I Looked Into SegWit, and Here's What I Saw

in bitcoin •  5 months ago

In light of the upcoming Bitcoin fork, I finally decided to look into exactly what Segwit is, and form my opinions based on the technical and economic realities, rather than opinions and impressions I've found online. In this post, I will share what I learned.

Where I'm Coming From

But first, a little background about my history with crypto and my perspective on this debate. I first encountered Bitcoin reading an article which talked about it as a digital money, but didn't delve into the blockchain technology that powers it. I don't know when this was exactly, but I'll take a stab and say it was probably in 2011 or 2012. I got interested and mined a little with my GPU, and played around with it sending it between a couple wallets, but I didn't seriously look into the technology behind it.

Later, circa 2014, I encountered blockchain for the first time, and quickly recognized the power and potential of the technology. Blockchain represents a quantum leap in what is technically possible with software, and even at the beginning, I knew it would fundamentally change the world. This happened as I was finishing my master's degree in computer science, so I decided to pursue a profession in blockchain technology.

To understand my perspective on the Bitcoin fork, it is helpful to bear in mind that I have never been as passionate about Bitcoin as I am about blockchain, and while I love Bitcoin for what it is, I regard it as the prototype of blockchain, but not necessarily the end-all-be-all cryptocurrency.

If Bitcoin were a truck... Image Source (CC0)

From a technology standpoint, the Bitcoin chain is clumsy, unpredictable, and slow. To break into the blockchain space, I first worked on Bitshares, and we created a blockchain with reliably scheduled block production every five seconds (later upgraded to three seconds), capable of processing thousands of transactions per second, and requiring only one confirmation for reasonable certainty of transaction permanence under normal network conditions. Bitcoin, in contrast, produces blocks at random times, can process about seven transactions per second, and requires an unpredictable delay of a recommended six confirmations for transaction permanence. (To be fair, though, my off-the-cuff estimate is that two or three Bitcoin confirmations gives similar certainty as one Bitshares confirmation).

In my view, Bitcoin's redeeming quality is its network effect. A lot of people use it, and a lot of merchants accept it. When I say "Bitcoin" nowadays, a lot of people out there know what I'm talking about. I think we can do better than Bitcoin technologically, so for fancy features and high speed, I'd say to use a different chain. The best thing Bitcoin can do is keep working as smoothly as it's capable of, and stay simple and secure enough that just about everyone can understand and rely on it.

What's Broken in Bitcoin

Now that I've shared a little about my history in blockchains, let's talk about what the problems are with Bitcoin. The main issue is quite simply that Bitcoin's popularity is rising, and seven transactions per second simply isn't enough anymore. Some secondary issues are noncritical bugs in Bitcoin, like transaction malleability, that have already been worked around in wallets, but we'd like to solve them once and for all so wallet makers don't have to worry about them anymore.

The seven transaction limit is really due to Bitcoin's 1MB block size limit. If we get a new block (on average) every 10 minutes, that means there's 1MB = 1024*1024 = 1048576 bytes of space for transactions, which is room for around 4200 small transactions (maybe 250 bytes each), which, divided by 10 minutes = 600 seconds, gives 4200/600 = 7 transactions per second. Obviously, if Bitcoin is to scale to be a mainstream, worldwide cryptocurrency, 7 TPS is simply not enough.

Strategies for Fixing Bitcoin

As far as I am aware, the secondary issues in Bitcoin (i.e. transaction malleability) are simple and straightforward to fix, and I haven't heard of much controversy around these. The big debate is over how to increase the transaction capacity of the chain. I know of two main approaches for doing this: Segregated Witness (Segwit), and simply raising the 1MB block size limit. I will now explore each of these strategies in more detail.

What is Segwit?

Segwit is a relatively simple concept, but a massively complex technical change with an untold morass of technical, economic, and political implications. To understand segwit, we must first understand the structure of a simple Bitcoin transaction.

Every Bitcoin transaction contains inputs and outputs. The inputs specify which existing bitcoins should be moved, and the outputs specify where they should be moved to. The sum of the bitcoin in the outputs must not exceed the sum of the bitcoin in the inputs (otherwise, the transaction would be spending more bitcoin than it has!), and if the outputs add up to less than the inputs, the leftover is a fee to the miner for processing the transaction. Every output has data attached to it that specifies the rules for claiming and spending its bitcoins, and every input has data attached to it which proves that it follows the rules for the output it claims.

Segwit names these attached pieces of data "Witness Data," and asserts that this data is not important for determining how many bitcoins belong to each address, but only for determining whether a transaction is authorized to claim certain bitcoins or not. Segwit creates a new storage space in Bitcoin's blocks, which is not subject to the 1MB size limit (but instead has its own 0.7MB limit) and moves the Witness Data to this new storage space. This frees up some room in the 1MB space for more transactions, which can store their Witness Data in the new storage space.

In practice, this should increase the blockchain's transaction capacity, but by how much is a complicated topic, due to segwit's new "data weight" requirements and fee structures. I won't get into this, but many argue that it is naively optimistic to assume segwit will yield a significant transaction capacity increase at all, especially in the short term.

What about Just Raising the Limit?

Raising the block size limit is a trivial change to the Bitcoin code, it's been done before, and its only real effect is to increase the rate at which the blockchain history grows, because it's processing more transactions in the same amount of time. The complaint against raising this limit is that if the chain history grows too fast, it may price out some users from running Bitcoin nodes because they can't afford the disk space to store this history, and full Bitcoin nodes must keep the entire blockchain history.

The main questions to be answered when adjusting Bitcoin's max block size limit are (1) what to set the limit to, or (2) how to calculate the limit. In the case of (1), we just change the number from 1MB to something else, and the question is what. Larger numbers mean more transactions, which means more people can use it, but at the cost of a faster-growing history. Bitcoin Cash proposes to set this limit to 8MB and remove segwit. Note that with 8MB blocks, we wouldn't necessarily see blocks this big immediately as (a), there might not be enough transactions to use that space, and (b), miners could easily and safely set lower limits for their own blocks if they felt 8MB is too high for now.

In the case of (2), we abandon the notion of a single max block size limit for everyone, and come up with some new plan for setting it. Bitcoin Unlimited proposes to let each miner decide this limit for himself in his own blocks, and take the risk that if he sets his limit too high, other miners may reject his block for being too big, but if he sets his limit too low, he gives up the fees from the transactions that wouldn't fit in his block.

Other Concerns and Controversy

I mentioned earlier that Segwit has a lot of technical, economic, and political implications around it. I will now elucidate on some of these concerns. I note that the proposals to raise the block size limit have little or no implications other than the fact that processing more transactions requires more storage space and network bandwidth (although I have heard this increase in bandwidth could cause trouble for nodes/miners behind the Great Firewall of China, I have not researched this and do not know if it's true).

One of the most troubling aspects of segwit is the fact that, from its inception, it has been promoted primarily by use of censorship, deception, bullying, inciting fear and divisions, and other such chicanery that has absolutely no place in an open source project. I emphasize that this is not mere conjecture -- the use of censorship on the main Bitcoin discussion channels such as the /r/Bitcoin subreddit and bitcointalk.org to suppress all discussion of problems or disadvantages of segwit is well documented [1, 2], while these same discussion channels allow overt bullying of any users who question segwit.

Segwit proponents have repeatedly used divide-and-conquer strategies to attempt to play one demographic of Bitcoin users (i.e. users, miners, exchanges, merchants...) against another, attempting to scare both sides into embracing segwit as a security blanket. For example, segwit is frequently pushed by people making wild and unfounded conjectures about retroactive forks and replay attacks stealing users' money, and advising users to contact merchants to demand segwit support to avoid this possibility. Cooler heads will note that people will usually see any significant chain reorganization coming, and any serious attempt to fork the chain will include replay attack preventions (i.e., Bitcoin Cash).

Even without knowing anything about segwit, I can say with certainty that no good idea is ever promoted using censorship or divide-and-conquer strategies. Good ideas promote themselves, and all effort can simply be spent helping people understand them. There is little documentation which thoroughly describes segwit, even though it is a massive and complex technical change that completely rewrites the way bitcoin blocks and transactions are constructed and validated. The bulk of information available about segwit promotes it based on predicted benefits, and when it comes to the justification for these predictions, typically cites some vague hand-wavey excuse about it being complicated, but the experts have figured it out. Criticisms and discussion of the implications of segwit are extremely difficult to find, which I can only assume is due to censorship, since when I did find them, they were grave issues which are not adequately answered.

One obvious issue with segwit is the question as to whether it actually solves any problems we have. Sure, it fixes transaction malleability, but that's easy anyways, and it's not an issue that's seriously bothering anyone right now. The issues that are bothering people are high fees and long confirmation times, and no one can provide a simple, clear argument that segwit will reduce fees or confirmation times, because segwit makes the transaction capacity of blocks complex and variable, and the best anyone can say is that segwit will probably increase capacity a little bit, eventually, assuming everyone starts using segwit transactions.

Another issue is that segwit messes around with the fees, creating different transaction classes with different fee levels, which will have unknown economic consequences. I would say this is still being debated, but all the debate is censored. There are some who think the fees are set up the way they are to subsidize Lightning Networks, which probably will solve the scaling issues, but not without trade-offs of their own, and Lightning Networks really have nothing to do with segwit anyways. LN could be implemented without it, and although some small modifications would still be needed, it wouldn't be anything as massive or complex as segwit.

But one of the biggest issues I have with segwit is the way it's implemented. Segwit starts off by assuming that hard-forking Bitcoin is impossible. The claim is just that it's "too hard" or "impractical," but these claims aren't generally backed up. Segwit therefore bends over backwards to implement itself as a soft-fork, which means that old bitcoin wallets will still work, but won't understand the new features. But the astute reader will recall that segwit fundamentally alters the structure of blocks and transactions -- so how can this possibly be done as a soft-fork?

The answer is that segwit uses what is, in my professional opinion, an unthinkably nasty hack: according to the Bitcoin protocol, all segwit transactions can be spent by anybody with no proof of authorization. That means that literally anyone can make a transaction that spends the bitcoins in a segwit address. The "witness data" (which is the rules for who's allowed to claim the outputs, and the proof that the rules were followed on the inputs that claim the outputs) is moved out of the main block and replaced with a simple "anyone can spend me, there are no rules and no proofs," and it's up to miners to know what the rules really are, ignore the "anyone can spend me" instruction, and instead apply the rules from the witness data.

There are two major implications to this hack. The first is that segwit is a one-way ticket: once it starts, it can never be removed because to remove the (insanely complicated) segwit rules that say "Ignore what the transaction says and look at the witness data instead" would leave only the "anyone can spend me without any authorization" rule on all segwit balances. Thus anyone could steal all the coins in segwit balances. To remove segwit, it would either be necessary to keep the (insanely complicated) rules in play, but disallow new transactions to use them, or convince all Bitcoin users to first move their bitcoins to a non-segwit balance. The first isn't really removing segwit, since its rules would still be in use, and the second is simply not going to happen since segwit proponents will lie and censor (just like they're doing now to promote segwit) to scare people away from leaving it behind.

The second implication is even more chilling: for the first time, the Bitcoin protocol will have official support for theft of bitcoins. See, the formal rules of bitcoin will be "anyone can spend these coins without authorization," but the segwit rules will say otherwise. This means that anyone who can get a majority of miners to agree to look the other way (i.e. ignore the segwit rules) can send a transaction that spends those bitcoins without authorization, and it will be valid by protocol. At present, if the majority of miners attempted to do this, their blocks would be invalid (and ignored by the network) because they violate the Bitcoin protocol, but with segwit, the Bitcoin protocol will only understand "anyone can spend these coins" so as long as the miners agree to ignore the segwit rules, the transaction will pass checks. Obviously this means that the miners could collude to steal everyone's segwit balances, but more likely, a government could force mining organizations to allow their transactions to steal bitcoins, reverse transactions, or whatever else. Whereas previously this meddling would've been extremely noisy, causing a hard fork (which would have likely been ignored). With segwit, however, theft by miner collusion is a first class feature.

Taking a Step Back

Now I'd like to set aside all of the details above, and simply ask: what is good about Bitcoin? In my view, the best things about Bitcoin are its simplicity, it's security, and it's mind share. Bitcoin is the first blockchain, and it's probably the simplest as well. This elegant simplicity makes it easy to understand, which in turn makes it easy to trust. It's also the best known and most widely used cryptocurrency in existence.

Segregated witness is systematically destroying everything good and worthwhile about Bitcoin: segwit is inelegant and complicated; it creates two parallel sets of rules for evaluating transactions, but ignores one of them. Segwit breaks Bitcoin's security by empowering miners and anyone who can coerce them to steal balances. And segwit is breaking the Bitcoin ecosystem up, causing people to fork the blockchain just to avoid using it, and destroying the mind share, confidence, and name recognition in Bitcoin.


With a background in software development and a passion for security, Nathan has identified blockchain technology as his niche. He is dedicated to creating applications which empower individuals to shape a better world for themselves and others.
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Excellent post, very well articulated. I concluded Bitcoin is going to require years if not decades of forking and drama to scale to something that is viable as a global financial instrument. I'm watching that Graphene Bitcoin fork with great interest (BTCX) because if successful it will take Bitcoin to 3s tx and 10,000-100,000 tps right away. And no more miner drama. Hope it works out!

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Wait there is a Graphene bitcoin fork??! so it will be like Bitshares Steemit and EOS bitcoin? and good hob getting $17 on your single comment! man @modprobe logs in after liek a week, makes $400 and is good for the month hahaha man he is gonna be motivated to post everyday now i bet! This will only continue if we keep bringing in more users we REALy need $10 steem

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Yes, there is a Graphene bitcoin fork called BTCX. Snap shot is Aug 1 and you get one BTCX for each BTC in your wallet. You create a Bitshares wallet, import your wallet key and get BTCX. Super easy to trade on the DEX. The best thing is BTCX doesn't use those ridiculous Bitcoin addresses anymore, you can send Bitcoin just like Steem or Bitshares to an account name

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this feels risky.. you really mean importing my BTC (and now BTC Cash) wallet key into bitshares? That's handing over the only thing that is making the funds my own

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This btcx seems a good fix. what's the probability of successful implementation?

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I know this sounds subjective to my own experience and naiive because its brand new, but The fact thet this is the frst time of me hearing this is proof we need marketing and ads for this! WAIt and u can just send BTCx with a username like Steem? (And i didnt know bithares let u use a username too) man ....dude...WOAH WHY ARENT WE fuckin PAYING FOR ADS an stuff

My god, so now we have our own bitcoin fork, What can we do with this?

And just having the ability to send bitcoin using a username and noty a crazy address is enough to sell ALOT of peopl!
so its noty ready yet or is iut mined? first blocked of BTCX ben mind yet?

bittrex or any exchanges support it or just openledger?

does openledger .iohave EOS yet?
and wow thank you evryone for the $5 comment!

So can we now have this Bitcoin fork inside the stemit.com walet page as a bitcoin wallet? or hmm that wont really be useful since its not regular bitcoin, hmm so its just like we hav our own Altcoin but it gtsto b caled Bitcoin stil

wow so This will open up SO many new possibilities that I cant even think of yet bcause I am not educated on this subject enough or I am just not thinking right...i just never think abouit blockchains as much as i should...I guess the first thing tht comes to midn when realizing e have our own hard fork is transaction sopeeds and lower costs? well first i want to ask
what makes this a graphene hard fork for bitcoin?

What about BTCX is 'Graphene" ? Anyone know how to xplain that? or wouldit require expmaiajning How Graphne works as its own programing language?

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and good job too for getting $6 commenting on a comment sir, BTCX sounds dope. )

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Please, what does BTCX stand for? I'd appreciate knowing - a bit more elaboration will be welcome.

It seems it has something to do with Graphene ?

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BitcoinX. It's a fork of Bitcoin that moves it from the POW mining chain to the DPOS Graphene chain. So BitcoinX works just like Steem or Bitshares, 3s transfers, 10,000-100,000 transactions per second, send bitcoin to accounts instead of hash addresses etc. BTCX basically fixes everything that is wrong with BTC all at once, no more forking/miner/developer drama. All the scaling is done, fast tx are done.

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had been looking for more information about BTCX but couldn´t find, do you have a link or somewhere we can review?

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great! thanks!!

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Totally agree with you. I was thinking to buy more bitcoin in huge amount and have stopped because i think there is too much fear in the space. Il rather buy etherium and then invest all my money into steem .

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ethereum, really, the most unsecure blockchain in existence?

Ethereum is an unsecure, trust-requiring, centralized, mutable platform that runs stoppable apps and censors people ethereum foundation dislikes

Seriously? This one?
Scroll below to see security issues, scalability issues, network attacks on others, and other scams done by ethereum.

https://www.reddit.com/r/ethereumfraud/comments/6bgvqv/faq_what_exactly_is_the_fraud_in_ethereum/

There are zero intelligent people in ethereum.

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Thanks for the information bud .. what do you suggest ?

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I lost my confidence in ETH. Some standards need to be establish to increase confidence.

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their standards are anything for tha dolla

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I would not recommend buying ethereum unless you are planning on investing that in an ICO. Because most of these ICOs raise their funds in ETH and they will have to liquidaten substantial amounts of ethers at some point, which will be reflected in the price. Litecoin, Dash and Ripple have a very bright future imo.

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I want to buy steem and convert it into steem power. So in order to buy steem you need to have other currency to invest into it.

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Ripple is too centralized. Litecoin already bit the bullet with Segwit. The anonymous crypts will be attacked by the authorities at some point - it's just a matter of when, not if. I would say Bitcoin and Eth have a good shot over the long haul.

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thanks @techwizardry for your advice :)

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lol ripple is "too" centralized ? Its like being almost pregnant youre either centralized or youre decentralized lol and riple was meant to be centreliazed from the start thats why they have steller the decentralized version to kind of kepo ripple hponst, but ripple is meant for banks which si why they will want it! so ripple is going to eventually be very valuable when stupid banks just choose it and rippl will be "Ok that was fun down hre guys bt im off to the moon with the big to big to fail banks! " and ripple will just bcome an institution just watch

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good advice, and also eos seems on track...

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I haven't done much research on EOS yet, but it does sound interesting.

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EOS has big potential!

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This has been my thought on ETH. I bought way too much of it and the more I look into it. I wish I had spent it on LTC or even BTC.

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Who am I? I'm a Brazilian who follows smart peoples' advices and have done well following TEEKA's advice...he says:
"We’ve talked a lot about the volatility in the cryptocurrency space. The last few weeks for ether is a great example.

In that short time, we’ve traded over $400 and below $150.

That’s why I always preach rational position sizes and using the volatility to your advantage.

One way to take advantage of the volatility is to buy on the Gemini Exchange. Unlike Coinbase, you can place bids on Gemini to take advantage of volatility.

We still see a bright future for Ethereum. It continues to be the leader in the ICO space. Plus, Vitalik Buterin just released Plasma, his working paper for scaling Ethereum.

Action to Take: Buy ether (ETH) up to $400.

Keep your ETHs !!!!!!!!!

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By the way...OMG will sky rocket as well.. buy up to 6$...today its about 8$ish. Don't chase it for now..as always, use the volatility of cryptos to you favor 😃

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Absolutely I am staying away from ETH. Litecoin for all purchases and DASH to hold.

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Can never go wrong with LTC!

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Agree, DASH is great! The more I read and learn about DASH the more I understand how great it is...

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With all due respect, how do you feel about that decision now? lol

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I agree completely. Need a good balance, one half value store, one half currency. Like your savings account vs chequing. Question is? Who will be Bitcoin's little buddy?

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Thumbs Up

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Litecoin may take the lead wile btc dwindles. The current road everything's on it looks like it is already.

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I already use Litecoin for all my trades and purchases. I noticed a lot more pairs are now made between LTH/ other coins

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Impressive, I am a kind of newbie in blockchain world. I came to know about it nearby in the middle of 2016. I find bitcoin much expensive and risky, so I put all of my faith in steem. May be I am wrong. What you think?

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Buy DASH

Very nice work, @modprobe. Your article cleared some things up for me. Shared - and I'd like to recommend another interesting point of view on SegWit from the Swedish Pirate Party guy, Rick Falkvinge Blockstream having patents in Segwit makes all the weird pieces of the last three years fall perfectly into place
Edit: How could I spell the guy's name wrong? :/

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Good link, thank you. I have a lot of respect for @falkvinge's writing.

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Yes! I just found that article and was about to post a link to it here as well. You beat me to it, so thank you sir. :)

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He has an account @falkvinge .. I invited him here. Last I heard from him he was busy moving to Berlin.

As much as I appreciate Bitcoin as a prototype and proof of concept to get things started, I'm increasingly hoping to see it die, or at least lose prominence. It's become so slow and expensive that it's a horrible introduction to newcomers, and its community has made clear that they're unable to come to sufficient consensus to upgrade it cleanly with enough improvement to make it tenable for widespread adoption. It was a great and necessary step, but it's just in the way now.

Here is another good post I found helpful: https://steemit.com/bitcoin/@ancap47/govt-sponsored-segwit-is-doa-dead-on-arrival-here-s-why

This makes perfect sense to me. Under Segwit's small blocks would continue to push fees higher on the free-for-all unregulated bitcoin main chain. This could go high enough to in affect shut it down. Side chains could be the only viable alternative. Good thing there are free markets and choices, we can be informed and not used bad technology even if there are short-term incentives. Lets see how this turns out.

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Good share!
I featured this post in one of my ~(~Q2C2~)~ episodes recently. Very good, a different take than this one owith a lot of important points, though I think this one by @modprope may be even better.

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I'm only here to see if I can get the vaguest understanding of this whole issue of crypto. I heard this was a good post to read and now my head hurts but I'm glad I did it. I'm stopping here because it looks bad and I have no idea even of the words being used to describe the badness. So over my head!!

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Whoever told you this was a good place to start gave you very bad advice. This is a very complex, nuanced issue the experts from around the world who actually build the code we're discussing have not been able to agree on for years in a space that isn't even that many years old. If you're looking for a simple place to start, I'm working on some short videos at understandingblockchainfreedom.com which may help.

Good luck. Don't let these conversations spook you too much. There's incredibly opportunity for human freedom here.

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Thank you for that advice! I have actually been ignoring the money side of this and the crypto blockchain info in the 6 weeks I've been on steemit. I just wanted to get in on the Alexa ranking for my content. But holy cow! So much complexity in so many areas.

I will take a look at your link and bookmark it for when I'm ready to dive in. And this whole post in now forgotten! Thank you again.

Terrific post. Thank you for explaining it so clearly in a way that average people can understand.

Strong post and honestly challenged my views but that's what it's all about. Up-voted.

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Agreed!

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Hey, I'm really glad to hear that. That means I'm succeeding. :) Will you elaborate? I'd like to hear more. Do you support segwit?

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This post seems VERY successful to me. It very clearly points out fundamentals that prove the point rather than trying to find reasons to justify a point.

To me the most concerning information was not the technical aspects of how segwit is really not going to improve the problems or that it may even be more susceptible to theft. It is the facts about all the censorship and violent tactics used to push an agenda.....
This is very concerning and also the most dangerous part in my mind.

Wow, thank you for the sincerely insightful look at Segwit!

As a developer who has just recently began making in-roads to the blockchain space I honestly couldn't wrap my head around why there was so much support for Segwit - given how overtly complex it is and how there's very little chance it'll really improve Bitcoin's scaling issues.

Furthermore, as you mentioned, there seems to have been a weird aversion to forking instilled in the Bitcoin community - which doesn't make sense considering forking is a fundamental aspect of any open-source project.

My question to you would be, do you see the Bitcoin Cash hard fork as a positive sign of the Bitcoin protocol's resilience - or a dilution of its already waning influence?

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Great question. I think the BCC fork is a sound technical idea -- and more importantly, it pushes the conversation forward and represents a clear declaration that a meaningful contingent is still awake, alert, and opposed to segwit. I think it's a great positive move. Personally, I would be quite happy to see BCC go big and segwit coin die in ignominy. But those aren't the only two options, of course.

Ultimately, though, I'd like to see the crypto world continue transitioning away from Bitcoin altogether. I don't think BTC needs to die, but I would like to see more powerful chains start getting accepted for everyday transactions. Transactions are fully irreversible within a minute on Steem, but on Bitcoin they are seldom even confirmed, much less irreversible, within a minute. Same with Bitshares. And, when it's launched, the same will be true of Eos.

Bitcoin is nice for its simple security, and as long as it has mind share, I'll probably hold it, but I'd like to move to something much faster and cheaper for everyday stuff, and more secure for long-term holdings.

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I see your point and I agree, but unfortunetly Bitcoin is the main cryptocurrency representative and if anything happened to BTC the whole market will suffer. BTC will most probably remain the most valued crypto and will only be used as a unit of storage of wealth. However, I am excited about the fork, and I am optimistic with regards to the new Bitcoin Cash, I believe it will gain ground and quickly, but I doubt it will overtake BTC. We'll see

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I definitely agree that BCC has the potential to be a viable competitor to BTC, given that it appears to address scaling better and avoid the complications of Segwit.

But as you mentioned, I think the most important benefit is that it illustrates to the Bitcoin community that hard forks are a viable means to move the project forward if there is enough dissatisfaction with the incumbent leadership.

And ultimately, time will show us which chain offers the better solution.

And I genuinely agree with your last statement about cryptocurrency moving beyond Bitcoin. With all due credit to Bitcoin's role as a truly revolutionary invention - I think it's protocol has had an incredibly hard time keeping pace with all the developments in the blockchain /crypto world.

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Bitcoin is nice for its simple security, and as long as it has mind share, I'll probably hold it, but I'd like to move to something much faster and cheaper for everyday stuff, and more secure for long-term holdings. <------ any suggestions ?

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I must say my head is swimming with all talk of SegWit being the way to go! it does not help that my favourite coin (Litecoin ) has implemented it okay and I have not noticed any issues from a user's perspective. It always good to hear an objective view clarifying the "spin" There are just too many hidden agenda on what views are presented to the public.

Very informative article, I just find it hard to believe that a new coin bitcoin cash will be created out off fresh air and could be worth hundreds of dollars it just seems wrong, cheers mike

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Maybe all the value will go to this new coin, and the 'Classic Bitcoin' will die, who knows ?

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It will not because the seqwit guys control the media and have unlimited cash* to push segwit.

*guess which are behind segwit

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I personally think everyone who receives bitcoin cash will probably just dump it? Thanks for your reply cheers mike

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If you look at the history of ETH and ETC, if you didn't dump immediately you would have been in a large profit.

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Fair enough, cheers mate

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That's the sentiment of a lot of critics of this BCC i personally will dump mine

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You could put the money in to something you prefer to hold

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If you understand it fully, it makes perfect sense. It all depends on how many miners switch over to BCC. The difficulty will adjust accordingly. The % of miners that switch will be a good deciding factor in price. Keep an eye on that.

You have to remember that it's just a fork of Bitcoin, and Bitcoins are extremely valuable and hard to aquire with the Block reward only being 12.5. So, they are starting at a point when Bitcoins are already extremely hard to aquire and most have already been mined. The price will eventually settle but only after the mining war has finished.

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@spiftheninja a very wise reply indeed, one of which I acknowledge and give you a follow for.
Cheers~*~

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Thank you for a very good reply , cheers mike

wow! This post has blown my mind, literally lol I have only just begun learning about cryptocurrencies and I am finding it hard to understand what is happening right now with bitcoin, but your article has helped me a little more. thsnk you! 😊

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What's happening in a nutshell is that the kleptocrats, those weary giants of flesh and steel, are beginning to realize that we've innovated around them, and they're fighting back the way they have fought for millennia: with deception, subversion, and fear. I've suspected segwit as being a trojan for a long time, but it wasn't until a few days ago I really looked into it and found out that I was right.

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That's encouraging .

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Why do you think Litecoin got Segwit? The same game as with Bitcoin?

I haven't looked in before what this Segwit is or means. This helps me understand about it but it's a very complex thing and it's really hard to process the information. Will be interesting to see what will happen after August 1st and how will it affect bitcoin overall. It's truly the simplest blockchain and one of the easiest to understand compared to all the other more complex blockchains.

Thanks for posting. That was literally the most detailed, but also simplest description of the cons of segwit that I have seen anywhere. I didn't realize that the changes would be irreversible in the way you describe. It's a shame things are playing out this way with all the deception and underhandedness.

All the best.

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My sentiments as well~
Well said!

Thank you for open my eyes on SegWit @modprobe. A lot of people have much to say about it, but now, I understand it better. Why did some sites say that the fork on August 1st is avoided? I reestem your post (more people need to know) Thanks for posting.

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I don't know... I don't doubt that there will be a fork, but how it plays out is beyond my powers of prediction right now.

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Ok, thanks for your time.

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Trezor announced support for Bitcoin Cash.

I will preface this by saying that Bitcoin is an amazing technological advancement and I hope that any improvements made to it are successful.

There are so many products currently being developed in the blockchain space that really have nothing to do with Bitcoin. They're being built on Ethereum, and quite possibly EOS if it's successful. Bitcoin may continue to be popular outside of the corporate world and general public use, but I don't believe that it will have large mainstream support in the future.

This is just my 2 cents, don't hate me!

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In other words, Bitcoin == myspace of crypto if blockstream continues on their current path.

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Absolutely.

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That's precisely why posts like this have been made. To educate and inform the community. If everyone just follows along and listens to Coinbase and Blockstream, we're not very well off are we ?

But, if everyone takes the time to learn about the dangers and truth behind Segwit; not to mention how simple the true fix actually is-- we as a community will build a stronger foundation for which Crypto-Currencies in general rest.

We must protect the open source nature of bitcoin and prevent intrusions and attempts to stifle progress.

BCC 4 LYFE

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Bitcoin has the most development and developers actually, no matter what eth shills say. Nobody intelligent works on ethereum. Almost no expert in crypto space supports it. BTC was given out fairy from 0 via PoW. Eth was 70% premined and sold for profit for centralized funding. Then eth was proven to be centralized (which makes it 100% unsecure) and everyone intelligent who supported it left for other options. https://www.reddit.com/r/ethereumfraud

There is almost no project worse than ethereum in this space. Eth is closer to onecoin than to any real crypto like bitcoin.

His concerns are realistic, but they are minor compared to complete centralization, huge attack surface, requirement to trust ethereum foundation not to take your money and let you use the platform. It's really pointless to even bring up eth in conversation about crypto, it doesn't belong in it.

Thanks for the long and clear explanation

awesome post !!! very informative

Excellent work! Thanks for explaining it this way. I was all for segwit but now I'm leaning the other way.
My understanding of Bitcoin was that it was created in response to the current (corrupt) fiat financial system and it is disheartening to see that Bitcoin seems to be going the same way. I guess it is in human nature to take something pure and destroy it.

Upvoted and followed

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I think segwit is the corrupt fiat financial system's way of trying to subvert and destroy or neutralize Bitcoin. After all, who came up with segwit? Blockstream. Who owns blockstream? The banks.

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Wow it makes total sense. This post and also the comments, especially by you are really quite paradigm shifting. Yet i sense they are right on, quite accurate and cutting edge.
I am very very grateful for the insight here~*~

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I think segwit is being used by the banks as well.

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Agree 100% . They will try to buy it first, then destroy it. However the only mechanism that is not letting banks achieving their goals, is pure greed of holders, who think bitcoin is going to be worth 500k etc, Thus not selling. Bitcoin is not Kennedy!!!

Thank you for taking the time to research and write this up. There is so much false information being spread by Blockstream it's hard to find facts.

Bang on the money imo, those with skin in the game should be able to move us in the right direction, but markets can stay irrational longer than we can stay solvent :s

@modprobe Thank you for all the effort you put into this post, especially for cryptocurrency noobs, like me. I am alarmed at what appears to be bad apples in the system who are for advertising and inviting governmental intrusion and even take-over. Monopolies do not like competing monopolies.

A few years ago, a group of folk was arrested after they issued their own currency warrants and sent them into the financial markets and collected on them. Now we see the SEC speaking on ICOs.

This was an absolutely fantastic read. I am not nearly as invested into cryptocurrencies as you are, and I only really learned about how blockchains function on a more technical level this past year from joining Steemit. There's been a lot of discussion among my more crypto-oriented friends holding BTC about the SegWit proposal, and I didn't really understand much about it. This is a succinct, clear analysis and it's done a great deal to clear up that confusion. Upvoted and resteemed. Thank you again for the informative analysis!

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Yes!

Great post..good work...resteemed

Thank you for your information and suggestions.
It's all very useful for me.
Because I was one of those in the bitcoin world today.
Your information is very helpful to me in taking the next steps.
May we all triumph with bitcoin.
Let's all friends join us.
So that we are both heading for glory.

I just started to get into this crypto world, what is your opinion about ETH and STEEM do you envision a great Future for this Cryptos? Good read, you explain things in an easy way.

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If I do my job right, ETH will fade into oblivion and Steem will migrate onto Eos. :P Any way you cut it though, the future is bright for crypto.

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WHAT???
Please elaborate for me about Steem migrating to EOS???
Please this is so intriguing.

Great article, you've highlighted many of the same objections pointed out by the /r/btc community. In fact, I jokingly call segwit transactions anyone_can_steal transactions.

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/r/btc was eventually where I got a lot of my information, but it took a while. Google seems much more fond of showing results from /r/bitcoin than /r/btc... Hmm...

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Jokes need to have at least some truth to them in order to be funny. Hopefully you'll soon see through the lies told by the ignoramuses on /r/btc. Segwit transactions are NOT spendable by anyone, that is just how nodes that haven't been upgraded SEE them because they haven't be updated to the new code!

BTC is the simplest, and Segwit is an ugly kludge for sure.. I think the newer x-coins may be a smarter long choice.. you are right - no one like bandaide solutions. Cheers for the great read :)

You write very well. I think this is the first explanation of Segwit I could begin to grasp. Thank you!

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I agree!

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Excellent! Thanks for your comment :)

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@modprobe Thank YOU for the article!

The candid truth lies within promoting steem and SBD as a currency and getting businesses to accept it on a large but gradual scale.

Criticisms and discussion of the implications of segwit are extremely difficult to find, which I can only assume is due to censorship, since when I did find them, they were grave issues which are not adequately answered.

On steem it is not possible to censor. Tell them to come over here to express their criticism, like you did ;)

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F yea!!!!!

It is interesting that both Bitcoin Cash (BCC) and Segwit has advantages and disadvantages. BCC will increase node space so that normal user cannot maintain a node due to disk space limitation but provides easier solution. On the other hand, SegWit provides short-time patch to scalability issue with complex rules. There are other several proposals, however, all these are interesting experiments other than politics. More information for willing technical readers- 1. Data Insertion in Bitcoin's Blockchain
2. Zero-Collateral Lotteries in Bitcoin and Ethereum

Resteemed, such well researched article is appreciated and saves lot of time in research.

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Personally, I think the claim that raising the block size will price out nodes is BS. Storage space is dirt cheap, and blockchain history is rarely needed. If it's really a concern, throw it on Amazon glacier and be done with it for what, 40 cents a month?

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@riseofth that's some complex articles, a bit to complex for me.

@modprobe I really enjoyed your article once more and the comment you just added.

Obviously this means that the miners could collude to steal everyone's segwit balances, but more likely, a government could force mining organizations to allow their transactions to steal bitcoins, reverse transactions, or whatever else. Whereas previously this meddling would've been extremely noisy, causing a hard fork (which would have likely been ignored). With segwit, however, theft by miner collusion is a first class feature.

Miners controlled from governments is the future we are facing.
The most powerful weapon we had for our freedom will be used for our slavery... Nice!

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Its "nice" that we get to realize it before its to late but its NOT "nice" that is happening. Its disgusting. Just another example of the diabolical super power that controls this planet.
I am thankful to be on the cutting edge though and to see so many such as your self and other Steemians figuring it out before its to late and coming up with NEW solutions!
The game goes on∞§∞

This is a great detailed article. There is a lot to learn from this. Very helpful information here.
You came with a bang! Been waiting for a post from you.

Thank you for opening our eyes. I feel like I just got out of a cave all of a sudden!

That's a nice rundown just hours before possible disaster. I like the reasonable and calm tone of this post, completely opposite what I'm feeling right now :P

Cheers!

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Wow...Good point....This is a VERY serious topic and one of which is cause for GREAT alarm, yet it is so calm and reasonable indeed.

Nice, good read and easy to understand. Thanks, now I get the possible problems inherent to SegWit. Some questions remain: Will it really fork? And which coin will become dominant? We will know soon...

Great job... very thorough explanation, I do listen to someone how has been in the scene for over 3 years. I just found you, subscribed!!

This is crazy! just about a week ago we thought we were in the clear by everyone signaling for bip91 and now we will have a hardfork. goes to show how fast things change in the crypto world. Thanks for the great post!

This is the most detailed explanation on Segwit I've seen thus far. One question though, does Segwit have a relation to the BTC fork?

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I wouldn't use the diagram from hilarski's post. Randy Hilarski just pushes segwit, he doesn't understand why the original bitcoin works, and didn't even know about Bitcoin Cash until a few days ago.

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How can you? Isn't it hard enough to understand Bitcoin alone, much less understand Segwit without bitcoin!?

So @modprone what you think what fork will do for BTC price?
Does it gonna be safer to use BTC in a future?

Great readable article here 👀👍

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Haha, I try not to speculate on price. If I don't make predictions, I'm not wrong so much :D But I'd like to see Bitcoin Cash get some traction. I think it's a good idea, as absurd as it may sound. It moves things in the right direction, and doesn't do anything complex enough to be seriously wrong.

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No it doesn't sound absurd at all. Everyone have their own opinion about many things. Just wanted to heard what you got. Keep it up @modprobe

Very useful and detailed explanation Nathan, thank you for your contributionism, cheers, Damir

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This post received a 2.3% upvote from @randowhale thanks to @gingyptian! For more information, click here!

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Congratulations! This post has been upvoted from the communal account, @minnowsupport, by gingyptian from the Minnow Support Project. It's a witness project run by aggroed, ausbitbank, teamsteem, theprophet0, and someguy123. The goal is to help Steemit grow by supporting Minnows and creating a social network. Please find us in the Peace, Abundance, and Liberty Network (PALnet) Discord Channel. It's a completely public and open space to all members of the Steemit community who voluntarily choose to be there.

If you like what we're doing please upvote this comment so we can continue to build the community account that's supporting all members.

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This comment has received a 23.71 % upvote from @lovejuice thanks to: @gingyptian. They have officially sprayed their dank amps all over your post rewards. GOOD TIMES! Vote for Aggroed!

great article @modprobe let's see what August 1st brings

thanx for the info
upvoted

well done tnx for sharing 👌👌

Excellent content. Thank you for this.

great article

Great post

Thanks:) nice info:)

Nice work! I'm still not sure what will happen, just keeping my BTC safe for now

Great post and good work

thanks.very informative

Thanks for the info
Great post
upvoted

excellent article. And place your bets!!!!

Great post thanks for the insight

0-conf transactions are instant and removing the temporary block cap means that Bitcoin can handle thousands of transactions per second which Bitcoin was capable of back in 2009.

terrific analysis. not a lot of people can understand this and explain like the way you did.

Very interesting Article. For me as a Crypto beginner it was a mind changer.
It gives a good base to build an own opinion on the topic, or dive deeper from there. Thanks for sharing.

Is there a maximum size on a block ? or could it theorethically be expanded to a gigabyte?

great article, nicely done @modprobe I am keeping in touch on your future blogs from now on

Wow! Just WOW!

This is one of the most valuable articles I have ever read here on Steemit!
Thank you for putting it together and also thank you for all your comments.

I found the comments in this post to be almost as valuable as the post it self and is one of the greatest potential benefits of a community like this.

Yet it is also something that seems to be rare these days. People ACTUALLY reading posts and ACTUALLY making important and valuable comments.

This post has it all for me.

Cheers!

@modprobe good article. upvoted and resteemed :D and followed

So what are the arguments FOR segwit anyway? If there aren't good ones out there.. is there at least a sexy conspiracy floating about? Hopefully involving lizard-jews mayans or something...

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GTS ... Andreas A has lots of videos touting the benefits of SegWit... efficiency, malleability fix, faster track innovations too numerous to mention. Bigblocks gives you a temp buzz with known and unknown possible vulnerabilities.... and you hit the wall and have to do it all over again. It's like dumb highway planners who always add more lanes thinking it will reduce traffic when in reality it spurs new growth and ever more traffic.

Incredible that you only have 1000 followers and yet you got $400 on this post and you barely post like once a week! I realize you have ALOt of whale followers! you joind last year! so youve been hrte a year and all the early followers you had ended up becoming whales and so youre reaping the windfall!
if i were you id be posting everyday!

Why arent you posting everyday mang?!?!?!

Best post I've seen on here describing the difference between the two forks.

Upvoted and Followed!

In reply to this:

(although I have heard this increase in bandwidth could cause trouble for nodes/miners behind the Great Firewall of China, I have not researched this and do not know if it's true).
... The Bitcoin Unlimited guys answered that question in an interview. Essentially, both Bitcoin Core and Bitcoin Unlimited run a protocol on the miner level to make block transmission efficient. So the full 1 MB block is never transmitted anyway.

Let's say a miner mines a block, the other nodes needing an update are only going to update for those transactions that they do not already have. This efficiency in the core code and alt-code sources, reduced bitcoin block transmission rates making the China firewall a non-issue for expanding the block size.

Here is a quote about Xthin: "Xthin fixed a longstanding inefficiency from Bitcoin Core where transactions were often received twice by each node. Nodes supporting Xthin can propagate blocks using fewer bytes and in less time than nodes that rely on standard block propagation."

https://medium.com/@peter_r/towards-massive-on-chain-scaling-presenting-our-block-propagation-results-with-xthin-da54e55dc0e4

And in spite of this, many were still using the blocksize China firewall restriction as an issue against scaling. Really, these discussions need to happen with people who know the code, once it gets a few layers removed into the community we just start hearing nonsense.

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The exact metrics on how efficient Xthin made block propagation:

"The main result is simple: on average, 42 kB are required to communicate a 1 MB block using Xthin, thereby cutting the bandwidth required for block propagation by a factor of 24 (1000 kB /42 kB)."

https://medium.com/@peter_r/towards-massive-on-chain-scaling-block-propagation-results-with-xthin-3512f3382276

Followed all in this thread upvoted and Resteemed, great post

Detailed article. Upvote you.