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Bitmain: “Bitcoin Network is at a High Risk of Being Split”

Last Updated March 4, 2021 4:57 PM
P. H. Madore
Last Updated March 4, 2021 4:57 PM

Throughout the bitcoin blocksize debate, both sides have been accused of digging their heels in, participating in paid shilling, censorship, telling only part of the story, and hyperbole. Now that large portions of the community have resolved to make serious progress by August, Bitmain, who’ve consistently come out against the UASF, Segregated Witness, and the like, have announced what they plan to do in a scenario where there are two competing Bitcoin chains.

Unsurprisingly, it’s not a get around the bonfire and sing kum-ba-ya with Blockstream developers, whom they’ve been feuding with for months, and who assert that Bitmain’s ASICBOOST technology is the real reason behind their anti-SegWit positioning.

In a recent blog post, Bitmain said :

The mining activity behind a UASF chain may stop without notice, and investors who buy in the BIP148 propaganda may lose all their investment. Any exchanges that decide to support a UASF token after the forking point need to consider the stagnation risk attached to it.

It’s hard to imagine people “losing all their investment” for backing the BIP148 user-activated soft fork. This type of reasoning suggests that Bitmain is interested/fine with using scare tactics. Nevertheless, parties on all sides of the discourse have recognized that a failure of the Chinese pools and companies, including Bitmain, to get behind the Segwit activation in time for the chain upgrade will result in there being two versions of Bitcoin. Would it be much worse than the situation we have now, or would those who already had bitcoins now simply have more of them? Will the market respond with punishment or praise in the form of new investment? These uncertainties are external to the issue.

In response, Bitmain plans  to launch of a hardfork which requires that blocks must be bigger than 1 megabyte in size beginning at Unix Epoch time 1501590000 beginning at about 12 hours after the UASF begins. This will ensure the divergence of the two chains, as anyone with either flag signaling will be only seeing parts of the whole of Bitcoin activity. This is problematic to say the least, and good luck to anyone trying to do business in such conditions.

Practically speaking, everyday Bitcoiners might be affected only very little, or only as much as they choose to be affected, provided they get all their coins into wallets they control. Potentially, if a split happens and both chains carry on, choosing never to merge again, then users would have coins on both chains.

We have a history to look to as regards major cryptocurrencies experiencing prolonged chain splits. The Ethereum DAO bug caused there to be two Ethereums, Ethereum Classic and Ethereum. Ethereum Classic continues to retain value. It’s easy to envision people being willing to accept discount, off-brand bitcoins from the minority chain, and there being two bitcoins moving forward, with neither having yet truly implemented a future-proof scaling solution.

Featured image from Shutterstock.