Thank you for your response but most answers you've given failed to answer the questions. Perhaps I wasn't always clear enough. Some also show your ignorance though. I really hope I can get some answers by real developers who understand the issue.
I am a real developer. I am a contributor to Bitcoin Core.
2. Segwit does provide a capacity increase but as I understand it the capacity increase only happens with actual segwit type transactions are being used. If they will not be instantly used because of a fear of a reorg then transfer fees will remain high possibly while BU will immediately have low transfer fees.
Why would it not be used because of a fear of a reorg? Segwit will only activate if 95% of the hashrate signals that they are enforcing it. Unless the majority of those signalling are false signalling, there won't be a reorg.
And yes you are mistaken. A reorg is possible with BIP148 if there is a malicious attack. A reorg going back to Aug 1 could happen in September for all we know.
How so? A non BIP 148 chain is invalid to a BIP 148 chain so there is no reorg possibility there. The only reorg risk is if a valid but different BIP 148 chain were mined. That would cause a reorg, but that is a risk for all blockchains, not just BIP 148.
3. I know the difference between an on chain transfer and an off chain transfer. I assume most people send and receive BTC from their exchange wallets though. Maybe that is a bad assumption. I assume regular users will not be making use of LN right away so are you saying that the effects of a post segwit BTC might not be felt for months? BU might be near free to exchange for months while BTC continues to have $5 transfer fees? Is that possible?
That is certainly possible, but again, you are assuming that people won't be using segwit. As I said earlier, segwit does not exist to just enable LN. Furthermore, even though we may not see the capacity increases of segwit immediately, users will still benefit from lower fees from using segwit. The fees that a segwit transaction pays is smaller than the fee of the non-segwit version of that transaction. There is an immediate benefit to using segwit as the amount you pay in fees will be lower, even though the fee rate may not decrease immediately.
5. You say that not using ASICBOOST is still profitable but there is absolutely no way that you can know this. Even if it is profitable a miner's ROI may go down from 30% to 3% meaning that BTC would have to explode to $30,000 for the miner to benefit as much as they benefited with ASICBOOST. If a miner's ROI is 5% and goes down to 0.05% BTC would need to be $300,000. And of course there is the possibility that those abusing ASICBOOST would in fact lose money if they were to honestly mine.
The majority of the network is not using ASICBOOST simply because you need a pool that can support it, and no pool currently supports ASICBOOST. This indicates that mining without ASICBOOST is still profitable.
9. You completely miss the point. A BIP148 chain can be reorged with a BIP148 chain that ASICBOOST miners have been honestly but covertly mining. They may wait a month to release a completely reorged month long chain. Segwit Bitcoin would essentially be dead. This is a real threat.
As I said earlier in this post, that is a risk that all blockchains have. However that means that those miners would be diverting hash power away from a chain that they think is more likely to earn them money. By covertly mining a reorg chain for BIP 148 nodes, those miners are wasting their electricity on something that they think won't earn any money (and probably won't if there are reorgs).