The Real Bitcoin: which Bitcoin fork will win?steemCreated with Sketch.

in bitcoin •  4 months ago

The self-proclaimed DAO attacker and “million BTC” (aka (sic) “million buttcoins”)* whale Mircea Popescu along with his The Most Serene Republic (TMSR), claim they will only accept “Real Bitcoin”:

* Valued at 0.5 million BTC in 2016.

Tangentially 20% of the total network hashrate was of unknown origin at that time, and Craig Wright recently boasted they will have 20% of the network hashrate.

Bitcoin Clones Are Worthless Than Real Bitcoin

Mircea Popescu wrote:

…so the holdings on the two chains aren't notionally equivalent. Instead, all the holdings on the Bitcoin chain are accepted as valid on both [real] Bitcoin and [the fork], but holdings on [the fork] are rejected by [real] Bitcoin. Consequently, everyone involved with the fork is writing options to everyone in [real] Bitcoin, free of charge. That they have no ready way to finance these should be obvious, and consequently the grim prospects of … the fork should be just as obvious…

If every person could create a clone at any point in time and fund it simply by stealing from the immutability of the real Bitcoin, then Bitcoin would not have any value because forks could proliferate. A fork of Bitcoin could only have value if it created more stake-weight consensus than the legacy Bitcoin. In other words, the consensus around a fork is proof-of-stake (without the nothing-at-stake problem), not proof-of-work.

For a Bitcoin fork to gain stake-weighted consensus requires that it be able to establish itself as far superior to every other possible fork, from the perspectives of those who hold the majority of the stake. Additionally the small stake holders which typically compromise 50% of the stake in a power-law distribution of wealth, will follow the other larger stake holders as a herd. The whales have an incentive to force the dolphins to pay all the transaction fees for the whales which the math says they can do, and kick the minnows off chain.

Problem is that there is no one block size or one scaling technology which is agreeable to everyone. There are various factions and innumerable choices for example for future possible block sizes. Who decides? Thus the only Schelling point is to stay in the real legacy Bitcoin and sell the free options on the clones. Any smaller orcas (e.g. Roger Ver) who defect will end up losing (although they are probably just fooling the masses to take real BTC from them), because of the game theory of it.

That is not to say the clones will go to zero if they can offer something that some speculators think is worth it at some “buy low, sell high” price. The price of the cloned Bitcoin will eventually fall low enough that some speculators are interested, but that doesn’t necessarily prevent them from going to zero long-term after the greater-fool burger been flipped a few times and is overcooked.

V. The fork is needed because otherwise some people won't be able to use Bitcoin.

Bitcoin isn't for everybody. Creating something useful that everyone can use is an exercise in trying to create something that's useful but worthless. Such a thing may exist, in the sense perpetuum mobile may exist. As far as the science of physics goes, they do not.

Should blocks ever become full, older coinbases will be prioritized over newer coinbases, and larger mining fees and transactions prioritized over smaller mining fees and smaller transactions. This means that someone who wishes to pay for very little with Bitcoin will be forced to use something else, so to speak is forced to "give his seat" to someone richer. This is exactly the point and the intent of Bitcoin : to force the poor to yield to the rich, unversally, as a matter of course.

For the reasons noted and for many other reasons I am pretty much satisfied that Bitcoin is not nor will it ever be a direct means of payment for retail anything. You may end up paying for a month's worth of coffee vouchers at your favourite coffee shop via Bitcoin (so shop scrip built on top of Bitcoin), you may end up settling your accounts monthly at the restaurant in Bitcoin (so store credit built on top of Bitcoin), you will probably cash into whatever local currency from Bitcoin (be it Unified Standard Dubaloos or Universally Simplified Dosidoes or whatever else) but all that is entirely different a story.

He is explaining the Bitcoin is reserve currency of the TMSR, not a medium-of-exchange. See my prior blog Get Ready for a World Currency for more about that.

Note that I had explained in detail that Bitcoin was designed such that it can’be modified to scale transaction volume (without an oligarchy but in that case the oligarchy would extract maximum fees any way). And Bitcoin can never support real-time transactions. In addition to the other criticisms made against SegWit by others, Lightning Networks must become dominated by Mt. Box nodes and thus it will become a fractional reserve system with loss of value analogous to centralized exchanges.

In the comment section of my prior blog post, I outlined my expectations and many other details, then @finitemaz asked:

Do you think BCC is going to be the real BTC then, even though it is forking? Is Craig Wright going to support Bitcoin Cash or another fork down the line?

Neither BCC nor any clone of Bitcoin can be the “Real Bitcoin” as so defined. Craig Wright in his desire to reject SegWit is a supporter of the real Bitcoin, but if he tries to fork the block size then he is writing free options as explained above.

I wrote in a comment on my prior blog:

Bitcoin probably already has a lock on the intrinsic value of a reserve currency for cryptocurrencies, and the medium-of-exchange to/from fiat. Thus I argue the worst outcome is to fork Bitcoin in August destroying the immutability which insures a 21 million coin limit (and I think all Bitcoin forks will fail because whales will protect the intrinsic value of Bitcoin).

I realize it is unsatisfying to Bitcoin fans if Bitcoin will not scale, but Bitcoin does not need to scale as it can be the on/off ramp to fiat and BTC saving for the altcoin that provides scaling,. Since there will likely be many such competing altcoins, then BTC remains the common denominator for investing in the crypto sector, i.e. the reserve currency of cryptocurrency.

Even if Bitcoin was forked to add some weak ass non-scaling lie, it will still never be that cryptocurrency that provides the breakthrough I am alluding to above. For that, we need competition and experimentation amongst altcoins (not forking the BTC unit into chaotic confusion). Thus we need a stable reserve cryptocurrency and that is Bitcoin. We have it, so no benefit in destroying it whilst trying to make it be something it can not be. Transaction fees will go up on-chain, so eventually those who can not afford have to move to an exchange or an altcoin. That drives a market need for altcoins to compete for the best solution.

What To Do

Move your BTC into a wallet you control (e.g. Electrum) immediately, else trade your BTC for altcoins.

SegWit (BIP 141) could begin forking any time because afaik BIP 91 has activated and this requires miners who signaled BIP 91 to orphan blocks which do not signal SegWit. And BIP 148 UASF requires this starting August 1. But spending to yourself is not at risk (presuming we do not get massive change reorganizations so moving your coins to private wallet or exchanging for an altcoin asap is urgent, also because a backlog of transactions could possibly ensue nearer to August 1).

You will not likely be able to accomplish all of this via Localbitcoins or other exchanges.

Afaik, to spend your BTC on the SegWit fork so that it can not be replayed on the legacy Bitcoin will require either mixing with some transactions from blocks that derived from a block containing a SegWit transaction, but (this probably does not scale well and) these can not begin until August 23. Before then, the other way is to attempt to double-spend to yourself on the SegWit fork and legacy Bitcoin over and over until it happens. You’ll need to import your private keys into separate wallets for each fork.

Replay protection is built into the Bitcoin Cash (BCC) fork that starts on August 1, so just import your private keys into a BCC wallet. Btw, not too encouraging that the specification for BCC doesn’t know that 100,000 bytes ≠ 100KB.

Looks like initially we are going to get a lot of excitement and derps rushing into the SegWit fork. So this might be a great opportunity to amass more real Bitcoin by selling one and buying the other. Also looks like Bitmain is confused.

Disclaimer: I am not providing speculation nor investment advice. This is provided for your entertainment and anyone can be wrong about the future.


P.S. My (TPTB_need_war and iamnotback) warnings about ICOs and SEC securities law have been vindicated.

Authors get paid when people like you upvote their post.
If you enjoyed what you read here, create your account today and start earning FREE STEEM!
Sort Order:  trending

Thus the only Schelling point (aka focal point) is to stay in the real legacy Bitcoin and sell the free options on the clones.

I wrote on BCT in March 2017:

Because there's no more fun than to get your co-whales dump on the wrong chain…

Surely they can attempt that but they have the prisoner's dilemma that the miners can then debase them to hell, because they already proved to each other that they are duplicitous.

So the fools die in their own tarpit as always.

In other words, once some whales defect, they defect from ever (then or in the future) preventing a mining cartel from fucking them over. Thus they will have destroyed the perceived value of Bitcoin which is its immutability (remember Bitcoin is modeled on Nash's Ideal Money).

I wrote on BCT in April 2017:

Overwhelming consensus only exists on those things which benefit everyone pretty much equally, which was precisely the point that @dinofelis and I made about the game theory of PoW being crab bucket mentality.

And that is why you'll never see any consensus on block size or SegWit, other than to defend the status quo which is the Schelling point of the whales (i.e. pull everyone back into the crab bucket so nobody gets an "unfair" advantage).

Schelling point. Learn it.

I think the current “consensus” on the SegWit fork off from Satoshi’s Real Bitcoin is a Trojan horse to enable a scheme and will not hold up.


Excerpted from the (not yet published) 2016 rough draft of my Bitnet consensus algorithm white paper:

5.5.3 The One Chain That Rules Them All

The more plausible PoW security issue is that in a pragmatic sense really only “the one chain that rules them all”[^kinghash] [^difficulty] has an asymptotic probability of 1 for transaction finality.

The vulnerability is even more plausible for “ASIC-resistant” PoW designed for general use computers, because of the very low hashrate as a portion of total computational capital.

[^kinghash]: Paul Sztorc. One Chain to Rule Them All. Truthcoin.info blog, §Only Bitcoin’s Hashrate Stands a Chance, Mar 7, 2016.

[^difficulty]: Mircea Popescu. The woes of Altcoin, or why there is no such thing as “cryptocurrencies”. Trilema.com blog, Aug 16, 2014.

UPDATE: Given the hashrate signaling for SegWit is at 76% and climbing fast, it appears unlikely that a contentious fork will occur on August 1.

I am not running a Real Bitcoin Foundation (aka TRB) full node, so I do not know if that legacy Bitcoin chain has forked off already, but I doubt it because afaik signaling on the nVersion field of the block header is not incompatible with the legacy Bitcoin transactions. EDIT: TRB will accept SegWit blocks but SegWit transactions are spendable by anyone! I sourced that link on Trilema. I verified that Satoshi’s Bitcoin indeed enables anyone to spend P2SH.

BTC spent with a SegWit transaction will be stolen by the first miner who can put a spend transaction in a block of the TRB (legacy Bitcoin) chain.


It appears that any HF will only begin once there are recognizable SegWit transactions in a block, which the Real Bitcoin will refuse to mine on. Note I read that the format of a SegWit transaction is such that it can’t be detected until it is spent.

So it appears to me we will get a significant rise in the BTC price after August 1 (perhaps to $4000+?) which will be pushed by the enthusiasm about the hashrate support for SegWit and perhaps also people selling BCC to buy BTC creating more buying demand.

And then August 23 or so, I expect the SegWit chain to fork off from the minority hashrate Real Bitcoin one, and Bitcoin kingpin Mircea Popescu will begin selling the SegWit BTC and buying the Real BTC gradually driving the price of the former down and the latter up and then the hashrate will gradually switch over as well. Charlie Shrem (@charlieshrem) is mocking Mircea Popescu’s statement, “As far as anyone will be able to perceive, miners simply left”.

Afaik, to spend your BTC on the SegWit fork so that it can not be replayed on the legacy Bitcoin will require either mixing with some transactions from blocks that derived from a block containing a SegWit transaction, but (this probably does not scale well and) these can not begin until August 23. Before then, the other way is to attempt to double-spend to yourself on the SegWit fork and legacy Bitcoin over and over until it happens. You’ll need to import your private keys into separate wallets for each fork.

Note we might see altcoins initially dropped as BTC is rising, then the altcoins may catch up. As the HF chaos hits August 23 or so, we might see LTC skyrocket as the community realizes SegWit is dead on Bitcoin and Litecoin already has SegWit. Especially if BCC is defeated so that Jihan Wu (Bitmain) only has Litecoin remaining as their main scaling solution altcoin.

But we might see a collapse in all crypto perhaps after moving up to a peak before everyone realizes SegWit is fucked. Another crypto winter may be upon us after this blow off top ends with theft of the SegWit transactions.

EDIT:

What's your time frame for that?

Difficult to say how long after Aug 23 it will take for there to be enough SegWit transactions to steal, so that miners break away from SegWit chain and mine on real bitcoin chain.

·

Afaics, it has been technically plausible to double-spend on the Core fork since the implementation of BIP65 in 2015, because OP_CLTV is a NOP2 on The Real Bitcoin fork.

Thus to double-spend on the Core fork, first broadcast a transaction containing OP_CLTV that can not be added to the Core fork until some distant time in the future and run a Real Bitcoin (TRB) full node to download the real blockchain and verify that your transaction was immediately added to the legacy blockchain. Then issue another transaction on the Core fork to double-spend.

However there is a risk if the transaction on TRB is later orphaned and your Core transaction is replayed on TRB chain then you can lose your BTC. So the safest would be either to exchange your TRB tokens for fiat or another token, or mix into your Core transaction some UTXO that derives from a SegWit transaction, so that it can’t be replayed on TRB because TRB doesn’t implement SegWit. Do not issue a SegWit transaction (as opposed to mixing in a UTXO that derives from a SegWit transaction) because your BTC could be stoken on TRB if you do. The problem with incorporating SegWit is that you have to do it before buyers are smart enough to realize that they do not receive TRB when the transaction has any SegWit history. And buyers may be wary of SegWit transactions any way because it is new.

However, the problem is that it is probable that no miner is still issuing blocks that enforce the protocol rules of The Real Bitcoin. The changes in the protocol have not yet incentivized a fork, thus although The Real Bitcoin does not reject OP_CLTV transactions, it also probably has no way to get them into a block earlier than the Core fork will.

There is no sense in mining your own Real Bitcoin block, because later when some significant hashrate decides to also do so (in order to spend all historic SegWit and derivative transactions to themselves), it is not like they will build on top of your block.

So the above technique can be used (to make double-spending more deterministic, i.e. you will not need to try over and over again) as soon as a significant amount of hashrate has started enforcing The Real Bitcoin protocol, which means it will not delay OP_CLTV transactions since they are a NOP2 in the legacy Satoshi Bitcoin.

I do believe The Real Bitcoin will ultimately be the fork that survives and prospers because SegWit writes (as explained more in my blog) a free futures option for legacy Satoshi Bitcoins (aka TRB) on all user funds that pass through any SegWit transactions such as Lightning Networks. Whales will choose (rally around the only Schelling point) to sell the fake Bitcoin that is not secure for many reasons, and buy The Real Bitcoin.

·

CharlieShrem Charlie Shrem tweeted @ 28 Jul 2017 - 15:46 UTC

When 5% of #bitcoin hashing power leaves to mine an altcoin, it's not a fork. It's them leaving. Bye

Disclaimer: I am just a bot trying to be helpful.

If the Bitcoin software doesn't fork that will always remain the original and only Bitcoin. If the is a Bitcoin software upgrade without consensus which causes a hard-fork I would consider the upgraded version the fake version. If the software cannot be upgraded without without a hard-fork it shouldn't be implemented... end of. All the these groups that are threatening to hard fork should do one and create their own shitcoin...

·

Those who want one of the clones could wait and buy it at a lower price. 😉

"Afaik, to spend your BTC on the SegWit fork so that it can not be replayed on the legacy Bitcoin will require either mixing with some transactions "

I was under the impression that after the Segwit soft fork, it would still be the Legacy chain. Am I mistaken? You are describing above that they would be two separate chains.

·

If miners decide they will not accept any blocks that have any SegWit transactions in them, then they fork off from SegWit. I had linked for you in past comments, Craig Wright’s threat to do that. Also I am positing that the Real Bitcoin Foundation will also be forking away from SegWit and keeping the legacy chain which did not have SegWit. Because SegWit changes the security model and changes how transactions are encoded.

Btw, it may be easier to just buy an altcoin that is on a dip and likely going higher such as LTC.

As if these endless strife did not destroy bitcoin: (

·

It only destroyed (or will destroy) those who believe Bitcoin should be anything other than the reserve currency of cryptocurrency.

Other cryptocurrencies can provide the medium-of-exchange function and BTC will continue to appreciate because it is the reserve currency of all that speculation (and hopefully bona fide medium-of-exchange) growth in altcoins.

Note that I had explained in detail that Bitcoin was designed such that it can’be modified to scale transaction volume (without an oligarchy but in that case the oligarchy would extract maximum fees any way). And Bitcoin can never support real-time transactions. In addition to the other criticisms made against SegWit by others, Lightning Networks must become dominated by Mt. Box nodes and thus it will become a fractional reserve system with loss of value analogous to centralized exchanges.

Mircea Popescu wrote:

For the reasons noted and for many other reasons I am pretty much satisfied that Bitcoin is not nor will it ever be a direct means of payment for retail anything. You may end up paying for a month's worth of coffee vouchers at your favourite coffee shop via Bitcoin (so shop scrip built on top of Bitcoin), you may end up settling your accounts monthly at the restaurant in Bitcoin (so store credit built on top of Bitcoin), you will probably cash into whatever local currency from Bitcoin (be it Unified Standard Dubaloos or Universally Simplified Dosidoes or whatever else) but all that is entirely different a story.

Although (for the reasons stated in the blog) this will not impact the outcome of which Bitcoin fork wins, the Al Capone kingpin of Bitcoin Mircea Popescu appears to have an error in his analysis above.

Specifically he does not consider the utility of fungibility between units of medium-of-exchange.

And I posit this is a critical error in his analysis because I think the Knowledge Age will prioritize the utility of real-time, globalized exchange that does not require the tsuris of non-fungible accounts littered all over the Internet for each special case.

And because as I wrote in my prior blog as quoted below and expounded in Hayek’s refutation of The Paradox of Saving, it is impossible to have only one standard-of-money such as only Bitcoin without our own existence being impossible:

an eternal fixed standard of value is impossible wherein only goldBitcoin would be the reserve unit-of-account upon which everything else is priced, because it would require the Universe to become dependently tethered/static (zero entropy) such that nothing could ever grow faster or slower than the supply of goldBitcoin without respectively losing or gaining absolute worth. Relativity would cease to exist: the past and future would become undifferentiated, the speed-of-light innumerable (unquantifiable), and life would not exist.

Every human has worth in terms of the resilience of the human race to unpredictable chaos. Mircea Popescu appears to me to be an elitist curmudgeon who fails to comprehend that top-down control over capital isn’t Antifragile. Has Mircea Popescu studied Nicholas Taleb’s work?

Larger things must grow slower and eventually stop growing and decay, just as saplings grow to oak trees but not to the moon. If the design of Bitcoin prevents that because the largest whales grow faster, then the faster growth of smaller things must occur outside of Bitcoin.