Bitcoin Is Having a Civil War as It Enters a Critical Month

Disclaimer: I don't know anything about bitcoin or if segwit2x is even the same as segwit...But a quick google for "coinbase segwit" shows this tweet from the Coinbase CEO - https://twitter.com/brian_armstrong/status/81725801561932185...

You're right that this is a fight for control over bitcoin, but you're wrong on who the players are.

There's the corporate faction: BitMain plus Bloq and the ones who want to embed KYC and AML into the bitcoin protocol. Their heavy hitter is Jihan Wu who controls %70 of the hash power, via his mining chips and his pools, and his customers being amenable to his wishes (because they want to remain customers). No visible engineering expertise, and has has backed a series of code projects over the past two years all of which have been spectacular failures: BU, XT, Classic, ABC and BTC1-- all have had significant vulnerabilities.

Their goal: Very large blocks that cannot cross the Great Firewall of China easily, increasing Chinese centralization.

On the other side you have The Engineers: Hundreds of engineers who have contributed to Core, starting with Satoshi Nakamoto and going forward to the present day. They are called "corporate" because Blockstream hired some of them, but the blocksteram engineers are prominent only because of their contributions and smarts, not because they exercise any control.

These engineers for the past 8 years have delivered quality software and 2 years ago delivered Segwit-- a misnomer that covers a large number of improvements for bitcoin that require a soft fork to activate. Segwit enables scaling and so many more applications to be built on Bitcoin, including smart contracts and side chains.

However, Segwit also reveals an exploit. An exploit that Jihan Wu has been using to give him a competitive advantage and which is in part why he has been able to gain centralized control over bitcoin hashing. This exploit is called ASICBOOST and segwit would put a stop to it.

This is why Jihan has opposed it.

Worse the corporates have spent millions on a 50-cent army of shills to spread FUD and misinformation and conspiracy theories to discredit core.

At the end of the day-- its the engineers who know what they are doing vs the corporate shills who sneer and think it can't be that hard to deliver bitcoin software -- but have so far completely failed to deliver anything that wasn't unmitigated crap.

How it's going to play out:

Jihan Wu has declared he will hard fork his own coin (and remove Segwit) because the real bitcoin industry and core agreed on Segwit2X .... he has hash power, so he may be able to make his coin dominant... for awhile. But core has solutions to this, and at the end of the day we will likely see chain split with the hash power on one side and the engineering resources on the other. That hash power advantage can be fixed within a few weeks.... the lack of engineering talent can't be fixed for love nor money-- as any engineer worth a damn understands what is at stake and will never join Jihan's Jihad.

Not years. The difficulty is recalculated every 2016 blocks (14 days)[1].

If one chain has 10% hashing power, for less or equal to 14 days the transactions could take 10 times more to validate. But that's assuming markets aren't correcting miners in the "right" direction in the meantime. Who wants to waste electricity on undervalued coins?

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Considering most of BTCs have been mined at the time bitcoin core had no competition; I'd say BTC rich people would tend to side with them. Because of emotional attachment, economic ties, and most importantly the dumb but very real reason of software maintenance.

[1] https://en.bitcoin.it/wiki/Mining

Why do you say it's an attempt to make Bitcoin more efficient? It's essentially exactly the code base of Bitcoin core with some very minor changes including a block size commitment in the future. Seems pretty clear that it is about control of that code base, and not really the technical underpinnings which are almost identical.

I think the issue is that people have a vision of what Bitcoin is, that doesn't align with the reality of a proof-of-work system with a computation bound hash. The block size is basically orthogonal to the proof-of-work, and the proof-of-work is distributed in the sense that anyone can do it. There is nothing stopping any entity from doing the proof-of-work if they have the resources and capabilities. So this idea that there will be one company that is the only one doing Bitcoin doesn't really make sense if it's cost competitive for other companies to be involved, regardless of the computation or bandwidth requirements.

End users can still validate transactions via SPV, which is completely valid and provable without storing the entire block chain. Consensus relay nodes can do the same thing, although they will start dropping off the network when the bandwidth costs become prohibitive. So in a small block system we have an extremely limited amount of space for transactions, which means the cost will eventually be excessively high and result in settlement between big players. That's the choke point that allows for KYC and AML. You can submit a transaction to the network, but you can't afford to because there isn't enough bandwidth to service your request so you are forced into regulated channels, onto exchanges, or through third party choke points that can be audited. To a certain extent this is already happening.

People who want small blocks for Bitcoin really need to be thinking about using an Alt coin, it was never in the plans to have an extremely low bandwidth pipe to keep things decentralized when the proof-of-work is by default a centralizing force.