[Bitcoin-segwit2x] PROPOSAL: B0RG (Bitcoin zero replay, guarantee) - Ensuring a smooth 2X upgrade without a chain split

Tue Oct 24 16:54:44 UTC 2017

On 24 October 2017 at 18:27, Erik Voorhees <erik at shapeshift.io> wrote:

> I have a question for the group...
>
>
> "Given the market is showing that the 2x coin will be valued under 20% of
> bitcoin, miners acting in self interest will mine bitcoin and the 2x chain
> will freeze up, requiring subsidy to mine.” - Mo Adham
>
>

> -Let’s assume, immediately following the fork, 1x has 20% of hash power,
> and 2x has 80%  (as indicated by miner signaling)
> -Let’s assume also that the price, immediately following the fork, 1x is
> $4,000 and 2x is $1,000  (as indicated by futures)
>

Questionable assumptions as signaling is not binding, and this turns out to
be important, as miners can and do, switch between chains.

>
>
> Most people see the above and think, “okay, soon after the fork the miners
> will switch back to 1x because price is higher.”
>
> But, is it not the case that while price might be higher, block times are
> lower. So if you consider it from a $ revenue per day:
> - 1x finds 28.8 blocks per day (0.2x144) and earns 360 BTC1x, or $1.44m
> per day ($4,000 x 360)
> - 2x finds 115.2 blocks per day (0.8x144) and earns  1440 BTC2x, or $1.44m
> per day ($1,000 x 1,440)
>
> In the above case, the revenue stream of both coins is equal, at $1.44m
> per day.  So even though one coin is priced higher, it doesn’t mean miners
> will necessarily choose that chain to mine.
>

If the difficulty of BTC2X adjusted down 80% both chains would be equally
profitable to mine.

Getting the difficulty down is the problem.

More insights can be gained at

https://www.coinwarz.com/cryptocurrency

>
>
> Am I missing something?
>
>
> Kind regards,
> -Erik Voorhees
> CEO ShapeShift AG
>
> On October 24, 2017 at 9:58:05 AM, Melvin Carvalho via Bitcoin-segwit2x (
> bitcoin-segwit2x at lists.linuxfoundation.org) wrote:
>
>
>
> On 24 October 2017 at 17:47, Moe Adham via Bitcoin-segwit2x <
> bitcoin-segwit2x at lists.linuxfoundation.org> wrote:
>
>> Miners need to move their funds into exchanges to sell them. If they
>> can't deposit coins to an exchange, they become valueless.
>>
>> Assuming an 80-20 split, Block times for the minority chain spike to
>> ~49.3 minutes and will remain that long for ~69 days. This would
>> effectively block the minority chain's functionality as a payment system,
>> as it will become increasingly impossible to deposit funds, or move them
>> between exchanges (assuming transaction demand remains linear). Miners can
>> prioritize their own transactions in blocks, but regular customers will be
>> left out to dry.
>>
>> I don't anyone should under-estimate the negative effects of this on
>> market participants.
>>
>> A lot of us have customers who expect bitcoin to just "work". If we start
>> telling them they can't spend their money for several days/weeks, the
>> choice of which chain is viable will quickly become clear. It will be
>> neither Bitcoin1x or Bitcoin2x. It will be a different blockchain
>> altogether.
>>
>> (To be clear, Bitaccess is neutral on this fork, we just want customers
>> to remain happy. They way this is going, that doesn't seem to be a likely
>> outcome)
>>
>
> What typically happens is (shock horror) miners will mine in self
> interest.  If you consider mining as a commodity, it makes sense that
> they'll just go for the most profitable coin, and not act altruistically,
> which was suggested in the original white paper.
>
> Mining is therefore common is a 0% / 100% until fees for a block make it
> profitable to mine that block (cab take several days) or the difficulty
> adjusts the profitability.
>
> This phenomenon is often referred to as "feast and famine".
>
> Given the market is showing that the 2x coin will be valued under 20% of
> bitcoin, miners acting in self interest will mine bitcoin and the 2x chain
> will freeze up, requiring subsidy to mine.  Such subsidies could be added
> by creating a few transactions with high mining fees.
>
>>
>>
>> --
>> *Moe Adham, MSc, BEng **|* Co-Founder
>>
>> *bitaccess.co <http://www.bitaccess.co/>*
>> Cell: *+1 858 877 3420 <%28858%29%20877-3420>*
>>
>> On Tue, Oct 24, 2017 at 11:36 AM, Phillip Katete via Bitcoin-segwit2x <
>> bitcoin-segwit2x at lists.linuxfoundation.org> wrote:
>>
>>> It is at this point that common sense needs to be applied. Even the most
>>> ardent anti SegWit2x upgrade individual would snap up the “airdrop” should
>>> there be 2 viable chains post Nov HF. That in itself is demand enough to
>>> have a market for both tokens. The flip side is that with an unusable
>>> chain, it matters not whether exchanges respond to user requests for
>>> listing as you won’t be able to move your tokens anyway.
>>>
>>>
>>>
>>> *From:* Samuel Reed via Bitcoin-segwit2x
>>> <bitcoin-segwit2x at lists.linuxfoundation.org>
>>> *Sent:* 24 October 2017 16:31
>>> *To:* Peter <dizzle at pointbiz.com>
>>> *Cc:* Bitcoin Segwit2x <bitcoin-segwit2x at lists.linuxfoundation.org>
>>> *Subject:* Re: [Bitcoin-segwit2x] PROPOSAL: B0RG (Bitcoin zero replay,
>>> guarantee) - Ensuring a smooth 2X upgrade without a chain split
>>>
>>>
>>>
>>> Another lesson to be learned from BCH is that incentives matter - where
>>> miners can sell coins depends on markets, and market prices depend on user
>>> and exchange support. Even if the 80% of miners signaling 2x at this time
>>> choose to go forward, if there are not viable markets willing to buy 2x
>>> coins at near 1x prices, 2x hash power will quickly revert to the old chain.
>>>
>>> Peter wrote:
>>>
>>>
>>>
>>>
>>>
>>> On Oct 24, 2017 10:58 AM, "Chris Stewart via Bitcoin-segwit2x" <
>>> bitcoin-segwit2x at lists.linuxfoundation.org> wrote:
>>>
>>> >RP that encourages a network split would render the NYA voidable
>>>
>>> Phillip, if there is consensus on one thing, it is there is going to be
>>> a network split. Every exchange is publishing policies for the chain split.
>>> Some even saying that they will not support the segwit2x token.
>>>
>>> -Chris
>>>
>>>
>>>
>>> The technical lesson from the BCH fork was that 1 hash = 1 vote. Nothing
>>> any exchange (or custodian) said mattered. Indeed because significant
>>> sha256 hashpower was deployed towards the fork it gained value and
>>> customers of exchanges pressured the exchanges into the financially
>>> sensible decision.
>>>
>>>
>>>
>>> This proposal, SegWit2x, is for the miners to decide.
>>>
>>>
>>>
>>> Transaction selection is not a consensus rule. Any miners that want to
>>> go against the Nakamoto signaling is free to do so and the responsible
>>> party (not the 2x devs who have no control over transaction selection). If
>>> because of the political climate some miner sees an economic opportunity to
>>> resurrect the legacy chain then they can modify their node (without
>>> consensus change) to listen to 2x blocks and not mine any transaction IDs
>>> found in the 2x chain.
>>>
>>>
>>>
>>> Additionally, to complete a safe chain resurrection such a miner can
>>> airdrop the mining reward from the forked block (after 100 depth) and send
>>> it to to all addresses with UTXOs over $x value. So that users of the 1x
>>> chain can spend the combined UTXOs which cannot be replayed on 2x, as a
>>> simple splitting solution.
>>>
>>>
>>>
>>> Safety efforts which do not require consensus changes should be
>>> exhausted first before suggesting consensus changes.
>>>
>>>
>>>
>>> Regards
>>>
>>> Peter
>>>
>>>
>>>
>>>
>>>
>>>
>>>
>>>
>>>
>>> _______________________________________________
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>>> Bitcoin-segwit2x at lists.linuxfoundation.org
>>> https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-segwit2x
>>>
>>>
>>
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