Who is against the activation of SegWit2x, is Bitcoin Gold associated with it and how should those who have bitcoins prepare? We tell you everything.
A few months ago, following some extensive debates, SegWit, an updated bitcoin protocol (EXANTE: Bitcoin) was initiated. As a result of these debates, an alternative Bitcoin Cash cryptocurrency (EXANTE: Bitcoin.Cash) was created as an opposition to SegWit. We are now on the threshold of another split and that is SegWit2x.
The SegWit protocol was made under one condition: an increase in the block size within three months, meaning the hard fork. The miners, who did not support SegWit in the beginning, activated it under the New York Agreement (NYA) terms.
This agreement is also identified as the Silbert Agreement or the DCG Agreement called after its initiator, Barry Silbert, the founder of Digital Currency Group. Many prominent players in the cryptocurrency market, including the Bitmain Mining Company, the Coinbase exchange, and the BitPay payment system were attracted by Silbert.
The use of SegWit soft work is gradually growing, and this is in favor of the network (for example, reduced fees). Further improvements have been virtually approved, the most important of which is the development of the Lightning Network system. Now everyone is worried about the second part of the New York Agreement, which implies an increase in the size of the block and hard fork next month.
The hard fork is designated as SegWit2x or S2X. The btc1 protocol for the activation of S2X was created by the former Core developer and the head of Bloq Jeff Garzik. Its activation will occur at the block 494 784. The time remaining before the activation of the protocol is shown on the 2xCountdown website.
6 objections to the New York Agreement
Considering the comments in various social networks, members of the bitcoin community are extremely unhappy with the New York Agreement. Many Twitter users express their disagreement with the #NO2X hashtag. If you need a more weighty evidence, look at the share of nodes (currently 97.7%) that have not switched to the btc1 protocol:
Delusional man thinks he can dictate when a $75 b network upgrades even though no one is running his software. #No2x #NotTheOnion https://t.co/MuT6WnEDeW
— Samson Mow [NO2X] (@Excellion) October 8, 2017
These are the main objections to the New York Agreement:
- The main objection is of a political nature and even though the meeting in New York was called a "consensus", only a small part of the top managers took part in it. The event was concluded without the partaking of developers, most companies and millions of clients.
- Since SegWit and its associated enhancements have already increased the network bandwidth, there is no immediate need to further increase the block size. The possibilities of the current blocs are far from exhausted.
- Hard fork is by definition a risky and dangerous measure, which should be avoided without extreme necessity. The only exception is the long-planned hard fork, which received a unanimous support from users. The pushing of the non-tangible benefits of hard fork (refer to point 2), for which a minority of users are speaking, will most likely lead to chaos and the emergence of an alternative S2X cryptocurrency.
- Some Bitcoin Core developers have announced that they will quit the project if S2X becomes the main blockchain. Frankly, all the developers who publicly announced their position on this issue opposed the S2X. Without these experienced and competent people, the future of bitcoin looks extremely unreliable.
- Replay protection is not provided by S2X, meaning that after the fork a transaction on one chain can be replayed on the second. Users who are not familiar with this problem, when making a transaction in one of the cryptocurrency, will simultaneously send the same number of units in S2X and bitcoins.
- S2X intentionally resisted attempts by Core developers to prevent a chaotic network split that they made in Bitcoin Core 0.15 and subsequent releases.
The New York Agreement: Less than the total of its parts
By studying the list of companies registered in the New York Agreement, you can find several interesting facts. To begin with, let’s recount the signatories.
The total number of companies that signed the New York Agreement is 56
At first sight, this is a very impressive number, but it does not stand up to a thorough verification. Moreover, the number of companies that have withdrawn their signature or who have never signed this agreement is much higher.
However, it cannot be said that we know the full list of opponents of the New York Agreement, since many companies have not indicated their position at all. Also it is not known how many miners will leave the pools, which will not perform operations in the chosen blockchain.
The total number of signatories minus individuals is 54
Of the total number of signatories, you can safely subtract two people: a former Core developer Gavin Andresen, and the former president of the bankrupt manufacturer of ASIC-miners Spondoolies, Guy Corame. Since none of them is an active developer or a CEO, their participation in SegWit2x does not go beyond a PR support or a possession of the node. This makes them regular bitcoin users like millions of others.
The total number of signatories, excluding individuals and “Yours” is 53
The startup of Ryan Charles “Yours” has signed the New York Agreement, but a week before that Charles announced that he switched from bitcoin to litecoin (LTC/USD). That is, “Yours” does not really participate in the future of bitcoin, and his signature may be annulated.
The total number of signatories, excluding the foregoing and subsidiaries is 46
Of the total number of companies that have signed the New York Agreement, you can also deduct subsidiaries:
- Bitmain manages the 1Hash, BTC.com and BTC.top mining pools. The contact details of all these pools lead directly to Bitmain. ViaBTC has already violated the terms of the New York Agreement, engaged in Bcash mining, and received an investment of approximately 20 million yen from Bitmain and private investors.
- The agreement was signed by two subsidiaries of DCG: Grayscale Investments and Genesis Global Trading.
- The Canadian "innovation hub" Decentral is dedicated to developing the Jaxx wallet. Therefore, it makes no sense to separate Decentral and Jaxx.
The total number of signatories, excluding the above listed companies and firms that have withdrawn their signatures is 41
SegWit.Party shows revised statistics related to S2X support, including all the links, if the position of a particular company has changed. According to them, 7 participants of the New York Agreement publicly withdrew their signatures.
The total number of signatories, excluding the above listed companies and companies financed by DCG is16
If you deduct the companies that got funding from the Digital Currency Group from the total number of signatories (see the Portfolio page on the DCG website), then there are only 16 companies left. Considering that in many cases DCG is the majority investor of these companies, they can, in fact, be equated with the subsidiaries.
The last figure is the most controversial, since in many cases we do not know the amount of investments received from DCG and, accordingly, the degree of influence of DCG on these companies. It is possible that some of them can make decisions completely independently of DCG.
How to prepare for the split
Those users who have survived the Bitcoin Cash hard fork should know what to anticipate.
The number one step is to transfer all the coins to a wallet, which is completely under your control. In other words you need to withdraw all your cryptofunds from exchanges and other web wallets. Double check that you have access to your private keys.
With the approach of the hard fork, exchanges will publish statements on how they will cope with the situation (see, for example, the statements of Coinbase and Bitfinex).
However, this time there will be one chief difference compared to the previous hard fork, due to the fact that there is a lack of replay protection, it will be unsafe to spend your coins. We highly recommend all bitcoin users not to fuss and wait for concrete instructions. Perhaps, users and companies will have to manually separate their coins, even though it is not clear how this will work. We also recommend to refrain from making transactions shortly before and after the split and wait for a signal that everything has returned to normal.
Changes to the hash rate and block formation time
According to some leaked unconfirmed reports, some large miners are going to completely redirect the hash rates to S2X and possibly attack other blockchain.
Although a strong fall of the hash power may lead to a delay in transactions and the growth of the commission, the market will come to balance over time.
Bitcoin Gold has nothing to do with SegWit2X
Bitcoin Gold is another hard fork planned for October 25th, read about more about it in our future articles.
Keep calm and have your private keys with you
The upcoming November hard fork is, in fact, the same old story. Remember to keep your private keys close at hand and abstain from conducting transactions until everything comes back to normal.
The main question everybody asks is what will happen to the Bitcoin? No one knows for sure. This is another episode from the life of the "free market", which we all have to experience ourselves.