As you probably know, the Bitcoin network is scheduled to experience a hard fork on November 16 that will probably result in a permanent split of the Bitcoin network.
We have seen this before with Bitcoin Cash (BCH) and Bitcoin Gold (Although not yet available), but this hard fork will have an important difference with the previous two. The signitors of the New York Agreement (NYA) and the SegWit2x developers don't want to create a new altcoin, but intend to upgrade the current Bitcoin protocol. For this reason they are not going to implement replay protection.
What is replay protection?
After a Bitcoin split there are two seperate blockchains. If the SegWit2x fork will result in a split everyone who owned Bitcoin at the moment of the split will own the same amount of coins on both blockchains. If Bob sends 1 Bitcoin to Alice on the legacy chain, an attacker can copy that transaction onto the SegWit2x chain and cause Bob to send 1 Bitcoin2x on that chain as well. Replay protection prevents such an attack.
Which Bitcoin version will miners mine?
This is a very important question. At this moment about 82% of the current Bitcoin miners show their intention to mine the SegWit2x coin and the other 18% of the miners don't seem to support SegWit2x and will continue to mine the current version of Bitcoin. You can find the most recent percentages on coin.dance. So it looks like a large majority of the miners will stop mining Bitcoin Core (or Bitcoin Legacy or just Bitcoin) and switch to the SegWit2x blockchain. Period. Bitcoin Core is dead and SegWit2x will be the real Bitcoin. Really? Will 82% of the miners really switch to the SegWit2x blockchain after a split? They currently only flag an intention to mine SegWit2x.
Which coin would you mine of you were a Bitcoin miner?
In the end Bitcoin miners are mining for just one reason: profit. Mining cryptocurrencies takes a lot of energy and is therefore very costly. Each miner has to pay his energy bills and eventually they just wants to earn money. It's as simple as that. A miner can choose to mine a certain cryptocurrency to support that blockchain for a while, but if the coin he is mining isn't worth much he will eventually switch to another coin.
According to SegWit2x futures on Coinmarketcap.com the B2X coin will be worth about 21% of BTC. If this will be the actual price of B2X after the split it is very unlikely 82% of the Bitcoin miners will continue to mine B2X. It will be very unprofitable while mining BTC will be much more profitable due to the drop in hashrate on the BTC chain. If I were a Bitcoin miner I would, without a doubt, switch to the most profitable coin which will surely be BTC.
The Bitcoin miners may act as if they are in control of the system, but it is the market that sets the price for a coin due to supply and demand. Most Bitcoin exchanges, such as CoinBase, have stated they will continue to list Bitcoin as BTC and will list the new SegWit2x coin as B2X. Moreover, it's hard to find Bitcoin users who support the SegWit2x hard fork. When everone start selling their B2X coins for more BTC the B2X coin has definitely lost the game.
B2X will be an unusable cryptocurrency due to the lack of replay protection. No one dares to use the coin for fear of losing real Bitcoin (BTC). It will first lose its value, then its miner support and will eventually die off.
Another point to consider is that Bitcoin (legacy) has developed so much over the past few years, and the fact that it now has an entire infrastructure supporting it.
Any new forked coins are therefore starting out at a disadvantage – at least in that regard. But if we look at the recent resurgence of Bitcoin Cash, it seems like those obstacles might not be insurmountable.
May the best coin win out in the long run. Or, to paraphrase an old Chinese proverb, "May a hundred blockchains blossom, and a thousand cryptocurrencies contend."
It will be very unprofitable while mining BTC will be much more profitable due to the drop in hashrate on the BTC chain
There is a catch here. Bitcoin minting reward could be claimed after a few dosens of blocks IIRC. If 80% of hashrate goes to b2x chain then bcore slows down 5 times - before the difficulty recalc. So the miner choose between claim 1500 in weeks or 7500 in months.
Also there are periods of time when large miners minted at loss compared to bitcoin reward. BCash miners did that.
Thats a gamble on the miners behalf. BCash implemented replay protection, which resulted in two coins that people freely traded. I think the lack of replay protection is what will be a driving force within the user community. The miners will make their choice on the prediction of what the users will do. It should be easy enough for a miner to switch from one to another, but still sometime is needed to shut down, swap the code and bring it back online.
Not being a miner, or a large user of BTC (other than speculating money on it), its difficult to say which way we are heading, because the reality is that the user community (traders and alike) could go any which way...even by accident.
I'm afraid but like them on not, in the end miners will decide what chain everybody uses.
User community or devs or even exchandes hasn't veto rule. miners have.
https://hackernoon.com/money-is-a-social-construct-and-thats-why-you-should-run-a-bitcoin-full-node-ea0330cb69a5
You know, now that I think about it, you're right. Thats because its easier to mobilize all the miners to follow one path then it is to mobilize all the users to follow. The miners can meet and say HEY THIS IS WHAT WE'LL DO SINCE WE ARE MAKING MONEY MOST FROM HERE!!!
The users will just be screaming at each other till the cows come home.
Even if B2X is worth a fraction of BTC, you would still need to find someone willing to give you USD for it when you settle the coin's value, otherwise its just a number floating in digital space (like most alt coins).
It's the exchange's job to connect the buyers with the sellers and the people who will be trading B2X on an exchange are the same people who trade BTC, literally the same.
Anyone who actively trades BTC will know this and as a result, we may see a dramatic drop in volume as traders stand waiting for the first person to make a move. This might result in a sell wall perhaps. Who knows since there is a considerable number of uninformed investors as well as a strong momentum behind BTC in general who are buying into a hurricane.
Now a big thing that plays into the value of B2X will be replay protection. Most users will be unaware of the fact that there is no reply protection built into B2X. For those who dont know, replay protection is when you prevent a single transaction from repeating itself on both the new and old blockchain.
As far as who controls which way the coin will fall, you certainly have it right that the hashrate will drop considerably on BTC when B2X comes online, but if no one trades BTC, it becomes a moot point.
Very difficult to predict which way the coin will fall until the investors start chatting. Personally, I'm thinking about selling all of my BTC investments and avoiding the confusion entirely.... I don't want to be involved in that mess.
Anyone else thinking about the same approach?
Sell BTC for altcoins.
I feel like ETH and other major alts will be main beneficieries in our cituation.
whos actually doing that? i still am holding all my BTC.
Not everyone likes to be at battlefield when guns start to blaze.
I personally know a few holders in hundreds of btc who are looking to sell. And a small btc fund too. They're still waiting for bitcoin to rise even more. I forecast the giant flow from btc to altts to reverce a few days before the fork.
This is my plan sell and wait for the dust to settle
Nice analysis. Appreciate the time you spent to put this note together
well done, but you left out Bitcoin Cash which could be the real winner here. Roger Ver is no idiot .
Bitcoin is a rocket launched in 2008, it's trying to reach a galaxy far, far away... It has already reached $7500 so far. Still, there's a long way to go, and a big price to come!
It has been broken up into many parts since it's launch. Again, time has come for the split of its Engine. Not sure which part of it's body will reach it's destination!
-------------------------- Waiting for the future! ---------------------------
Iam sure that BTC will remain the King Coin.
At our times the question would be "Which BTC"?
The original btc
As you probably know, the Bitcoin network is scheduled to experience a hard fork on November 16 that will probably result in a permanent split of the Bitcoin network.
We have seen this before with Bitcoin Cash (BCH) and Bitcoin Gold (Although not yet available), but this hard fork will have an important difference with the previous two. The signitors of the New York Agreement (NYA) and the SegWit2x developers don't want to create a new altcoin, but intend to upgrade the current Bitcoin protocol. For this reason they are not going to implement replay protection.
I agree with your words...!!
Thank for sharing @penguinpablo
Interesting analysis! I don't feel I know enough to have an informed opinion at this stage.
Hi..i just follow and upvote you...please follow and upvote me
Been reading around, some people think it will be worth as much as 20-30% bitcoin value, which just seems insane to me
Think you have probably predicted the future.
Plieas upvote my articel 😢😢😢
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Thanks @penguinpablo this answers my question and for awhile there will be a new altcoin if I understand this right and like Bitcoincash, which I played it safe and got none, this time if I just hang in with BTC, I can't really go wrong?