I fully agree. That said, the trap iamnotback may fall into, and I have fallen in such a trap in the past too, is:
"the best is the enemy of the good".
By being too perfectionist, and by being too intelligent to fail to see the flaws in your design, you end up never delivering.  While the guy that is somewhat less smart, and *didn't even see the problem* will deliver something (that will have a problem, true, but everything has problems).  If you hold back, because you have *understood* that your idea has a problem, you're not doing, what the less smart guy or girl is doing without realizing that there was a problem, but delivers, nevertheless.

Well, normally, the protocol is protected by the consensus mechanism that imposes immutability, that is, status quo.  So the software will not be able to change the protocol.  That is what we are witnessing.  We see that the dynamics of the consensus mechanism is such, that everything evolves in such a way that nothing happens.

Of course, it is extremely lucrative for exchanges, as everybody has "free coins" on the chain he doesn't like, and will go and exchange them: a lot of volume (essentially the whole bitcoin stash, twice !), and a lot of exchange fees.

You should really stop telling this.   With a hard fork, there is no "orphan risk",  you just have two chains, two coins, and that's it.

Nah, it is open source, everybody can make his own node software.  I suppose that mining pools do that, in order to implement their mining strategies.

It might also be that miners support BU to the height to make sure that segwit doesn't get activated, but don't want BU either.  Miners make most profits with small blocks and no segwit: they sell block chain room.  That may, in the long run, become the most valuable commodity, not bitcoin's coins.

I think you think too much that there are "important people deciding".  If you think that, you think that bitcoin is centralized, with some hierarchy that makes "political decisions", like in the fiat world. 

We are just witnessing a dynamical system that *takes its own decisions*, without "important people" or "a hierarchy" deciding rationally, and that was the whole point of a trustless, distributed consensus system: the consensus emerges from a dynamics, and not from some central authority.

It is like a free market deciding on a price.  There's no authority to turn to, or hierarchy to try to talk to, if "the price isn't right".  The price is a dynamically established phenomenon that nobody in authority, decided upon.

In the same way, the consensus over the protocol in bitcoin is, in as far as bitcoin is a decentralized consensus system, just as dynamically determined as the price in a free market with many actors.  Wanting some price settings is wanting an authority, a cartel, a monopoly or something of the kind. 

Of course, like a free market, "market makers" try to set the price to their hand.  But in as much as there are sufficient diverse players in a market, there are no strong market makers that decide upon the price.

The consensus protocol is supposed to "keep status quo" on all economically relevant parameters.  If this mechanism is sufficiently strong, it will simply be *impossible* to modify the block size.  And that's not the fault of Joe or Jack.  It is bitcoin's consensus dynamics.

But of course not.  For the old nodes, B1 and B2 are simply invalid blocks.  So their height is at 460001.  If I send an invalid block to another node, I suppose he's simply going to reject it, no ?  Otherwise, I can bring down the whole bitcoin network by making 5000 successive bogus invalid blocks with erroneous hashes (not difficult) and tell the whole bitcoin network that we are 5000 blocks ahead ?   Everything comes to a grinding halt with such a simple attack ?

Of course not.  B1 and B2 are simply considered invalid blocks by old nodes.   The old nodes will all agree that they are at height 460001.  And those nodes receiving blocks B1 and B2 will reject them, and not even propagate them.  But all BU nodes will accept them, propagate them, and their counter will be at 460003.  An old node asking a BU node to send him the blocks, will conclude that this node is "confused".  Otherwise, I can bring down the whole bitcoin network with one single "confused" node 5000 fake blocks in the future.

Period.

Why would that be the case ?  If it forks, we have two coins.  There are already more than 700 other coins out there.  What happens, of course, is that bitcoin then loses its "first mover advantage" and becomes "just another crypto currency".

You don't seem to understand that it is not a matter of choice, morality, principles, legality, legitimity or whatever.  We don't have any choice, because there is a DYNAMICAL SYSTEM that decides upon choice: the immutability mechanism.   And that system will decide to remain as it is.  So the only way to do something different, is to make an altcoin.  By forking or whatever.  Not because that would be "right" or "wrong", or "moral", or "just" or .... but because it is dynamically IMPOSSIBLE to do something else.  By the very mechanism that bitcoin was designed to develop: immutability.

The only way to break immutability is by centralisation.  

When I talk about the "original protocol", I don't talk about a historical protocol for which no block chain is actually running today. I'm talking about the "original one" as the CURRENT one.  Any "old" protocol is dead, because no live chain is running it.

Well, they do not necessarily need to be geographically limited.   But limited in some way, that link together only those groups of people that transact a lot amongst them.  Usually, this is geographically.  But it doesn't need to be so.  Any relatively limited group of people that transact more amongst them than outside of their group, can sustain a "local chain".

We simply haven't found yet a way that is trustless and distributed, and that is sufficiently swift and fluid to sustain the centralized and swift fiat fluxes of trade.   Blockchain is simply not cutting it.  The "trustless and distributed" overhead is too heavy as compared to a lean, mean centralized system.

So in as much as you NEED trustless and distributed, you have to reserve it for those things were it makes a difference.

Indeed, how does a mere mortal use the lightning network ?   I try to imagine how this works.  Suppose I'm a mere mortal, using bitcoin, say, 10 times a year to buy something on the internet, and to sell something else on the internet.  And Joe, my neighbour, too.  And Jack, my other neighbour, too.  Each of us, we have, say, 5 bitcoin or so.  And we buy and sell 10 things a year with bitcoin.  Like 100 million other mortals.  Suppose that one of these things is, I want to buy a second hand i-phone from a guy in New Zealand (not a professional salesman, just a guy selling his old phone).  
In the old days, he would send me his bitcoin address, I would send him 0.1 bitcoin, and he sends me the phone.  I could use escow eventually.  That's it.  But now, I don't see how "setting up a lightning channel for just 0.1 bitcoin" to a local node, is going to help.  If I do so, at the end, we settle, with a transaction on the chain.  So this takes one on-chain transaction on my part, and another one on the New Zealand side if we set up, and close our connections for this single transaction.

So the only way in which this is beneficial, is that I open a lightning channel to a local node with all the coins I will probably need this year, for my 10 transactions.  But in order for that channel to *last that long*, I need *a reliable node* that will stay open that long, and has sufficient other connections that my payment can reach my destination.   The only way for that to be viable, is that my neighbours, Joe and Jack and so on, also use one of these central hubs, that will reliably transmit stuff across the network ; has enough "escrow coins" to open all these channels, and has enough profit to be a reliable node.

In what way is that "other node" different from a local bank that keeps my coins, knows my transactions, and so on ?  Yes, I keep control.  Yes, I can terminate at any moment.  But the service will have to be paid for.  The destination may be censored.  AML will apply.   What's the difference with a bank account ?

I'm not even aware of what blockstreamers say.  I just apply logic to the different possible outcomes.

My point is that nothing of all this will ever happen.  Bitcoin will simply stay as it is.  There will not be segwit, nor BU.  
Unless:
1) bitcoin is further centralized, and that centralized entity decides whatever it wants to decide
2) bitcoin loses its first mover edge.  At which point I think non-consensual hard forks will be possible.

But in as much as the consensus mechanism of immutability remains at work, there's no possibility for any of this.

I'm just exploring the logical possibilities of the different actions.

The biggest clusterfuck that can happen, is a backward compatible hard fork that loses miner majority after 6 months.

I meant: you cannot avoid people to build a lightning network on top of bitcoin, once segwit is alive.  You may try to stay outside of it, that is true.

You are right.  The term "monetary" doesn't apply.  It is a "valuable asset".

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No, you can have distributed exchanges.  Like now, there are many different national fiat currencies, but you don't need bank accounts of all of them.  If there are N chains out there, and everyone uses on average, n < N chains which you pick "in common" with your most important partners, you only need to exchange now and then between one of your chains, and "foreign" chains.

I don't need the chain that is essentially used by customers of groceries, and groceries in a town on the other side of the world.  The single one time I need to buy tomatoes in a far-away grocery, I'll go through some exchanges to "hop" from my chains to the grocery chain over there.  I don't need to have them all.  My transactions with my grocery don't have to fill up their chain.  And theirs are not interesting for me. 

However, a single global chain that has as well my grocery expenditures, as Bill Gates' new porsche buying, as a Chinese guy's buying of a bag of rice, that's simply crazy.  I only need a local chain, a few chains used by local agents of amazon or the like, and the possibility, in those rare cases I need something from far away, to exchange for their chains.

This is where an unilateral split gets tricky, and why BU needs majority hash rate.

Let us say that block A1 is the last common block ( A's are less than 1MB).  BU pulls the trigger at that moment.  What does that mean ?  They mine at least ONE B block, bigger than 1 MB: B1.

We now have: for BU nodes: A1 - B1
However, for old nodes: only A1 (B1 is invalid).

BU has more hash rate.  It now builds a B2.
For BU nodes: A1 - B1 - B2
for old nodes: A1 (both other blocks are invalid).

Now, a "minority miner" mines A2, built on top of A1 (B1 and B2 are invalid blocks for him).

For BU nodes:  2 chains: A1 - B1 - B2  OR: A1 - A2.  First chain has more PoW ("is longer"), so winning chain: A1 - B1 - B2

for old nodes: A1 - A2 (other blocks are invalid)

As BU *has more hash rate* this will continue.

At no point, an "A" miner will build upon the B chain (invalid blocks), and at every point, the BU nodes will see more PoW in the B chain.

But, but, but, drama and catastrophy.  If BU now becomes minority hash.

We have:

A1 - B1 - B2 - B3 - B4 ..... B250

A1 - A2 ..... - A100

For a while, everything goes still well.  But A having more hash rate, it will grow faster.

So after a while, we have:

A1 - B1 - B2 ..... B500
A1 - A2 ..... A-501

BOING!!!

Now, for the BU miners, the A chain is the longest.  They will add their new block to the A chain:

A1 - ...   A-501 - B502

But for the (majority hash rate) A miners, this is an invalid block.

They will also mine an A502 block.  
And then an A503 one on top of that.  B502 gets orphaned.

Next, the BU miners still find:

A1.... A501-A502-A503 a valid and longest chain.

They will add B504 on top of it...

But the A miners will outcompete them with A504 and A505.  B504 gets orphaned....


And the B chain is dead.
Everything that happened on the B chain is as if it never happened.

Unless the B miners decide to implement something that makes it a bilateral split.  A soft fork on B is thinkable, that A doesn't have.

There is no orphan drama when there is a hard fork.  Blocks on one chain are simply invalid on the other one, and respective miners build on one or the other.
There is no NEED to communicate, but it is not the fact of stopping the communication that makes that there are two chains of course.  The double-valid transactions WILL get across (miners will pick them from the other chain) and the block information is not relevant because mutually invalid.

butcoin and bitcoin will also be entirely different coins, like ETC and ETH.  And yes, most probably their clients will end up only talking to one another within their network, but it is not this "banning" that splits the chain.

I don't think you can avoid the lightning network once segwit is live.

No, because a segwit block is still a good normal block.   Because segwit is a soft fork.  Every segwit block is accepted by an old node.  Otherwise it is not a soft fork.  So as a non-segwit node, you cannot decide whether a given block is a non-segwit block.  Because segwit blocks are also OK.

You could, indeed, implement ANOTHER soft fork, a non-compatible with segwit, true.  Is that what you mean ?

Again, this is not true.  A "higher block count" doesn't matter if these blocks are not valid.

If the chain contains 5 more blocks of 3 MB, and your node considers only blocks smaller than 1MB, these blocks are simply invalid.  You don't consider them.  You keep the last block of 1 MB as the highest one.  The miners keeping with the old protocol will do the same, and build on this block.  So you will now accept this next block.  And the next 1 MB block.  And the next and still the next.  You are on the old protocol chain.

On the other hand, a BU node will accept these 5 extra blocks as valid.  It will consider the 1MB block next to it as orphaned.  and the next one and the next one.  Because if BU has more hash power, the chain built on the 3 MB blocks which you consider valid is growing with more PoW.  You are on the new butcoin chain.  And there's no confusion.  A BU node will only accept the BU chain (and orphan the old bitcoin branch).  A bitcoin non-BU node will only accept the bitcoin blocks of < 1MB, and consider the other blocks as invalid blocks.  Whether they communicate or not.

But you should seriously distinguish between a soft fork and a hard fork.