This comment by Ilogy about Segwit2x deserves more attention

/u/ilogy wrote a lengthy, high-quality post about Segwit2x, but then stashed it away in a comment where most people won't see it:

I would have strongly agreed with you a month or two ago. But the unexpected BCH fork has completely altered the political landscape, and at this point I am inclined to say that contrary to promising unity, Segwit2x now threatens to achieve the opposite. I have confidence in the intelligence and wisdom of many of the people who signed the NYA — who in my eyes are underappreciated heroes in this story — and believe many of them will come to the same conclusion, do the right thing, and pull out of the agreement for the sake of Bitcoin.

The purpose of the NYA

The NYA was an effort to keep Bitcoin unified. It gained the political power to do so once BIP148 was introduced. The reason for this is twofold:

1) BIP148 threatened to split the network thereby giving the economic powers a political mandate to take extreme measures to prevent this.

2) BIP148 handed the economic powers a weapon they could use to threaten the miners into a compromise.

With regard to #2: The threat of BIP148 was always that the economic majority might join it, not ever that a portion of users might split off with a tiny amount of hashing power. If the economic majority had chosen to join BIP148 it would have represented a real threat to the big block miners, since even with superior hash power the non-segwit chain would be choked of liquidity and cease to be profitable while the segwit chain would rapidly gain hash power as less ideological miners switched to earn greater profits. The intent of big blocker extremists like Jihan Wu in signing the NYA was simply to prevent making enemies of the economic powers, to stop BIP148 from becoming a real threat.

As Eric Voorhees once said, if the miners didn't sign Segwit2x, he would support BIP148. I believe this was a good representation of the position of the economic powers generally. The economic powers used the threat of BIP148 to force the miners into compromise.

How the NYA intended to achieve unity.

The purpose of the NYA was for the economic powers to threaten the two primary factions — the miners and the Core developers — into compromise in order to achieve unity for Bitcoin. It's strategy was twofold:

1) To use BIP148 to threaten the miners into activating Segwit.

2) To use the threat of a hard fork to threaten the Core developers into raising block capacity.

I have already spoken of #1. With regard to #2: The purpose of the segwit2x hard fork was never, in my opinion, to actually switch the development team leading Bitcoin. The economic powers understand that the Core devs not only are the most competent developers on the planet with respect to Bitcoin, but that they give tremendous confidence to the network and have a plan for long term scaling and efficiency.

The actual purpose of the segwit2x hard fork was to threaten the Core developers into compromising on block capacity so that Bitcoin would remain unified. The threat is that if they don't do so, if they don't make Core compatible with segwit2x, that the network will have no choice but to switch to the segwit2x client which effectively strips Core of their position as the developers of Bitcoin.

The reason the network, in theory, would have no choice but to switch to segwit2x is twofold:

1) Because the segwit2x chain would rob the legacy chain of almost all of its hash power, reducing it to a performance state similar to BCH.

2) Because the economic powers effectively decide which chain to call "Bitcoin," and if they chose to call the segwit2x chain "Bitcoin," the legacy chain — already unusable due to its tiny hash power and lacking security with threats like Jihan Wu eager to destroy it — would essentially become just another altcoin. And with such a massive influx of new investors and users, eager to use "Bitcoin," and unaware of the politics of all of this, segwit2x would effectively become Bitcoin. This is why their threat has teeth.

However, things aren't going quite as planned.

Big blockers have already violated the intent of the treaty through the introduction of BCH.

The big blocker faction has effectively violated their end of the New York agreement. While it may be true that not forking the chain was never an explicit part of the agreement, it was the main intent and purpose of the NYA from the economic powers' point of view. And while it may be true that ViaBTC, who never signed the agreement, lead the effort to create BCH — everyone knows that ViaBTC is intimately aligned with Bitmain (perhaps may even be owned by them) and that Bitmain itself invented BCH. And everyone knows, of course, that Roger Ver and the larger r/btc community strongly support BCH, and since they represent the main political group wanting to see a block size increase, the creation of BCH effectively represents this faction's unwillingness to accept the NYA.

So there can be no question that big block extremist faction has violated the intent of the treaty, which was to avoid a chain split and end the civil war, and that members of this faction that participated in the NYA have played a double game and promoted this violation.

The Core developers are refusing to be moved by the economic powers' threats.

Today the Core developers have made it clear they don't intend to cave to the pressure to make Core segwit2x compatible. And, in fact, they are adding their intent to the code itself, so their position is very serious indeed.

This means that segwit2x will cause another split in the network. So rather than achieving unity — the entire purpose of segwit2x in the first place — we will have arrived at the very opposite: 3 chains. For all intents and purposes, it is now clear that segwit2x has failed to actualize its intended goal.

What is the logical next step for the economic powers?

The economic powers, in my opinion, are primarily concerned with the health of this space and with the success of Bitcoin. This was why they sought so hard to achieve Bitcoin unity. At this point, they are most likely to achieve their goal by scrapping the NYA and they have the political window of opportunity to do so because of BCH.

The reason for this should be obvious: Bitcoin is on an absolute tear. It is shredding all time highs, user adoption is exploding, people are begging to get in. The exchanges are completely overwhelmed, confidence has never been higher. Segwit is being activated which will open Bitcoin to all kinds of possibilities and technological improvements, the market is demonstrating a clear signal that it approves the direction the Core team is taking us and disapproves with the big blockers. The last thing the economic powers — who are just being crushed by overwhelming success — want to see is all of this disrupted. And the most likely thing that could disrupt all of this would be to go forward with the chaos that would ensue from attempting to remove Core from its position.

Furthermore, prior to BCH, the NYA had the political mandate to preserve unity. Now, they are facing a situation in which unity preservation is moot, it has already been lost, and contrary to providing more unity, segwit2x actually threatens more fragmentation. They are also facing a situation in which they have been given the excuse to drop the agreement precisely because of BCH.

In short, the political pressure to uphold the agreement has been alleviated, the economic pressure is working against upholding the agreement, and the only threats to abandoning it are continued hostility from a portion of the miners and a hit to their reputation.

Therefore, what I expect to happen is that the signers of the agreement will seek a way to drop it that minimizes political and reputational fallout. They need an exit strategy, they want an exit strategy, they merely need to find the best way to do so. And perhaps they need our help. The community must actively pressure them to abandon the NY agreement. No one has much, if anything, to gain from segwit2x and a lot to lose.

Finally, I want to say a few words about scaling.

I believe more and more people are becoming aware of this, but it bares repeating. On-chain transactions are inherently inferior to off-chain platforms, like lightning network, as payment vehicles because of confirmation times and the threat of double spends. Eventually software will make it easy for ordinary people to double spend and businesses will be forced to seek other solutions. On-chain payments just don't work as cash for small purchases that require immediate settlement. This is particularly true in the case of bitcoin where you have 10 minute block times. At best, the effort to use the base layer as the primary payment network will result in quicker networks — e.g., Dash or Litecoin — replacing Bitcoin in this endeavor, though that will likely never occur because of 2nd layer protocols that will actually make quicker confirmation times meaningless for payments. Slower confirmation times in a base layer may even eventually be understood to be superior for the settlement layer as payment layers become more widely used.

With projects like the lightning network we get instant confirmations. This is huge for buying cups of coffee from starbucks. Now businesses will be able to accept bitcoin payments without fear of double spends. I don't believe networks that attempt to compete with bitcoin on the basis of payments will be able to do so.

High block fees were never a long term problem. They were only a problem in the short run because of the way big blockers held up segwit and our ability to implement 2nd layer solutions. It was an artificial problem made for political purposes and now it has been alleviated. We are poised to move forward rapidly and leave this chapter for the history books.

Submitted August 10, 2017 at 07:50PM by cacheson
via reddit