Home / Capital & Crypto / Coinbase CEO Armstrong Sets $5,000 Wager That Bitcoin Fork Works out Fine

Coinbase CEO Armstrong Sets $5,000 Wager That Bitcoin Fork Works out Fine

Last Updated March 4, 2021 4:46 PM
Lester Coleman
Last Updated March 4, 2021 4:46 PM

Brian Armstrong, CEO and co-founder of Coinbase, claims bitcoin is upgrading rather than splitting on account of Bitcoin Classic, and he’s willing to bet anyone $5,000 that he’s right. Armstrong, writing on Medium , said hard forks are one of the most important bitcoin innovations and having multiple teams working on the bitcoin protocol is a positive thing.

Brian Armstrong Bitcoin
Brian Armstrong

He said he is willing to bet $5,000 USD payable in any equivalent amount of fiat or crypto currency to the charity of the winner’s choice that bitcoin’s first hard fork will be an upgrade of a single currency, not a split, and all will work out fine. The bet extends to any public bitcoin figure or tech willing to accept it. Should more than one person accept, Armstrong will choose the challenger.

Who Will Accept The Bet?

Armstrong said his bet is mostly for fun, but he wants to see how many people are willing to put their money where their mouth is. As for why he didn’t denominate the bet in BTC, he said he doesn’t want people to think he’s trying to “game” it. If he wins the bet, the bitcoin price will likely rise and if he loses, the price will likely fall. The bet is payable in BTC but the price is denominated in USD.

Armstrong tweeted in November that Coinbase would include Bitcoin Classic as a means to block confirmation by running Bitcoin Classic nodes, CCN.com reported. He tweeted this following the fork’s announcement of a new code that pushes for doubling the blocksize to 2MB.

In response to Armstrong’s announcement at the time, some wanted him to clarify if Coinbase was switching to Bitcoin Classic as the primary running node going forward. Armstrong replied that Coinbase’s integration of Bitcoin Classic would be in tandem with several node types implemented by the company.

Armstrong Clarifies His Position

Concerning his newly-announced wager, Armstrong attempted to define “works out fine.” To win his bet, he sets three conditions.

1. At the moment the network forks, 95% or more of hashing power will be on one chain. This will hold true regardless of the threshold used to trigger the upgrade. Bitcoin Classic uses a 75% threshold and other forks can use a lower threshold, but 95% or more will be on a single chain at the time the network upgrades.

2. At the moment of the fork, 95% or more of all merchant and consumer wallet firms (by the number of users) and exchanges (by trading volume) will support the new version. This could be hard to measure, but one can look at public numbers of users for merchant and wallet software as well as trading volume for most exchanges.

3. Two days following the upgrade taking effect, the bitcoin price will exceed what it was one month prior to the fork taking place.
Armstrong said the fork he defines is the longest bitcoin chain measured by the amount of hashing power done on it that originates from Satoshi’s genesis block. He defines the moment of network upgrades to be the time when the proposed change occurs.

As an example, mining can begin with a vote for Bitcoin Classic, but it is not until 751 of the last 1,000 blocks get mined with a vote as well as the elapse of a 28-day grace period that the change goes into effect and 2MB blocks can begin joining the longest chain.

In such a case, it is not before the 2MB blocks join the chain that he claims the upgrade has occurred.

Bet Good For 12 Months

Lastly, Armstrong limits the bet to the first hard fork occurring in the next 12 months from the date of his post. “I think there will be at least one during that time, but if not I don’t want to leave this bet going on forever. If no hard fork occurs during that time, then there is no winner.”

Armstrong thanked tech blogger Sam Altman for inspiring the bet. Altman offered a bet about certain tech company valuations five years from now.

Coinbase’s move to run Bitcoin Classic comes at a time when the debate concerning bitcoin’s block size is moving toward a bottleneck with lines are being drawn in the bitcoin community. Bitcoin’s mining pools, collectively representing 70% of the total hashing power of the bitcoin network, rejected the hard fork.

In the space of a week, the number of Bitcoin Classic nodes grew 700% following the release of its new updated code which allows for doubling the size of a block.

Image from Shutterstock and Facebook/TechCrunch.