November BTC Fork - The Facts
With less than a dozen days left before the SegWit2X fork, I thought I'd start gathering some facts before I start forming personal opinions and speculative conclusions. I refer to the SegWit1X chain as 1X and the SegWit2X chain as 2X for simplicity, and I have looked for very simple facts and safe assumptions. Here are the dots that I gathered:
Fork at Block 494,784. Approximate date = 16th of November.
The New York Agreement: The NYA involved parties representing about 83% of the then hashing power who all agreed to both hardforks - one for SegWit and another for an increased block size of 2MB (2X) within 6 months of the former. Further details in reference 1.
It is safe to assume that miners will only mine the most profitable chain (possibly several chains in differing proportions).
If whales pump a single chain it will gain more value. If this happens, miners will be more inclined to mine that particular chain only. This will result in the other chain(s)potentially losing overall mining attractiveness.
1X will continue to have a 1MB block and SegWit;
2X will have a 2MB block and SegWit;
Bitcoin Cash (Just for info right now) currently has an 8 MB block with NO SegWit;
Current Price Status (Futures) on BitFinex: 2X/BTC = 0.17; 1X/BTC = 0.83
Current Mining Status: 2X = Around 85% of blocks are signalling for 2X.
It seems only a few mining pools including Slush Pool, F2Pool and Kano CKPool are not signalling Segwit2X. All Antpool (Jihan Wu) owned pools are signalling for Segwit2X and will likely continue to do so up to the fork. It is not clear if any other pools from the Segwit2X signalling group will change their minds in the meantime.
Lower mining power chain: Likely to be 1X. Fees likely to be extremely high as not many miners. Difficulty adjustment could take a few weeks, if not months. Until then it will be very difficult to transfer funds. [It may be better to keep BTC on an exchange before fork, to ease liquidity cost/time if you want to sell either of the coins immediately]
Double-spending: Miners (from 2X) will have an ability and incentive to double-spend on the minority chain (lower mining power chain). If you have huge mining power, you can allocate some of it to just double-spend on the minority chain. Some people will possibly lose confidence in the minority chain as a result.
Replay-Protection: Neither 1X nor 2X currently have replay protection.
Exchanges:
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Bitfinex: original chain is “BTC”, SegWit2x chain is “B2X”
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BitMEX: Original chain is BTC
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Bitstamp: Unknown
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GDAX & Coinbase: hash power and market cap decides which chain is “BTC”
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Kraken: Unknown
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HitBTC: original chain is “BTC”, SegWit2x chain is “B2X”
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CoinsBank: Original chain is BTC
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CEX.IO: original chain is “BTC”, SegWit2x chain is “B2X”
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Gemini: hash power decides which chain is “BTC”
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Coinfloor: Unknown
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BTCC: Hash power decides which chain is "BTC"
Further details in reference 4.
The opinion section
Vinny Lingham's opinion: 2X will outcompete 1X.
Enter Bitcoin Cash: A review by Ryan X. Charles who has incorporated some of Vinny Lingham's quotes, states the following:
a. BCH is a fork of BTC with same PoW, but with improved Difficulty Adjustment Algorithm (DAA). BCH cannot die, but 1X and 2X could both die. If whales shift most of their holdings to BCH (or another coin), that would incentivise the miners to mine BCH (or another coin) instead of 1X and 2X. Both 1X and 2X would lose their mining power; however Core would release an emergency update to software adding DAA like BCH (or another coin). Thus, 1X would survive, and 2X (which might not get DAA) would die.
b. If 2X continues to be the dominantly mined chain, 1X will be forced to launch an emergency update to their PoW with DAA. There could be fighting between the two chains, and as a result a struggle to become dominant --> potentially causing altcoins to flourish.
BCH is upgrading their EDA (Emergency Difficulty Adjuster) on Nov 13. See website. This will lead to reduced volatility in BCH - likely making it more attractive to more long-term miners.
Mining profitability: It is currently almost equally profitable to mine either BTC or BCH.
My opinion on what to keep and eye on before the fork to judge where the fate of BTC is heading.
Mining signalling distribution DAA: 1X or 2X software updates to implement Difficulty Adjustment Algorithms Futures price before fork Significant whale movement
References:
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