Segwit2x, rest in pieces

[playak]

Now that F2Pool backed out of the New York Agreement, the 2x signalling has dropped from 95% to 85%, and the Segwit2x futures on Bitfinex have fallen to 0.12BTC.

https://cointelegraph.com/news/f2pool-deals-possible-death-blow-to-segwit2x-fork-withdraws-support

Now one could argue that the volume on those BT2 futures is very low, but think of it: I you were a major party that really believed in segwit2x, why would you not buy loads of futures at current prices?

That's right, the segwit2x supporters are not all that convinced themselves...

Comments

[tobixen]

I expect the participants who have signed the NYA to follow through and support the S2X-token, at least for a while - but at the end of the day, money talks - both exchanges and miners ultimately have to do whatever gives the best profit.

With 15% hash power and a 1 MB block size limit, transactions will hardly go through at the legacy chain. I fail to understand how a bitcoin with almost no utility value, a bitcoin that cannot be withdrawn nor deposited to the exchanges, can have any value. Possibly BitFury and BTCC will defect the NYA - but still I believe the hash power will be too low to make the legacy chain usable.

Then again, I have been wrong before and I will probably be wrong again. Two thoughts:

• One thing we saw with the 1st of August fork (even if it was very clear that there was good replay barriers and no risk of transacting during the period), quite many exchanges and businesses shut down the possibility to withdraw or deposit while the fork took place, some even for days, and I guess quite many individuals also had been advised not to transact right before or after the fork. There was actually quite some free capacity in the blocks. If the transaction volume will decrease to 20% of normal, then 20% hashing power is enough to clear the backlog. The confirmations will be slow, though.
• Perhaps the inability for people to deposit into the exchanges, as well as the low inflation will cause the legacy bitcoin price to grow (as it will be difficult to buy it from the exchanges). If the relative pricing of the new tokens will be anywhere in the ballpark of the current Bitfinex futures, then miners will most likely defect the NYA and mine on the legacy chain, and the S2X-chain will die.

The Terms and Conditions on Bitfinex is not that good, particularly that the T&C can be changed by Bitfinex anytime. By saying that they will use the designation "BTC" on the 1MB-chain after the fork they are clearly showing where their loyality is. Also, any "technical failure" is sufficient to deem the BT2-tokens as worthless. Despite all this, I've been buying up some BT2-futures as I see BT2-domination as the most likely outcome, though it feels a bit risky buying it from Bitfinex. I wish other exchanges would follow up and offer similar bets.

[playak]

15% hash power: that remains to be seen. If the profitability of mining BTC is better than that of B2X, then those 15% will turn into 90% within a day. Worst case for BTC is it might have 2 weeks of slow transactions. Who wants to use software that's only developed by one person, who can't even keep his own website up?

[tobixen]

If the profitability of mining BTC is better than that of B2X, then those 15% will turn into 90% within a day.

I believe it will take quite a bit more than a day; the situation needs to be stabilized before it's clear what is most profitable. There is a delay from the block is mined until the coinbase can be moved. Exchanges most probably will disable all deposits and withdrawals for some period surrounding the fork, there is no profit to be had unless the miners can transfer bitcoins to the exchanges. Market prices for the two chains are likely to move a lot in the period surrounding the split. I do expect the miners to stick to the agreement for several days, maybe as much as two weeks ... but of course, in the end the market talks.

I'm surprised that the Bitfinex future market gives the 1MB-branch such a solid support. However, it's wrong to assume the post-fork token price on the two chains will mirror the bitfinex futures; the price also reflects other risks, like the fork not happening at all (if I've understood it correctly, the BT2-tokens will become worthless if Core folds and merges the 2MB pull request - even if that means a full victory for S2X). The Terms and Conditions also specifies that the Terms and Conditions can be changed at any time by Bitfinex, something that is quite unacceptable in my view.

Worst case for BTC is it might have 2 weeks of slow transactions.

No.

Bitcoin is designed so that the average time between two difficulty adjustments is two weeks - in reality it has usually been less than two weeks. However, those "two weeks" are not measured in clock ticks but in the number of blocks mined. This means that if going from 100% to 20% hash rate, those two weeks will turn into ten weeks. With 10% hash rate, those two weeks will turn into twenty weeks.

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