UASF or Bip148: The credible bluff!

When I read about the user activated softfork for the first time I thought it was just silly. Bitcoin has a very clear government structure where miners get to run the network and maintain consensus. Who are these people calling some non-mining nodes "users" and want to create a bitcoin fork without any miner support.

However, what I did not see right away: this was a credible bluff. And a credible bluff is quite powerful.

What is bluffing anyway

As a poker player bluffing is something I have to do every time I play. A poker player in a high quality game cannot really be profitable without bluffing. Bluffing is essentially betting in a way that represents strength even though you do not have the hand to back it up. However bluffs are only effective if they are balanced. This basically means that when you make a bet you sometimes have it and sometimes you don't in a way that your opponent cannot know which is which.

A poker example

Here is an example from my last PLO session:

I am in the blinds and look at J875 double suited at my local 5-5 game and I complete a raise to 15. 5 players are in the hand. I start the hand with about $1400 and everyone else in the hand has me covered. My hand is utter junk, but I complete the action and get a good price.

Flop: Pot is 75

The flop is 823, rainbow with one of my suites. This gives me top pair which is kind of useless in PLO. But this board misses practically every range, so I decided to simply bluff with a $50 bet, hoping everyone just folds. If I get called I have some back-door possibilities and a little bit of equity with my pair.
Two people called me, one who is clearly a beginner or fun player the other a very good player. That is really bad news, I will have to be done with this hand unless something good happens for me on the turn.

Turn: pot is about 75 + 50 + 50 + 50 = 250

The dealer puts a Q on the board which is now Q832.
I am done with the hand and check, planning to check fold. The recreational player bets 75 and gets called.
WUT!
75 is a very small bet, making me thing he wants to protect his hand and the fact that the good player just called twice means he too has a very weak hand or draw. This makes me think that I should be able to make both of these guys fold.
I decide to turn my useless hand into bluff.
I bet 450. The recreational player moves around quite a bit, thinks forever and then calls (tells that he is unhappy and likely weak). The other player folds.

The river: pot is 250 + 450 + 450 = 1150
River is a 2 and the board is now Q8322, no flush possibility. I am still convinced that my opponent is weak and move all in for a little less than the pot.
My opponents thinks forever, moans and after very long time shows Q3 and folds.

Why did my poker bluff work

The key about bluffing is that it needs to be credible. This means it must be possible for me to have a hand that is representative of the strength of my actions and betting history. In this case I was representing something like a set (i.e. 88, qq in my hand ) or something about this strong. With this hand I would have bet the flop and possible check raised the turn.
Given how I had played this hand a strong hand was possible along with the fact that so far I had not been seen bluffing or even betting hard before.
In other words it was very likely that I had a big hand. And so my bluff worked and got my opponents to fold the best hand.

Why is UASF a credible bluff

Some user creating their own bitcoin client and then not accepting the chain from the majority of miners cannot possible be sensible at first glance. Just like betting all my chips away with a junk hand seems idiotic above.
UASF is nothing short of a rebellion against the very simple governance model of bitcoin. Satoshi clearly states "...The proof-of-work also solves the problem of determining representation in majority decision making. ". By investing in mining equipment and hashing power, miners get to operate the bitcoin network and receive rewards but also form consensus about the protocol. If they do this well, the market will reward them with higher bitcoin prices which will make their initial investment profitable, else they will lose money and eventually suffer an economic death. It is a very simple but economically sound game of value. Which is why game theory and bluffing is so applicable.
A user activated softfork only works when some miners and a big economic majority supports it or potentially supports it. Since it is conceivable that some or many bitcoin holders hate transaction fees and blocksize limits it does seem feasible that some will value this new chain. Two years of utter fighting within the community have made this clear.

As such it is possible that bib148 succeeds and threatens the value of the traditional chain that miners have refused to adapt to new features suggested by developers. It is not required that this will work for the bluff to be effective or profitable, just like my hand above does not have to win a showdown if it gets called. As long as parts of the users and bitcoin holders believe that UASF may lead to a fork this threat works. Then it becomes a credible bluff.

This bluff is changing what miner want to do

In the case of bib 91 and Segwit2X it has led miners to react to this bluff by actually changing their side of the chain and adopting Segwit which is exactly what UASF as well as the core team have been trying to make the miners adopt.

This is another very interesting chapter for bitcoin and blockchains. For me it shows how after all this simple design Satoshi created does in fact seem to work. I am amazed how quickly all of a sudden things get moving.