If you’re anything like me, you may have struggled to get through Bitmain’s recent contingency announcement regarding BIP148 (a.k.a. SegWit activation) and its prediction of an imminent UASF (User Activated Soft Fork). It was long, technical, and honestly, a little boring. Maybe that was deliberate on their part – because when you strip it down, it’s hard to deduce what their real objectives and motivations are. The blog is full of fluffy notions of a united Bitcoin, and noble self-sacrifice in the face of what they consider to be a ‘wipe-out’ attack. So let me take you through a closer look, and give you the heads up on what I’ve managed to read between the lines.
The final round in the scaling fight?
Ding ding! Has the moment arrived when we get to see the real future of Bitcoin? Assuming it still has one if Bitmain’s rhetoric is anything to go by. Because they’re saying that BIP148 is an ‘attack’ on Bitcoin, using the risk of a wipe-out as heavy artillery. In other words, any nodes following the original chain after a UASF split, assuming the new chain gains a majority has rate, stand to lose a significant number of transactions during the reogranisation needed to join the new chain. Or more bluntly: they’re going to delete your Bitcoins – maybe.
Bitmain thinks there’s a high risk of the blockchain splitting on August 1st, which as well as the wipe-out described above, also carries the risk of investment capital losses, and stagnation of the losing chain as miners migrate to the most profitable version. They’re also arguing that there will be no replay protection on a split BIP148 chain. A split chain is really a duplicated chain; your coins now exist twice. Spending on one chain could mean duplicate spending on the other – a situation that exchanges are not currently equipped to deal with.
To be fair to Bitmain, much of this is accurate. A split chain is a headache for everyone – but a much worse one for those on the wrong side of it. Coincidentally, that looks to be Bitmain on this occasion.
When is a fork not a fork?
So, Bitmain have announced their intention to create a hard fork. For the sixth time in two years. Sounds worse now doesn’t it? Seriously though, they’re calling it a UAHF – a user-activated hard fork. They haven’t specified who the users are, but I can only assume they mean themselves. They’re justifying it as a contingency against damage to transactions and investments caused by a split chain. Like I said, very noble – especially when you factor in their commitment to this new chain regardless of short term financial costs should things go pear-shaped on the main chain(s). In other words, if BIP148 turns out to be the 51% ‘attack’ they think it will be, they’re going to hard fork.
Except it’s not technically a hard fork. It’s actually a new coin based on a shared history with Bitcoin. If and when they do this, they’re going to mine it privately for 3 days, and guarantee replay protection on their new chain, as well as protect any transactions threatened by wipe-out or stagnation. Of course, all this is dependent on a certain set of circumstances coming about, but the worst case scenario is that there will be three Bitcoin chains as a result: Current Bitcoin, BIP148 and Bitmain’s Bitcoin as the bloggers are calling it. Confused? You’re not alone.
What’s going to happen to my Bitcoin?
Honestly? It’s going to land somewhere between exactly where it is now, and triplicated across three chains with dubious to non-existent monetary value. There’s no doubt that a big shake-up is coming, and the different vested interests are all vying for position. Ultimately though, there’s no guarantee that the community will get behind any of the visions on offer, regardless of where the hashing power goes. There’s also the little fact that Bitmain is one of the largest providers of mining hardware. Their preference and push for a rapidly-increasing block size could be very good for business. Not to mention very bad for the smaller fish in the mining pond. A quick glance at Reddit will give you an entertaining overview of this opinion, summarised in one user’s vitriol: “BITMAIN IS CANCER.”
While Bitmain are accusing the Bitcoin press and forums of astroturfing, it’s clear that there’s more than a simple conspiracy at play. Bitcoiners are passionate about their ethics and their money, and they won’t tolerate powerplays forever. So my advice is this: hang onto that passion, because it’s often the only thing we all have in common – and it might be the only thing that keeps a post BIP148 Bitcoin alive.
This article represents the personal opinion of the author and is not a recommendation to buy or sell Bitcoins.