segregated (hence, called Segregated Witness) from transaction data and processed by these sidechains, like Lightning Network (LN). Consequently, they will be taking part of the transaction fees, which were originally collected fully by miners.

Miners are pushing for SegWit2x, an increase in the block size, to take some of that power away from sidechains and back to the miners, and keep their block rewards. SegWit2x will allow miners to retain more of their incentives than if there was no block size increase—miners only get paid for on-chain transactions, which means sidechains will be reaping more rewards if block sizes are not increased.

Both forks are tainted with controversy: corporations backing Lightning Network advocated for SegWit so they can take control over the sidechains—and collect fees from transactions. This is where there was clearly a conflict of interest: Core developers who relentlessly pushed for SegWit were also working for Blockstream—which received millions of dollars in funding for finance giant AXA. AXA has been working on building technology and setting up shop in the blockchain industry through sidechains. People believe that Bitcoin Core developers pushed for SegWit because of this partnership.

On the other hand, SegWit2x lead developer Jeff Garzik recently revealed that he is abandoning the project and running off to his new competing cryptocurrency as an exit plan if and when Bitcoin implodes. This gave rise to rumours of an inside destabilization plot.

It is important to note that this upcoming fork is a power struggle for the legacy chain. Proponents of large blocks have escaped the signature segregation update—which they say is an ultimate hijacking of the original Satoshi vision and forked away through Bitcoin Cash to preserve the signature data and try to solve the blockchain congestion with larger block sizes.

To sum it up, the two phases of SegWit are in opposition with each other:

1. The SegWit soft fork in August was seen as a move initiated by corporation-backed developers, to allow businesses to take over sidechains and take some of the profits that were otherwise fully given to miners;
2. To counteract sidechains, miners are pushing for the upcoming SegWit2x hard fork. An increase in block size would mean more transactions flow through miners, and therefore yield more fees.

But then how can “SegWit2x stall SegWit,” when it has already been deployed? Nodes have to upgrade to SegWit software to fully activate the change. If more miners run the SegWit2x software, that becomes the main chain and will hold the trading name BTC. And with over 12 million BTCs in existence and with the BTC value flirting with the $7,000-mark, this is not just a mere matter of “who gets the name.”

Hard forks are not only about protocol changes, it’s also about a change in developer teams. The prevailing chain will declare which developers hold a position of power—who will have a heavier amount of influence over the community and consequently, the blockchain system itself.

And with SegWit not really fully implemented yet, the confusion brought about by the upcoming SegWit2x hard fork may just be enough to cockblock SegWit.

This is like a game of chess, except with a lot of insults flying all over the place, lots of not-very-subtle shade-throwing, flailing arms, etcetera, etcetera.  Needless to say, it’s a huge mess.

The war of two SegWits: the SegWit vs SegWit2x saga simplified

This brutal tug of war could tear the legacy chain apart. Again.

The NYA was supposedly a compromise between those who wanted big blocks for faster transactions (Bitcoin Unlimited), and those who wanted to strip the signature data to free up space (SegWit). But it in fact, seems more like a war than a compromise—one that could tear the legacy chain apart. Again.

In case the legacy chain splits apart once more, the good news is you get free money. The bad news? The hard fork, which happens on block 494,784—falling sometime around November 16, could result in a phase of confusion. Some exchanges have declared that they will list the SegWit2x chain as B2X while others say they will list the longest chain as BTC. Eventually, this may flip—the market will decide which one will be “BTC.” So after the fork, it would be best to sit tight and not go on a selling spree just yet.

The war of two SegWits: the SegWit vs SegWit2x saga simplified

As the scheduled hard fork for Bitcoin’s legacy chain draws near, SegWit Core (BTC or BT1) supporters are clashing with SegWit2x (S2X or B2X) advocates.

One big question for those who wanted SegWit but do not want big blocks is: why proceed with SegWit2x and push for the block size increase when the big blockers have already “forked off” to Bitcoin Cash (BCH), especially when everyone is saying it’s “dangerous?” Is it just to honor the New York Agreement (NYA)? Or do they just not know what they’re doing?

There’s really not much of a sophisticated answer to this other than that this is a sort of hail Mary pass—a last attempt for miners to grab some of the power and keep it in their court. Bitcoin Core developer Luke Dashjr himself said that the main intention of SegWit2x (B2X) is to stall SegWit (BTC).

“Overall, Segwit2x seems to have one real purpose*: to try to stall Segwit longer. It is a distraction from the upcoming BIP148 softfork, which is already irreversibly deployed to the network. By promoting BIP91 and Segwit2x as an alternative to BIP148, what miners are really doing is another power grab to try to take back their veto, which has no purpose other than to be used by Bitmain to block the whole thing at the last minute.” –Luke Dashjr, Bitcoin Core developer and Blockstream co-founder, on Medium.

This wouldn’t make sense to most. How can there be infighting particularly between a phase 2 and its phase 1? First off, their names are quite misleading, because they are entirely different updates.

To understand what this means and why this is going on, you first have to understand the different perspectives in the Bitcoin community, and the role they play in Bitcoin as a voting system. In Bitcoin forums (especially Reddit), you will see four major players weighing in on this drama: HODLers (BTC holders), users, miners, and developers.

HODLers

The problem with HODLers is that many of them (not all) only ever care about how much BTC is at trading value, without giving a rat’s ass about the politics and developments (or impediments) that could catapult the project into either the utopian Bitcoin 2.0 era, or into a quick and tragic bubble burst—which is bad for the whole Bitcoin system. But hey, so long as it looks like we’re shooting to the moon, who cares, right?

Apart from this, they don’t have voting power because they’re not mining, anyway. And even if they did, what percentage of that population would rather just listen to FUD and propaganda-laced group-think than to actually do their research and understand technical documents so they can form their own opinion?

Users

Users, on the other hand, would feel the impact far more than HODLers. Ironically, while the Satoshi white paper was built with users’ convenience as a priority for building the ecosystem in the first place, it is them that will primarily suffer the repercussions of flawed governance. The consequences of skewing the system in favour of corporate allegiances will end up charging users more per transaction, while also making them wait longer processing times. What a lot fail to remember is that the Satoshi white paper specifically says Bitcoin is a peer-to-peer network built to move value around. It was not intended to be a mere vault where money sits still—not that there’s anything wrong with HODLing. But above all else, frictionless transactions was originally a huge part of its value proposition.

Unfortunately, much like HODLers, unless a user is also a miner, he or she has no say in protocol changes either. It doesn’t matter how active they are in Reddit word wars, if they aren’t mining, no votes will be counted.

“No one who never mines makes any vote—it’s the person who yells and screams, and jumps up and down outside of the election booth, blocks others, hits people, fights, censors them—but doesn’t vote themselves.” –Dr. Craig S. Wright, Bitkan’s “Shape the Future” Blockchain Global Summit, Hong Kong. 20 September 2017.

Miners

Miners are the bloodline of the blockchain, they keep transactions flowing and records untainted. In exchange for their service, miners are rewarded with transaction fees as well as bitcoins for every block created. Today, they come in large groups, called mining pools. Individual miners join mining pools to minimize overhead expenses, and as a large group they are able to mine bitcoins faster. The node operator takes a small cut from these profits, keeping a mutually beneficial relationship with individual miners.

They can support or boycott a hard fork—anything that is a radical change to the protocol, by using software that supports (or doesn’t support) the upgrade. If majority of the miners support the change, the consensus will lead to a smooth transition into the update. But without this consensus, the blockchain splits, and two chains are created. These chains then compete for majority of the mining power. And, depending on development, one can either thrive or dissolve eventually.

Developers

Developers also play a crucial role in the Bitcoin system—even outside of developing the code. While being on the development team does not automate votes on your count, these people have the power to influence all the players in the ecosystem. This is especially effective when dealing with a new system that is poorly understood by a huge majority of the market—despite having already thrown their savings into the mine. As a developer who has been there early on, you get some perks which comes in the form of credibility, although this does not mean you will never be questioned, obviously.

It becomes a problem when there is a divide between developers, particularly when there are conflicts of interest (which we will tackle later on in this piece). Developers can influence the community to work towards a goal—whether with pure intentions or not. As mentioned earlier, so long as BTC’s value goes up, it seems the herd of Bitcoin holders remain blind even when the shepherds lead them off the edge of a cliff.

The tug of war

Now that we’ve defined the characters you will encounter in Reddit, Medium, and Facebook debates, we can explain who’s on what side, and why.

In the SegWit vs SegWit2x saga, HODLers and users’ opinions are moot—as explained earlier. But they do engage in the word war A LOT. Most would base their decisions on what Core developers say. Hose down all that noise and we get to what this all really is: a power struggle. The NYA is a tug of war between developers (and the corporations backing them), and miners.

So what’s behind each team’s motivations? It’s a war for profit, and power.

In the SegWit world, services are being pushed as “sidechains” which will be tasked to take some of the load off of miners. Signature data will be segregated (hence, called Segregated Witness) from transaction data and processed by these sidechains, like Lightning Network (LN). Consequently, they will be taking part of the transaction fees, which were originally collected fully by miners.

Miners are pushing for SegWit2x, an increase in the block size, to take some of that power away from sidechains and back to the miners, and keep their block rewards. SegWit2x will allow miners to retain more of their incentives than if there was no block size increase—miners only get paid for on-chain transactions, which means sidechains will be reaping more rewards if block sizes are not increased.

Both forks are tainted with controversy: corporations backing Lightning Network advocated for SegWit so they can take control over the sidechains—and collect fees from transactions. This is where there was clearly a conflict of interest: Core developers who relentlessly pushed for SegWit were also working for Blockstream—which received millions of dollars in funding for finance giant AXA. AXA has been working on building technology and setting up shop in the blockchain industry through sidechains. People believe that Bitcoin Core developers pushed for SegWit because of this partnership.

On the other hand, SegWit2x lead developer Jeff Garzik recently revealed that he is abandoning the project and running off to his new competing cryptocurrency as an exit plan if and when Bitcoin implodes. This gave rise to rumours of an inside destabilization plot.

It is important to note that this upcoming fork is a power struggle for the legacy chain. Proponents of large blocks have escaped the signature segregation update—which they say is an ultimate hijacking of the original Satoshi vision and forked away through Bitcoin Cash to preserve the signature data and try to solve the blockchain congestion with larger block sizes.

To sum it up, the two phases of SegWit are in opposition with each other:

1. The SegWit soft fork in August was seen as a move initiated by corporation-backed developers, to allow businesses to take over sidechains and take some of the profits that were otherwise fully given to miners;
2. To counteract sidechains, miners are pushing for the upcoming SegWit2x hard fork. An increase in block size would mean more transactions flow through miners, and therefore yield more fees.

But then how can “SegWit2x stall SegWit,” when it has already been deployed? Nodes have to upgrade to SegWit software to fully activate the change. If more miners run the SegWit2x software, that becomes the main chain and will hold the trading name BTC. And with over 12 million BTCs in existence and with the BTC value flirting with the $7,000-mark, this is not just a mere matter of “who gets the name.”

Hard forks are not only about protocol changes, it’s also about a change in developer teams. The prevailing chain will declare which developers hold a position of power—who will have a heavier amount of influence over the community and consequently, the blockchain system itself.

And with SegWit not really fully implemented yet, the confusion brought about by the upcoming SegWit2x hard fork may just be enough to cockblock SegWit.

This is like a game of chess, except with a lot of insults flying all over the place, lots of not-very-subtle shade-throwing, flailing arms, etcetera, etcetera.  Needless to say, it’s a huge mess.

The war of two SegWits: the SegWit vs SegWit2x saga simplified

This brutal tug of war could tear the legacy chain apart. Again.

The NYA was supposedly a compromise between those who wanted big blocks for faster transactions (Bitcoin Unlimited), and those who wanted to strip the signature data to free up space (SegWit). But it in fact, seems more like a war than a compromise—one that could tear the legacy chain apart. Again.

In case the legacy chain splits apart once more, the good news is you get free money. The bad news? The hard fork, which happens on block 494,784—falling sometime around November 16, could result in a phase of confusion. Some exchanges have declared that they will list the SegWit2x chain as B2X while others say they will list the longest chain as BTC. Eventually, this may flip—the market will decide which one will be “BTC.” So after the fork, it would be best to sit tight and not go on a selling spree just yet.

SegWit supporters, you’ve been played: Jeff Garzik is abandoning ship

Less than a month before the second phase of NYA kicks in, its lead developer announces his own coin: an exit strategy from the potential disaster that is SegWit.

Before the 2x phase of SegWit even happens, its lead developer is well on his way out the escape hatch. Way to inspire confidence, right?

Jeff Garzik, SegWit2x’s lead developer, announced at the Las Vegas Money 20/20 conference that Bloq—the blockchain firm for which he is chief executive—is launching a rival cryptocurrency to BTC called Metronome, which would supposedly survive even if the blockchain it runs on collapses. Much like Garzik, Metronome can supposedly switch from one blockchain to another (such as Bitcoin and Ethereum) in case one is crashing. In the context of current events, if the upcoming hard fork he supported, advocated, and worked on for the legacy chain of BTC next month ends in disaster, he and his Metronome friends are all safe.

“If.”

It makes you wonder whether the “if” was even a question at all, or if it was just a matter of when. Was it designed to fail from the start so their Metronome can come in to save the day once the BTC chain falls in ashes—after the arson they seem to have committed themselves? Was this a case of “press-the-self-destruct-button-from-the-inside-and-run?”

This reeks of deceit from all angles: the pilot—who drives the plane all the way promising you a rich, beautiful island—ejects himself out of the plane before you reach the supposed “beautiful island” he chose for you. Need a visual?

SegWit supporters, you've been played: Jeff Garzik is abandoning ship

To add insult to injury, in an interview with Fortune, Garzik talks about “[BTC] threats from forks and drama” as if he had no hand in it: “Today, [BTC] faces existential threats from forks, developer drama and so on. Knowing what we know and having a clean sheet of paper, we asked what would we build and the answer is this,” Garzik said.

Unsurprisingly, Reddit users did not hold back on the discussion.

"S2X is officially dead. Garzik switched to his own premine scam coin. S2X has no devs. It’s over. Time to get back to work. Schnorr+MAST next" from Bitcoin

The New York Agreement (NYA) acquired majority support in August—primarily from mining pools and the businesses relying on them despite the fact that it does not solve BTC’s scaling problem for the long term. In addition, the protocol change opens user deposits to several angles of attack and has not been properly vetted—by default, such a major change in the BTC protocol should undergo a substantial vetting time before implementation. SegWit was hastily discussed between a few large companies behind closed doors.

But in the past few months, some major players have withdrawn their support of the solution. Here’s why.

The real Bitcoin was switched in the night.

It’s like the Body Snatchers. What you now hold as BTC is no longer the Bitcoin you were holding on to over two months ago. It’s definitely not the Bitcoin people originally signed up for. It has been switched to a business-backed decoy overnight. So where did the “real Bitcoin” go?

The real Bitcoin survived this power grab in the form of Bitcoin Cash (BCH), a group of users that forked away from the legacy chain in an attempt to solve the scaling problem whilst preserving the core principles of Bitcoin—the same cryptocurrency a large population of the community are unwittingly calling all sorts of names, not noticing the power grab-switch-scam that happened right before their very eyes.

What a lot of people don’t realize is that SegWit is the traditional banking system taking over Bitcoin and essentially killing it. Bitcoin Cash is the original Bitcoin escaping that carnage.

What does this mean for users of BTC’s legacy chain, SegWit Core?

The central bankers have caught up with you. You will be paying their fees again.

Remember that time when someone got so tired of paying high fees and waiting long hours due to so many unnecessary third party services leeching off of the simplest financial transactions, and a system was built to eradicate all of them? Right, that was Bitcoin.

But with SegWit, you can throw that pledge out the window. These intermediaries have made it back in disguised as “sidechains.” Don’t be confused by the term “sidechains” here. These are intermediaries, or perhaps, back offices disguised in a new, unfamiliar term. And you’ll all be paying them—the unnecessary intermediaries that seem to exist solely so they can cash in on transactions.

SegWit proponents cleverly named it SegWit—focusing on the signature data segregation. What they conveniently downplayed was the “sidechain” aspect of SegWit. They may as well have named it BizOn, because business is definitely on.

Financial giant AXA Strategic Ventures is working on a blockchain solution that would supposedly “extend bitcoins with sidechains,” with the same Core developers who relentlessly and successfully pushed SegWit into the scaling debate, Blockstream.

They were able to sneak that past the majority despite the fact that it goes exactly against the Bitcoin promise of cutting down costs by eliminating third party/intermediaries. Yep, they intentionally snuck those bastards back in. Now watch transaction fees rise as businesses like the Lightning Network—which itself is a controversial solution—leech in from what used to be your peer-to-peer network. If this were a concert, your platinum seat ticket has been demoted to general admission. Here is the new business model from AXA:

SegWit supporters, you've been played: Jeff Garzik is abandoning ship

Notice that there is now a “sidechain” between you (micropayments) and the blockchain. It doesn’t end there. “Sidechains can have other sidechains for things like micropayments,” it says. So this gap between miners, users, and the blockchain can be filled with even more companies—just like it was with traditional banking.

What does this prove? One: ironically, despite the fact that the underlying technology behind Bitcoin vowed to be incorruptible, human frailty remains inestimable. And two: propaganda is the most time-enduring, technology-proof device in human history.