Bitcoin Forum

(Cross-post from my blog (http://fieryspinningsword.com/2015/08/25/how-i-learned-to-stop-worrying-and-love-the-fork/))

It’s hot in Israel in August, but not nearly as hot as the global debate surrounding the release of Bitcoin-XT and the contentious hard fork that would ensue if enough people adopt it. It seems that both proponents and opponents of Bitcoin-XT dread the possibility of the network splitting in two, and focus on making sure everyone switches to their side to prevent this from happening. Contrary to this post’s title, I don’t actually like the prospect of a fork; but I do claim that having two networks coexist side-by-side is a real possibility, that it is not the end of the world, and that we should spend more energy on preparing for this contingency.

http://ak-hdl.buzzfed.com/static/2015-03/26/19/enhanced/webdr06/enhanced-25942-1427414324-7.jpg

It’s possible

Let’s start with the feasibility of this. The ways this could unfold, in decreasing order of my estimate for their likelihood, are:

1. Bitcoin-XT will not reach the threshold required to actually diverge from the current Bitcoin on the blockchain level within a reasonable time, and we will meet again for round two of the debate.
2. Bitcoin-XT will form a separate blockchain and network in or near January 2016.
3. A compromise will be reached which will make Bitcoin-XT obsolete as a separate initiative.
4. Bitcoin users will, virtually unanimously, switch to Bitcoin-XT.

Option #4 was included for completeness, but in my opinion is pretty much impossible. There is too much disagreement about the technical issues, the change in governance, and the bold forking attempt for everyone to just drop everything and tag along. The prospects for compromise (#3) look grim at the moment, the gap in philosophies seems to large to bridge. #1 is highly likely – Bitcoin-XT has support, but I don’t think enough to pass the 75% threshold. But if it does have enough… We find ourselves in scenario #2 – the unprecedented event of a significant cryptocurrency having its network, blockchain and community split in two.

It’s (relatively) safe

Is it bad? Well, yeah. First, Vires in Numeris – Bitcoin is subject to strong network effects, and two networks of roughly half the size are not as strong as one big network. Second, there’s bound to be confusion all around, with two separate currencies each claiming to be the one true Bitcoin. Third, people will think that it is bad (for both real and imagined reasons) and lose faith, stunting Bitcoin’s growth.

How bad? Let’s analyze the short-term effects from the point of view of three types of Bitcoin users:

1. The merchant that accepts Bitcoin payments. He doesn’t have to do anything about this, at all. He teams up with his favorite payment processor, as he did before, and let the processor, and the Bitcoin enthusiast that will pay him, work out the details.
2. The Bitcoin investor. If she bought bitcoins before the fork, she needn’t do anything at all. If she bought 1000 bitcoins, she will now have 1000 coins on the Bitcoin core network and 1000 coins on the Bitcoin-XT network. Whether the currency that will survive is one, the other, or both, her investment is safe.
3. The Bitcoin enthusiast. He will probably have to carry two Bitcoin wallets around (or a special wallet that separately manages funds for both networks), and whenever he wants to pay with Bitcoin, he may have to figure out which version of Bitcoin the recipient expects. That’s extra work and trouble. But it’s okay, he can deal with it. He’s an enthusiast.

I will talk more about longer-term prospects in the section about preparing for the fork. But for now I’d like to say a few more words about confusion. Often I’m frustrated by the obscene amount of misinformation about Bitcoin that is spread around, and then I realize that… That’s not a unique problem for Bitcoin. The world is full of ignorance, misinformation, disinformation, persistent myths, propaganda, misnomers, downright confusion, and simply people who are wrong. Humanity still haven’t figured out an efficient way to organize the world’s knowledge in a way that is accessible and reliable. And yet earth hasn’t exploded yet. We get by. We study the things we truly care about, we understand meaning from context, and we make the most out of the information available to us. So I doubt making the Bitcoin ecosystem a bit more confusing will make it collapse.

This and other concerns will, of course, have a negative impact – but they’re little more than bumps on Bitcoin’s road to success, of which Bitcoin has already had plenty and will have many more.

Furthermore, a fork was in some ways inevitable. Remember that nothing like Bitcoin was ever done before. We had physical currencies, where the rules were determined by physical laws; and we had centralized currencies, where the rules were set by a predetermined, trusted (even if untrustworthy) 3rd party. But a decentralized digital currency? That’s a strange beast, and we all signed up to the notion that what keeps it intact is consensus among people. But it is presumptuous to expect that all of humanity will agree on all the rules all the time. There are differing opinions and philosophies, and when those manifest, camps will part ways. Much like living organisms, cryptocurrencies will replicate. They will compete. They will die. They will survive. They will evolve. And in so doing, they will become stronger.

And I’m not saying, of course, that it’s good that we’re forking right now. We should still try to prevent it if at all possible. But a fork is bound to happen sometime (even if for wholly unrelated reasons), so we may as well gain some experience about the process. We could learn that forks are terrible and we should never let them happen again… Or that forks are great and we should do them all the time… We could learn how to prevent or prepare for future forks, Or we may learn something else entirely. It may be more chaotic than hoping that the mere fear of a fork will keep everyone together, but it’s certainly less rigid and fragile, and more flexible.

We should prepare

So how should the fork unfold? Ideally, the changed version (Bitcoin-XT in this case) will have a different transaction structure for txs that take place after the blockchain split, so that transactions on one network will never be valid on the other, and vice versa. Unfortunately, I have seen no indication that such a thing exists or is planned for Bitcoin-XT (a major red mark for its developers, by the way, assuming there is nothing I missed), so things might get a bit messier. Left to their own devices, transactions might be accepted by one network, the other, or both, and it’s difficult to control which.

A prudent user will consider the currencies as separate, starting from the block where the chain splits. Each will have its own balances, its own exchange rate against other currencies, its own list of places that accept it, etc. But he will need to be careful not to send currency A, and have his transaction accidentally picked up by network B, which will result in him losing his coins B without compensation from the receiver, who never requested coins B.

To do this he will need to decouple his coins into their components. The way to do this is to get some coins generated as coinbase in a post-split block (or coins that can have some trace of those) – those will function as a collapse agent, since they are valid in only one of the networks, say A. Then he will send all his coins – both pre-split UTXOs with his savings, and the post-split collapse agent – to himself. This transaction will only be vaild in network A, so in the receiving address he will have a coin (UTXO) with the total of his balance, that is strictly of currency A. Once this transaction is confirmed, his original UTXO is collapsed into currency B, since in network A they were already spent. Then he can manage his currency with two separate wallets, knowing for certain which currency he sends at any given time.

If he stores coins in a paper wallet, he needn’t worry about it at first. He can extract and decouple the coins at any time. Waiting has the added benefit that one of the networks might die by then, meaning he can claim the coins in the only network that matters without extra effort.

Of course, all of this might be too cumbersome for typical users. Ideally, there will be exchanges and wallet services supporting both currencies which can facilitate the process. Users of these services will have a separate balance for coin A and coin B. The user can simply send coins to his deposit address for the service. The wallet will credit the user’s balance for coin A, B or both depending on which networks acknowledge the transaction. The wallet will then hold superposed coins, and will decouple them as above. When the user wishes to withdraw funds, he will separately withdraw each currency to different wallets, and the service will make to sure to send him only decoupled coins. Then, again, he can know for certain which coins he has in which wallet, and use each to pay when appropriate.

If the user has strong beliefs favoring one currency or another, he can use the exchange to sell just the other currency. He can then even use the funds to buy more of his favorite currency.

The Bitcoin URI for requesting payments should include information about which coin is expected. This will be used by merchants and so on, according to the preference of their payment services provider. The user who wishes to pay can use the information to pay with the correct wallet.

Ideally, smart wallets will be developed which hold both coins A and coins B, and when given a payment request, automatically send the correct type. For example, if we are buying a product worth $280, a bitcoin A is worth $140, and a Bitcoin B is worth $70, the merchant will display either a request for 2 bitcoins A (worth $280) or a request for 4 bitcoins B (worth $280), according to the merchant’s preference. The user will just scan it as normal and have the wallet send it. Users doesn’t really need to worry about it – it suffices to make sure he always carries around both types, assuming he’s expecting to find merchants accepting either type.

Going forward, one of two things can happen:

1. One the currencies will be significantly less popular than the other. It will see less merchants accepting it, its exchange rate will drop, and its technology will develop slowly. Users will be disillusioned by this and migrate to the other currency. Eventually it will for all intents and purposes disappear, and the popular currency will rise as the one true pretender to the Bitcoin throne.
2. Both currencies will enjoy a significant following, forever (or until the heat death of the universe, or whatever). Each will have its own advantages and disadvantages, and people can freely choose between using one, the other, or both. In this case, it is not sufficient to have software and services to handle the plurality seamlessly – the name ambiguity should be resolved, and it will be prudent for the less popular currency (measured by market cap if no better metric is found) to give way, change its name, and finish its cycle of separating from the other currency.

It will be a bit messy, but we can handle it. A fork in the road is not the end of the world.

yes i'm thinking the same thing two chains side-by-side will be EXCELLENT for everyone !
~ keep calm and BTC ;-) *eZ^$$$

Short term gain for a long term loss?

If 2 chains side by side occurs , bitcoin as we know is dead. No one will touch it.

Meni, What you think is the least likely , I think is the most likely, although it won't
necessarily be called XT.  Pools are already signing blocks in support of Bip 101 and Bip 100.
Miners will increasingly switch to these pools because most people really do want bigger
blocks.  

Blockstream/Coredev people want 1mb because its suits their business model,
but they are already being shouted down as
pools and big companies show their support for bigger blocks.

But we shall see.

Technically we can handle fork. In fact, we have handled it before. But, a fork means down market, which is bad.

On a side note, I see, some extremely promising bitcoin block size proposal like https://bitcointalk.org/index.php?topic=1154536.0, are being ignored by core devs. I dont understand, is there any rule that the solution of block size debate must come from the five core devs and everyone else will be summarily ignored ?

Yeah I started a thread about something similar the other day:

Why not just make BitcoinXT a separate coin?

https://bitcointalk.org/index.php?topic=1160256.msg12223435#msg12223435 (https://bitcointalk.org/index.php?topic=1160256.msg12223435#msg12223435)

Although I think it would be better just to fork it now and try to build a following rather than the way they are going about it.

There is zero support for that idea.  I challenge you to name one person on the forum who wants to have BitctoinXT as a separate coin.

(On the other hand, several major pools are signing blocks supporting bips and bigger blocks and major bitcoin companies
signed a join statement supporting it as well.)

I do.  Doesn't matter that much what I want though; separate coins are inevitable if XT forks the blockchain.  Or BIP101 for that matter.  I envision a strong possibility that there will be way more than two as people jumping on the bandwagon and exploit the confusion.

So you would buy Bitcoin XT if it was a separate coin?  I probably should have said there is zero demand for that.
The only people that support it want the XT supporters to 'go away'.  The big block supporters and people who want
to run XT -- none of them want a separate coin.

If XT forks ...

A split is almost certain to occur as some people will not accept Gavins/Hearns coin.

Some segment of people will stay on the Bitcoin core chain which will mean it will have economic value.

So miners will mine it because there is profit to be made.

Service Providers will provide services because there is money to be made.

This is not winner takes all.

Looking at History, the Sunni/Shia split, the Protestant/Catholic, Catholic/ Orthodox etc split were not winner take all. This does not have to be.
It might not be in the economic interest to have a split. When humans argue tho, they often do things that are not in their economic interest. That is the history of the world. Civil wars exist.

Two separate chains is a very realistic possibility and gets more likely as time goes by. Both sides are becoming more entrenched in their positions and refuse to back down. The arguments are getting more heated and angry and personal.


Its is now also an issue of ego/influence/pride for any side to back down.

I want XT supporters to 'go away', but send me money for my XTCoins which I obtained pre-fork.

I might even find reason to obtain XTCoins if XT were implemented as a sidechain.  The most likely reason I could see for wanting some is that XT might be what Google Wallet supports.  I don't actually have a Google Wallet, but I might get one if I got 'cash back' for buying shit advertised on one of their properties or something.

Transplant from another thread:

Endorsed.

Bitcoin has forked before and the other one died, correct?


If there is enough support for the fork (70%+ ?), then the other one will die fast because the "only real party in town" is winning?
If they have a few users "like MySpace still does", who really cares?

Nobody has provided anything more than an assertion that a slightly stronger fork would kill off a slightly weaker one, much less do so 'fast'.  If you wish to try to justify that hypothesis, please do.

WRT MySpace, different situation entirely.  The two extremes on the philosophical spectrum ('rock solid distributed security' vs. 'be everything to everyone') offer vastly different capabilities to serve vastly different use-cases.  The world is expansive enough to support multiple of these forks.

A successful fork could set the precedent for
1) Governments to Fork the ledger and slap their own KYC/AML infrastructure on top of it. This includes purchasing & running mining equipment for this fork.
2) Companies to fork the ledger in order to provide some integration like tvbcof mentions above about Xtcoins/Google wallet.

I'm seriously doubting why alts need to exist even though I own some.
I'm supportive of this as long as it is done in a technically sustainable way. (eg. BSP Bitcoin Separation Protocol as mentioned above)
It's definitely a good idea to take a position sooner rather than later and this could create some excellent profit opportunities when the fork(s) happen. I encourage all Bitcoin users to educate themselves on constructing transactions now to take advantage of these events.

I'm fully expecting this to be the trajectory for XT/BIP101/whatever in the case of a fork.  We'll have our work cut out for us to avoid having it be the trajectory for Core one way or another.  Part of why I would like to see a fork is that I think the pressure to integrate crypto into mainstreamland will be relieved by having XT(-like) systems to escape through.

My dirty little secret is that I could see XT being quite successful as it moves through it's evolution and I probably will not completely split and liquidate my entire stash of them.  I myself even have use for a solution which has all the bells and whistles that the large corporates can tack on, and I have no philosophical or operational problem with paying my taxes...and my BTC are demonstrably clean.

I will also mention again that it's mostly us freaks who even consider KYC/AML/Taint/etc to be a bad thing.  Back in the real world, and even in significant pockets of the crypto-enthusiast space, these ideas are fairly obvious and fairly good.  That was my take-away from the San Jose conference a few years ago.


Could be.  I would only recommend it to those who are highly clever...but then that's the only group I mentioned Bitcoin to in the first place.

I wish I could be optimist but I'm not. I see the coming fork (if it comes) as a huge image problem. Investors will not move till this issue is settled. BTC's quite low, and nobody shall expect it move up before that Damocles sword is being put away for good. BTC's price will remain low, and number transactions will not change much. BTC deserves better!

I wish I could do something to bring a compromise.

This is true.
I work in high finance and whereas previously people approached me in confidence to ask how they can purchase bitcoins, now people approach me in confidence to ask me if this is the end of bitcoin.

Indeed Bitcoin deserves better.

This echo's Hearn's experience that investors want a 'benevolent dictator' management structure so that shit can get done.  Another reason to fork the thing already and give this segment what they want.  Then we can all just move forward.

It is thus ironic that Hearn has caused investors to reconsider Bitcoin.

Not that I'm a fan of what the Core devs are doing either; they need to get their shit together too, but at least they're not trying to push blacklists and backdoor IP bans, which would jeopardize fungibility and decentralization, two pillars upon which bitcoin derives it's value in the real world.

Yet what else do investors, especially affluent investors, desire, besides scalability? Consistency and stability in the protocol, thereby making meaningful risk analysis possible.
A hard fork is anything but stable. It has been accomplished in the past without issue, however the previous hard forks were not caused by a hostile takeover of the protocol.
Among all Bitcoin luminaries, I can think of few that would be worse than Hearn in the role of 'benevolent dictator.'
Karpeles would be worse, I suppose.
Gavin was actually doing a decent enough job until Hearn whispered sweet nothings in his ear.

If I could pick a Bitcoin dictator, I'd pick Szabo.

And you have to. This area (the dev team) is where the decentralisation paradigm loses its usefullness.

People keep making the argument: "Decentralise everything! Let the users decide on difficult technical problems!"

But if we followed that logic in extremis, every git commit would get put to the "electorate". Useful development couldn't take place under those conditions, simple misunderstanding could hold back vital or urgent changes that would be effective. Divisive, corrosive top level designs might end up under serious consideration....


Software Development teams can only be a small number of individuals, with a preferably smaller number of members with commit access to the project. The fact that we have a really amiable, pragmatic guy in that role right now has been consistently good for Bitcoin; Wladimir van der Laan is exactly the type of leader I like.

One way to compromise would be if Core would review BIP 101 again or if that's not possible, agree to simply bump blocksize limit to 8 MB and make further adjustments possible by soft fork.

I'm pretty sure that in such case XT would lose it's following and all businesses that now support BIP 101 would be happy with Core. Most Bitcoin XT/BIP 101 supporters simply want a blocksize limit increase that gives bitcoin enough room to grow and currently XT is the only client that offers it.

XT has virtually no support anyway, most of the BIP101/XT supporters are using such transparently dishonest argumentative tactics (every classic is on display) that it's unlikely that they're just everyday users.

And what is this obsession with 8MB, or any static limit? The people who are so attached to such arbitrary numbers are those that need to review the design, not the developers who understand the issues in more depth than most others.

Gavin & Mike settled on it because it's a chinese lucky number for "prosperity". True story!

I think Linux has managed quite well with huge number of contributors (thousands?). Linus has been it's benevolent dictator from the day one (although he has been delegating his work to trusted "leutenants" more and more). It seems that large software projects need to have clear hierarchy in order to move things forward (someone has to have the final say on what patches get accepted).

Obiviously some people will sometimes disagree in direction taken and it will result in a fork. But the impression I get from Core is that it has no direction (no one has the final say in what should be done), just bunch of devs with different ideas on what should be done.

Bitcoin development is quite unlike any other open source software.

You are not the first one to bring up the Linux parallel. Unfortunately it doesn't apply.

From his writings it doesn't sound like he'd take the job.

I also remember Maxwell mentioning that he thought it would be unwise for any American (or USian I guess) to have formal leading role in Bitcoin.  It was either stated or implied that this nationality status could result in unhealthy and unwelcome political pressure.

At least, let's expect that coin value is not lost if there is a fork. If the fork comes, old coins will be in the two chains, and likely halve their value, forcing people to have the two wallets to maintain their coin value.

Am I right?

You must be kidding right? http://blog.blockchain.com/wp-content/uploads/2015/08/Industry-Block-Size-letter-All-Signed.pdf

I wonder who's being dishonest with his arguments  ::)

There is some value to the comparison IMO.


Somewhat agree. The hierarchy is definitely important, there cannot be deadlocks to progress, even if that means progress goes in the "wrong" direction. It also demonstrates how a less patient character can also be effective, although whether Torvald's demeanour is what actually motivates people to do the job well is debatable.

The Bitcoin dev team does have a hierarchy, but it's not enforced by a strong character. The strong characters are amongst the immediate lieutenants, not the people with commit access (who I believe are currently Wladimir, Pieter Wuille and Jeff Garzik). When contemplating the alternatives, there is no-one that I think has the right temperament for a role that requires more trust than Torvalds'. We'd possibly already have a solution, but possibly a host of new problems too.

The irony is delicious, more replies to statements that are subtly but importantly different to the statement I actually made.

You're not fooling anyone, it's totally disgusting and you should be ashamed of yourself.

Sorry for pointing out some facts you dislike ???

BIP 101 has had a lot of support from businesses in bitcoin ecosystem and when it comes to dishonest tactics neither side is clean. If you're asking me if I'm everyday user, then yes, I've been using bitcoin since early 2013. Like with most bitcoin users, until this debate I've had no interest in writing to BCT so that's why my account is new.


It's basically just to kick the can forward to some point where it doesn't matter so that better solutions can be made (if even needed). 8 MB is just something which miners and businesses have already given some support so easiest point to find quick consensus.

If you ask me I'd be happy in lifting the limit completely as it's not even mentioned in the whitepaper.

I think probably you are not right, but at the end of the day there is a lot of hand-waving and speculation involved in a lot of this stuff.

For values, I believe it very unlikely that reality would prove a split to be a zero-sum game.  In other words, that the value would 'half'.  I personally feel that the future of Bitcoin is most bright as a backing store (or reserve currency or source-of-truth or whatever one wants to call it) providing a foundation for subordinate chains.  A split would cause me to consider my own stash more dear because I believe that the other group is a detriment at this point and we could move forward more easily without them.

On the flip side, as has been stated, the investor class wants a more nimble management team among other things.  They might value the solution more if it could move more quickly to the roles that they envision.

So, a split might result in a significant increase in total net value.  Conversely, people might think that such a split could be repeated time and time again and it makes blockchain technology as expressed by Bitcoin families of crypto-currency less valuable.

---

To your question about 'two wallets', I would say no.  What you would need is a wallet which could evaluate each UTXO that you control and decide how to optimally structure spends so you don't get burnt.  I would anticipate such things being commonplace by the time they are needed...which, unfortunately, doesn't necessarily mean that everyone will use them so some people who are not paying attention or who choose to trust the wrong people will probably get burnt.

What you actually mean is that BIP101 has support from a handful of large incumbent businesses. And I'm not referring to you when talking about dishonest tactics, you've been straightforward in what you've said.


Whitepaper was the blueprint, not the final spec. Your idea is a bad one. With no limit, the whole dynamic eventually collapses. Or the miners continue at a loss.

Yeah I could see there being wallets that incorporate both bitcoin versions. A dual wallet that determines the best way to store/spend your funds.

How is this even possible? The miners that are at a loss will drop out resulting in a difficulty adjustment. Those who aren't at a loss due to their competitive environment will just continue mining, like it is the case actually. Difficulty will simply adjust to the marginal cost of the sum of the transaction fees.

The most damaging aspect is how the rest of the people not within the circle of community, on what they would think and will view bitcoin. They will see it as something not reliable and with uncertainty surrounding it, nobody is going to put in more money. Surely they are not going to take that kind of risk on investment.

The same thing was said many times about Bitcoin itself by most of the people who had even heard of it.  Ultimately they mis-judged and it was their loss.  Shrugs.

I think that's more due to cultural differences than impatience. Finns give relatively little value to social etiquette. I guess Linus just thinks it's more important to be clear in ones message and get the job done. It might not always motivate to do the job well (some egos will get bruised), but certainly makes it easier as others don't have to be second guessing his intentions.

Re. bitcoin. laanwj is respected and trusted and could potentially steer bitcoin clear of this XT fork. Solutions might not be the most efficient ones, but sometimes it's more important to move things forward.

why i stopped worrying and began loving the fork is that this whole circus means that people give a damn.

There can't be 2 chains. if that happens everyone will be leaping off of Bitcoin in a real hurry. This situation is doing no good for bitcoin. I'm a bitcoin believer, but even soI believe that another coin will overcome Bitcoin before we know it.

Exactly this! I kind of believe that if we do end up with 2 Blockchain's, Bitcoin will never again be the same and we would lose a lot of our future potential. People would lose confidence, precedent would be set and Bitcoin would just never be the same.

Now is this possible? Absolutely. As Meni said it nicely, people have already used to throughout their history on destroying much of the great things because of their human characters, egos etc..

Lets hope we will never end up with 2 Bitcoins.

That's actually an interesting and valuable observation.  IMHO.