[Guide] Surviving the fork, or How to double your bitcoins (or save fiat)

[JorgeStolfi]

a forced global upgrade across thousands of independent entities, in two weeks.

Yes, two weeks is rather short.  Two months would have been better.  I suspect that the 75% will be reached very quickly, or never.  I suppose that Mike was afraid of some PR counteroffensive that would convince many 8 MB adopters to switch back to 1 MB, if the grace period was too big.

After all how hard can it be to force everybody to adopt the new bitcoin, even though they dont agree with it?

Once 75% of the miners have agreed to switch to 8 MB, agreement is irrelevant.  The remaining miners and the major services will choose to switch before the 8 MB limit is enabled, even if they didn want to, otherwise they will lose money.  They will be aware of the event and capable of upgrading in time.

But even you agree that there will be an altcoin created out of this and that altcoin will have nontrivial value, probably more than LTC, certainly more than NMC.

No, I don't agree with that.  

Litecoin is a functioning coin, that non-experts can use as easily as bitcoin, with no confusion.  It has its own exchanges, a large user base, etc.. (It is even used by bitcoin arbitragers, I read somewhere, to quickly transfer value between exchanges, due to its shorter block period.)  

The "1 MB bitcoin", if it survives at all, will have a very long block period, a huge and growing backlog of unconfirmed transactions, practically no services and exchanges -- and very few people will know how to handle it.  

Indeed, if the 8 MB sizelimit prevails, its miners may find it worthy to put some of their hashpower to the task of jamming the 1 MB branch, to minimize confusion of clients who failed to upgrade, and to prevent its use for scams.

[jl777]

if XT wins, does this mean all the current alt coins that relies their chain security with merge mining with bitcoin core will loose substantial network hash and end up dying along with the bitcoin core.

so asap get out of the alts that have merge mining with bitcoin core if XT succeeds or can they merge mining with both core and XT?

i think right now the safest bet is ethereum, it came out just the right time for the shaken btc world, people will look into eth for hope that it will take over most of btc marketcap.

ps i have no eth, only have nxt.

I would think that all merge mined altcoins will still work with which ever BTC survives, maybe each such altcoin might need to hardfork too. not sure on the details, but i dont see this as any insoluble issue for merge mined alts

[BitcoinNewsMagazine]

If this thread encourages people to get their bitcoin out of web wallets and into Bitcoin Core by the end of the year it will have done some good.

[kingscrown]

If this thread encourages people to get their bitcoin out of web wallets and into Bitcoin Core by the end of the year it will have done some good.

sincei use BTC from like 2010 when faucet gave out 1BTC ... im used to core
dunno about others

[jl777]

a forced global upgrade across thousands of independent entities, in two weeks.

Yes, two weeks is rather short.  Two months would have been better.  I suspect that the 75% will be reached very quickly, or never.  I suppose that Mike was afraid of some PR counteroffensive that would convince many 8 MB adopters to switch back to 1 MB, if the grace period was too big.

After all how hard can it be to force everybody to adopt the new bitcoin, even though they dont agree with it?

Once 75% of the miners have agreed to switch to 8 MB, agreement is irrelevant.  The remaining miners and the major services will choose to switch before the 8 MB limit is enabled, even if they didn want to, otherwise they will lose money.  They will be aware of the event and capable of upgrading in time.

But even you agree that there will be an altcoin created out of this and that altcoin will have nontrivial value, probably more than LTC, certainly more than NMC.

No, I don't agree with that.  

Litecoin is a functioning coin, that non-experts can use as easily as bitcoin, with no confusion.  It has its own exchanges, a large user base, etc.. (It is even used by bitcoin arbitragers, I read somewhere, to quickly transfer value between exchanges, due to its shorter block period.)  

The "1 MB bitcoin", if it survives at all, will have a very long block period, a huge and growing backlog of unconfirmed transactions, practically no services and exchanges -- and very few people will know how to handle it.  

Indeed, if the 8 MB sizelimit prevails, its miners may find it worthy to put some of their hashpower to the task of jamming the 1 MB branch, to minimize confusion of clients who failed to upgrade, and to prevent its use for scams.

I dont understand how if 1MB bitcoin survives (as losing fork) how there will be a growing backlog of unconfirmed tx? The assumption is that  if it loses, fewer people will use it, but maybe if all the miners abandon it CPU mining would become viable again. As long as the diff readjustments happen, the blocktimes will eventually get back to the 10 minutes per block.

but if as you say that the XT miners will aggressively attack the original to kill it, then it seems the tyranny of the majority. To be able to make the real bitcoin into an altcoin.... I never imagined this would be possible

James

[Come-from-Beyond]

If and when that happen, you may be sure that all sensible exchanges and services will upgrade, together with the sensible miners among the other 25%.

It's just not smart to believe in a prediction not backed by anything. And hence it's smart to think that you may be wrong and we should cover our asses.

[JorgeStolfi]

I dont understand how if 1MB bitcoin survives (as losing fork) how there will be a growing backlog of unconfirmed tx?

Because the transactions issued by clients are in principle executable in both branches.  Only a few transactions will be specific to only one branch: namely, those that involve coins that were mined in that branch, after the split.  

The incoming traffic is now ~120'000 transactions per day, on average.  For the last 12 months it has grown almost linearly at ~5000 tx/day per month.  If it continues growing at the same pace, by Jan/2016 it wil be ~150'000 tx/day.  The effective capacity of the bitcoin mining network, revealed in the recent stress tests, is ~200'000 tx/day or ~1400 tx/block.

Suppose that the miners split 90:10 between the 8 MB and the 1 MB branches.  The 8 MB branch will have ~130 blocks/day, which will have to carry ~1150 tx/block -- which is still less than the effective capacity ~1400 tx/block.  There may be "traffic jams" at peak hours or peak days, but the backlogs should clear after a few hours at most.

On the other hand, the 1 MB branch will have ~15 blocks per day only.  Each block would have to carry 10'000 tx, which is way over the capacity ~1400 tx/block.  So, every 10 minutes, on average, 1400 tx will be confirmed, and 8600 tx will be added to the queue.  The backlog will only begin to clear when the difficulty is readjusted and the block rate returns to ~10-15 min.  The adjustment happens every 2100 blocks, with is normally 2 weeks but in that chain will be 20 weeks.

the XT miners will aggressively attack the original to kill it, then it seems the tyranny of the majority. To be able to make the real bitcoin into an altcoin.... I never imagined this would be possible

Well, right now the 5 largest miners (who have ~70% of all hashpower) could cooperate to starve all the other miners, and take 100% of the block rewards intead of just 70%.  Or they could do much nastier things.

[jl777]

I dont understand how if 1MB bitcoin survives (as losing fork) how there will be a growing backlog of unconfirmed tx?

Because the transactions issued by clients are in principle executable in both branches.  Only a few transactions will be specific to only one branch: namely, those that involve coins that were mined in that branch, after the split.  

The incoming traffic is now ~120'000 transactions per day, on average.  For the last 12 months it has grown almost linearly at ~5000 tx/day per month.  If it continues growing at the same pace, by Jan/2016 it wil be ~150'000 tx/day.  The effective capacity of the bitcoin mining network, revealed in the recent stress tests, is ~200'000 tx/day or ~1400 tx/block.

Suppose that the miners split 90:10 between the 8 MB and the 1 MB branches.  The 8 MB branch will have ~130 blocks/day, which will have to carry ~1150 tx/block -- which is still less than the effective capacity ~1400 tx/block.  There may be "traffic jams" at peak hours or peak days, but the backlogs should clear after a few hours at most.

On the other hand, the 1 MB branch will have ~15 blocks per day only.  Each block would have to carry 10'000 tx, which is way over the capacity ~1400 tx/block.  So, every 10 minutes, on average, 1400 tx will be confirmed, and 8600 tx will be added to the queue.  The backlog will only begin to clear when the difficulty is readjusted and the block rate returns to ~10-15 min.  The adjustment happens every 2100 blocks, with is normally 2 weeks but in that chain will be 20 weeks.

the XT miners will aggressively attack the original to kill it, then it seems the tyranny of the majority. To be able to make the real bitcoin into an altcoin.... I never imagined this would be possible

Well, right now the 5 largest miners (who have ~70% of all hashpower) could cooperate to starve all the other miners, and take 100% of the block rewards intead of just 70%.  Or they could do much nastier things.

Let us not quibble over exact details, since it is not possible to predict exact amount. So using your numbers of 90/10 split:

"The backlog will only begin to clear when the difficulty is readjusted and the block rate returns to ~10-15 min.  The adjustment happens every 2100 blocks, with is normally 2 weeks but in that chain will be 20 weeks."

OK, it is 6 months later and blocks are back to normalish rates. With all of the existing bitcoin infrastructure are you saying that it wont be a viable altcoin? That LTC is worth more than old bitcoin? That NMC is worth more then old bitcoin?

Did you consider that there are a lot of people that use bitcoin and if dont update to a new wallet and they see that they received an old bitcoin, maybe they just accept it. doesnt even the Mtgox bitcoins sell for amounts > $0?

To be so confident that multibillion dollars of existing value will just vanish within weeks, this just does not pass the common sense test.

James

[turvarya]

That still doesn't show an economical incentive to stay on the weaker chain.
Maybe you could describe it further? (That is not a rhetorical question. I am really curious.)

The fork will happen if 75% of blocks are mined by miners who support it. This is a quite silly indicator because it's not the miners who decide what changes are good/bad. NotBitcoinXT makes it worse, we can't trust even the number of blocks. What an average Joe will do? A sane average Joe will try to sit on the both chairs until he clearly sees what happens. And the most rational behavior is to follow the guide to maximize profit (minimize loss).

I strongly disagree. No sane person will follow your guide, since it is just highly speculative.
And again, there is no economical incentive for merchants not to go to the stronger chain. They most likely will just follow the lead, long before the split happened. And as I also said before NotBitcoinXT is a bad joke, no serious business will use it.

[Come-from-Beyond]

No sane person will follow your guide, since it is just highly speculative.

You don't risk by following the guide and you increase your chance for a profit. Looks like our definitions of "sane" differ much.

[jl777]

That still doesn't show an economical incentive to stay on the weaker chain.
Maybe you could describe it further? (That is not a rhetorical question. I am really curious.)

The fork will happen if 75% of blocks are mined by miners who support it. This is a quite silly indicator because it's not the miners who decide what changes are good/bad. NotBitcoinXT makes it worse, we can't trust even the number of blocks. What an average Joe will do? A sane average Joe will try to sit on the both chairs until he clearly sees what happens. And the most rational behavior is to follow the guide to maximize profit (minimize loss).

I strongly disagree. No sane person will follow your guide, since it is just highly speculative.
And again, there is no economical incentive for merchants not to go to the stronger chain. They most likely will just follow the lead, long before the split happened. And as I also said before NotBitcoinXT is a bad joke, no serious business will use it.

how is getting corecoin and XT coin both, instead of just one of them speculative?
It would seem that someone could make some sort of mathematical proof that (corecoin + XTcoin) >= corecoin and also that (corecoin + XTcoin) >= XTcoin

Then again, math is my weak point so I must be missing something

James

[turvarya]

No sane person will follow your guide, since it is just highly speculative.

You don't risk by following the guide and you increase your chance for a profit. Looks like our definitions of "sane" differ much.

...
3. After the fork find someone who owns coins not existing on the both blockchains and ask them to send few satoshis to your account, do it for the both blockchains. Those lucky owners of coins that don't exist on the other blockchain will likely be miners or guys who managed to get their transaction not included into the other chain. I expect that the market will react to the fork by selling such special coins slightly more expensive than their face value.

4. Find exchanges that work with different blockchains and send your coins TWICE by combining your original coins with coins obtained on the previous step. This will prevent a transaction on one blockchain from inclusion into the other blockchain.

5. Sell your bitcoins on the both exchanges for fiat and watch market reaction. Once the market decides which blockchain wins send fiat money to the corresponding exchange and buy bitcoins. If you are a skilled trader you may try to exchange BTC for LTC or another altcoin instead of fiat. Do it at your own risk, I don't dare to predict how altcoin markets will react to the fork.

ad 3. You are buying overpriced Bitcoin, because they are "special". Oh, yes, that is really sane

ad 4. What if, there are just small unknown exchanged, that work with the weaker chain? How long does it take to register there?

ad 5. Selling your Bitcoin is always risky, especial if you exchange them for another cryptocurrency.

"There is no free lunch", if someone tells you otherwise, he has no idea, what he is talking about or is trying to scam you.

[LiQio]

...
3. After the fork find someone who owns coins not existing on the both blockchains and ask them to send few satoshis to your account, do it for the both blockchains. Those lucky owners of coins that don't exist on the other blockchain will likely be miners or guys who managed to get their transaction not included into the other chain. I expect that the market will react to the fork by selling such special coins slightly more expensive than their face value.

4. Find exchanges that work with different blockchains and send your coins TWICE by combining your original coins with coins obtained on the previous step. This will prevent a transaction on one blockchain from inclusion into the other blockchain.

5. Sell your bitcoins on the both exchanges for fiat and watch market reaction. Once the market decides which blockchain wins send fiat money to the corresponding exchange and buy bitcoins. If you are a skilled trader you may try to exchange BTC for LTC or another altcoin instead of fiat. Do it at your own risk, I don't dare to predict how altcoin markets will react to the fork.

ad 3. You are buying overpriced Bitcoin, because they are "special". Oh, yes, that is really sane

ad 4. What if, there are just small unknown exchanged, that work with the weaker chain? How long does it take to register there?

ad 5. Selling your Bitcoin is always risky, especial if you exchange them for another cryptocurrency.

"There is no free lunch", if someone tells you otherwise, he has no idea, what he is talking about or is trying to scam you.

Few satoshis -> slightly over market price -> economic incentive given in most cases -> sane

The proposed medium to exchange to is USD/Fiat - only skilled traders are advised to maybe try alts. Selling anything is always risky because the value could change after the sale... what is your point excactly?

[Come-from-Beyond]

ad 3. You are buying overpriced Bitcoin, because they are "special". Oh, yes, that is really sane

You don't need to buy a whole bitcoin, few satoshi is enough. You won't notice this purchase even if you pay 1000-fold.

ad 4. What if, there are just small unknown exchanged, that work with the weaker chain? How long does it take to register there?

Ever heard of off-exchanges trades?

ad 5. Selling your Bitcoin is always risky, especial if you exchange them for another cryptocurrency.

Selling your Bitcoin is always risky? Not for fiat, last year clearly showed that those who sold did a smart move. I hope you won't try to argue that keeping bitcoins during a panic is a smart move.

"There is no free lunch", if someone tells you otherwise, he has no idea, what he is talking about or is trying to scam you.

Agree on that.

[turvarya]

ad 3. You are buying overpriced Bitcoin, because they are "special". Oh, yes, that is really sane

You don't need to buy a whole bitcoin, few satoshi is enough. You won't notice this purchase even if you pay 1000-fold.

ad 4. What if, there are just small unknown exchanged, that work with the weaker chain? How long does it take to register there?

Ever heard of off-exchanges trades?

ad 5. Selling your Bitcoin is always risky, especial if you exchange them for another cryptocurrency.

Selling your Bitcoin is always risky? Not for fiat, last year clearly showed that those who sold did a smart move. I hope you won't try to argue that keeping bitcoins during a panic is a smart move.

"There is no free lunch", if someone tells you otherwise, he has no idea, what he is talking about or is trying to scam you.

Agree on that.

I argue, that you might miss the price increase and have to buy Bitcoin at a much higher price--> there is just a too big risk in there.
Yes just keeping your Bitcoin is a much smarter move, instead of playing casino with them.

Off-exchange trades don't change anything about, that you have to find such people.

[Come-from-Beyond]

I argue, that you might miss the price increase and have to buy Bitcoin at a much higher price--> there is just a too big risk in there.

Ok, keep bitcoins. If you are so optimistic you still should do first 3 steps.

[S4VV4S]

If 1 CoreCoin = 1 XTCoin and vice versa,
why would one CoreCoin be worth less if a fork occurs and XT wins?

One would still have 1 CoreCoin (losercoin) on the XT chain (winnercoin).
CoreCoin -> XTCoin -> $xxx
Am I missing something?

[vaporware asset wizard]

jl777 & CfB tag teaming, Impressive!!

[RoadStress]

If this is the case, I would say that most of the exchanges will freeze their operations for a day or two until this mess doesn't get sorted out.

And voluntary refuse to earn a day or two worth trading fees (which likely be 2-3 times higher than usually)? Operating on the both blockchains looks as a much better decision.

This is what I was thinking too. Exchanges can be fork-neutral and they could offer services on both or more blockchains until they reach a limit when they cease to offer services on a particular blockchain.

1) This raises really big issues with future Hard Forks.   For example - what happens if the China Miners/Exchanges decide to go a different route from Western Miner/Exchanges.  Could the Bitcoin Supply split again?   Because once things get more globally accepted and Bitcoin a more global currency - I can see potential future politically motivated Hard Fork divergencies.  I mean - if Gavin & Mike can do it - surely China or the U.S. or Europe could do it??   As pointed out earlier - kind of blows the whole fixed supply concept.

No problem there! It will still be better than our traditional financial system of printing money! It will still be a fixed supply and it will be more transparent than what we have now.

Some clever bitcoin hackers may be able to create transactions that are valid on only one chosen branch.  However, most transactions issued by typical users will be executed in both chains;.  Thus they will not be able to "see" the two altcoins.  When one of those transactions, by accident, turns out to be valid for only one chain, the client will either not notice ever, or will get confused, and maybe end up with his wallet in an inconsistent state, maybe even lose coins.

The Bitcoin CEO will save us all!

Well, right now the 5 largest miners (who have ~70% of all hashpower) could cooperate to starve all the other miners, and take 100% of the block rewards intead of just 70%.  Or they could do much nastier things.

Don't forget that the system is built to incentivize playing honestly by the rules! They can do that, but the market will react for sure.

[wagabee london]

 the fight between bitcoin xt and bitcoin core will make some people make money maybe bitcoin should be rename bitcoin xt the dev should work together for the community