#189 Jimmy Song: A Fork in the Road for Bitcoin?

Transcript

[Music] this episode of epicenter is brought to you by Ledger and The Ledger Nano s half piece of Mind in knowing your private keys are protected by industry standard physical security go to ledger wal.com to learn more and by shapeshift.io the easiest fastest and most secure way to swap your digital assets don't run the risk of leaving your funds on a centralized exchange visit shapeshift.io to get [Music] started hi welcome to epicenter the show

which talks about the Technologies projects and startups driving decentralization and the global blockchain Revolution my name is Sebastian quo and my name is bran Pro Crane we're here today with Jimmy song and Jimmy is a Bitcoin developer he used to be VP of Engineering in Armory some of you remember that wallet now he's working at itbit paxos itbit is you know New York based Bitcoin exchange and paxos is building kind of distribut leer technology for financial institutions but the reason jimie is here today is that he's been writing just a series of really wonderful posts about the current situation in Bitcoin you know what's going on with soft Fork user activated soft Fork hard Fork seg

2x New York agreement uh bit 148 bit 141 there's so much going on it's extremely complex and I've been thinking a lot about this you know what what's what's going to happen what are the different probabilities uh and I haven't found anyone uh kind of writing it writing about this in a nicer way than than Jimmy in his post so of course we'll link to many of them in the show notes and really excited to talk with Jimmy today about uh about all of this so thanks so much for coming on thank you you're way too kind you're way too kind that's that just like that makes me feel so good thank you it's great being on I I haven't really been keeping up with a lot of this drama I mean like I I kind of got sick of it a while ago and then

and then I found myself preparing for this for this episode and and not really knowing what was going on and what were the different proposals and uh and I I watched some some of the videos that you did with other podcasts and read your articles and it's a lot clearer now thanks to uh thanks to your elegant way of putting things and explaining things thank you so much thank you so much I mean I just honestly most of the time I'm just translating technical jarg to what normal people read um it's amazing how a lot of coders don't re recognize that when they say jargon most of the people don't actually understand what they're talking about even other coders so yeah that's what I try to do with my articles yeah no exactly and I think

that's such an important thing know because you have these like different this conversations going on in different uh in different buckets and there's not much inter kind of connection between the two so I'm glad that you're you know solving that a little bit so before we getting into all of this do you want to give us a bit of a background how did you get into Bitcoin and blockchain originally and what has your journey been in this uh space yeah uh I mean I I think uh like a lot of people I uh I started in like 2011 I saw an article on slash do that said Bitcoin had just broken $1 and I was like how come I've never heard of whatever this is and um I read some stuff about it I was really

excited and I was going to go buy like a lot of Bitcoins and then I found out how hard it was like you can't just buy it with PayPal you you have to at the time you have to use duala and deposit to mount g and then do a bunch of stuff and I thought it was too complicated uh so I didn't think about it until I heard about it again in I think July of that year when every when Bitcoin went up to something like $30 and at that point I was kicking myself thinking I I I was so stupid not to buy at a dollar uh did all those steps got money into Mount gox managed to buy some um and uh and yeah I didn't really think about it because bitcoin price

didn't do anything until like 2013 at which point it it went up and uh I was like you know what I'm a developer I I really need to do some stuff with this and really understand this technology so I went and uh and I started contributing to a project called color coins uh if I don't know if you guys remember but uh yeah it it was uh basically trading other assets on the Bitcoin blockchain um back then I think vitalic butan was part of it and he wrote he wrote a white paper for it we told him that wasn't what we agreed on and he he said all right fine I'm going to go make my own coin so that's um that's sort of the beginnings of ethereum right there

anyway I I did color coins for a while um then I got I I started doing Bitcoin development professionally first for uh Monas um that's a company based in Switzerland they don't they don't really I I I haven't heard from them in a while uh and then I went to Armory uh to work on the Bitcoin wallet there um and I I've since uh you know contributed to btcd and a bunch of other projects and I'm now at itbit paos I'm I'm called the principal blockchain architect I'm not really sure what that means but I I think it's mostly just coding um with a nicer title uh but that's that's how I got in and uh you know I mean it's been

a fun and interesting journey to say the least and outside of your role at uh itbit backos are you contributing to any open-source projects or contributing uh to the to to the ecosystem yeah sure I mean I I obviously contributed to Armory and I I still contribute once in a while if I I cuz it's my primary wallet if I see some deficiency I I tend to do something um I've also contributed to btcd um which is an alternative client and uh more recently I've started contributing to bitcoin core just a little bit um not that many people know that so hopefully yeah I uh you know that doesn't make me sound biased or whatever but uh but yeah there's a bunch

of projects that I've contributed to just sort of done on my own as well just just to see what I can do you can go take a look at my GitHub Jimmy song all right well to to get into our main discussion here a little bit so the I mean we've we've also done many podcasts before about the whole scalability in Bitcoin and these controversies it's it's been I'm sure we've done 10 20 or more episodes on this so but but maybe just from your perspective can you give a bit of a a really broad overview of you know what has happened and and where are we today yeah I mean it th this has been going on for like three years like we're we're

entering our fourth year of this debate right um I I think um I mean it really started because people were getting concerned that the you know block siiz limit was getting reached there were blocks once in a while that were very close to 1 Megabyte even back in 2014 and uh and for a while uh you know it just sort of was a debate for coders on the Bitcoin Dev mailing list um you know somewhat somewhat spilling over into Reddit and then we know what happened with famos and our Bitcoin and all that stuff um you know there there was some censorship there and I mean for as far as I'm concerned most of the dialogue has actually moved over to

Twitter so I I don't think that's that much of a concern anyway um yeah so the scaling debate started then um and you know somebody came up with segregated witness I think it was some combination of Peter woa and Luke Dash Jr and Greg Maxwell that that figured out that it could be done without actually hard forking that was presented at scaling Bitcoin there was a Hong Kong agreement at that point uh you know shortly afterwards uh that got kind of broken up both sides sort of blaming each other for how it broke up and that that was originally basically supposed to be uh seg plus 2 megabyte blocks um I I mean I I've written this in an article but I I

really think the issue comes down to that of control both sides want a lot more control over Bitcoin um you know the miners want more development control and development want more uh compliance from the miners if you will and uh and that's that's sort of led to where we are today where you know there's you know bip 148 and all this other stuff that that's been going on I it's too many bit numbers to name actually but yeah that's uh it's it's led to a point where there's been a significant Clashing of Wills if you will talk about this uh I'm interested in this notion of control

maybe go in bit more detail as to what you mean by miners would like more development control and developers would like more control over miners it seems like a circular kind of argument to me yeah I both sides want more control and uh what I mean by that is uh the miners have been asking for 2 megabyte blocks for a while and they wanted to get somebody uh you know have a hard Fork to 2 megabyte blocks or even larger and uh the developers have more or less um sort of tabled a lot of the bips that were along those lines I think they're all in they all start with like one Zer some it's like 101 102 103 104 something like that um and for the most part uh hard Forks are no longer really being

considered and uh and for the miners that was very frustrating uh because they want something they think it it it would be perfectly safe and the developers are not giving it to them uh from the miners perspective they've been asking for segwit and uh and the miners are not really signaling from their perspective it's just sort of that that signaling bit is I am ready to I I've upgraded my software and am ready to uh allow segt transactions um but the miners are sort of using it like a veto um and they don't like like that so uh you know you you could sort of see uh how that plays out because miners are trying to replace

the or at least were trying to replace the development team with Bitcoin unlimited and the developers were sort of trying to replace the miners by you know changing things to bb8 and you know at biip 148 obviously and um trying or even threatening like a proof of work change so that you know the mining equipment would essentially be like big bricks um yeah they both want more control over what the other does uh and developers develop miners sort of mine and secure the network um and yeah that that's been sort of the big fight over the last few years I think I mean the the miners ultimately to me have a lot of the of

the actual control because they're they're running the network uh or securing the network what what is to stop the miners from writing their I mean if if the miners want a certain thing why don't they just write it and run that code they they actually apparently have right like a lot of them are at least claiming to be running Bitcoin unlimited I don't I don't know if they actually are um it's easy enough to signal and make it look like you are on the network without actually running it but they claim to be uh so it's entirely possible that they are uh the problem becomes when uh you know Network nodes don't agree um I mean everyone is sort of Master of their own

node and you could do whatever you want to your own node uh and you know have any kind of ridiculous rule that you want uh but you know as soon as you disagree with someone you're going to Fork off to your own chain so that's really the big risk is that Bitcoin would split into two or even more um and that's why not everybody just sort of run runs their own client they they want something that's at least compatible with what everyone else is running uh and you know the the miners could uh do that and they've threatened to uh just as much as sort of the user activated software people have um but yeah I mean it's it's not really that useful unless

there's enough of the entire ecosystem coming with you to to have a viable Fork yeah no that makes sense to me it's just that it it seems like if there's a minority at some somewhere uh threatening minors um that if if if their clients are not going to be compatible with the majority of miners that are signaling for one or one or another type of upgrade um they're not going to get their transactions validated because the majority of miners are not going to be agreeing with them I mean they're they're not going to be agreeing with the miners that essentially have the power um so so that that's where maybe I'm missing something

but I feel like miners could easily sort of take over this power struggle um they could in the sense that they'll have the mining power to sort of have a more robust and secure chain in terms of proof of work um but it's easy enough to Fork off and this is actually we could talk about this more when we get to bip 148 but this is essentially what user Act at softwork is doing is sort of um say we're we don't agree with what these miners are doing and you know you're you can't control us so we're going to do our own thing and whichever miners want to come with us can um and you know you

as long as you get enough of the ecosystem to come with you it's entirely uh possible that you can do that and be successful uh I whatever your definition of success is but you know like whether or not that's probable or whether like it it opens up all sorts of sort of Game Theory options as far as who can attack whom and what you can threaten and things like that uh which which make this very very difficult to analyze so can you give me uh just a very quick refresher like what is segregated witness yeah so segregated witness is um it is a fix for a bunch of things it it uh fixes the transaction malleability problem which which in turn

fixes the quadratic hashing problem it also uh allows for a different kind of transaction uh which is very useful for something like the lightning network uh would um you know and there's sort of another whole section of the block that that can hold these new types of transactions in addition to the 1 Megabyte uh block size that has the old type of transactions uh yeah it's it's a bunch of things sort of rolled up into one and you know it has a lot of different utilities that are associated with it this episode of epicenter is brought to you by Ledger makers of the Best Hardware Key security Solution on the planet but Ledger is more than just a

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originally the idea was to activate Sig with this thing called bit 141 can you run us through what what was bit 141 and why didn't it work well so it bit 141 is actually still going on but bit 141 is is based on uh bit 9 and uh bit is a signaling mechanism uh to allow a network upgrade and um and essentially uh any sort of softwork you want to sort of prepare the network and let everybody else upgrade before you actually re let the code go live uh and so you need 95% of the network to signal that they're

ready in in essence uh as part of bip n uh to to do so bip 141 used bip 9 I think it's using bit one to do that um and uh and it started signaling back in November of uh 2016 uh so it's been about 7 months and part of bip 148 or bip n also is that you have a one-year expiration so that you don't just keep this bit reserved for that one feature forever and uh and so far it's never really gotten over something like 35% of the network and you need 95% to Signal before there's lock in and activation um so some quick technical thing aside uh what 95% means

is within one difficulty adjustment period this is 2016 blocks typically that's uh how often Bitcoin uh adjusts the network hash rate so that or network difficulty so that uh you find the block about every 10 minutes um so in within one network difficulty adjustment period you need 95% of the blocks to signal for that feature um in and you know one n network difficulty adjustment period is 2016 blocks and I think you need 1,916 blocks to signal for it before it locks in and then you have another Network adjustment period at after which it's actually active on the network uh Why

didn't it work well um it looks like the miners didn't want it um or at least they wanted 2 megabyte blocks to come with it and that's uh that's essentially why many aren't signaling for it so that's that's kind of where we are I mean one of the things I always found puzzling about this seget thing and and also a little bit indicative of just a certain like disconnect with reality of of of this 140 bit 141 thing is this 95% activation threshold because I mean even when that was proposed there was already so much like division in the community and so much disagreement and the idea that like everybody would just like

agree and go along and that you know even 5% could basically block this it it just seemed bizarre the idea that this would ever work to me yeah and that that was sort of my assessment as well before it signaled if you look through my Twitter feed I was kind of doubting whether or not it would activate ever and actually my pin tweet from January 1st 2017 is I really didn't think segwood would actually come online though you know um that may not be the case anymore but uh but yeah I I um like from a game theory perspective you would have to say this is sort of like a way to expose the other side's position or at least make sure that that's actually

what they believe um and uh and it it seemed to do that uh at least sort of uh you know force one side to take a stand on uh on for it or against it and that's that's essentially what it did whether or not that was like a good move is um I I can't really say um you know I mean sort of like who knows what actually works so yeah and how did that you know I think tradition the transition from that right from the bit 148 and and and 141 not going through is is then this response with this this idea of a user activated software and 148 can you explain a bit you know what is bit 148

and what is a user activated soft Fork bip n uh I guess started a while ago but before that there was a it was sort of like um hey we're going to upgrade everything on this date that was sort of the normal way that Bitcoin was upgraded and bit9 was sort of thought to be a lot safer uh by requiring the 95% and and a bunch of other sort of softworks went through for uh bip 141 based on bip 9 like uh you know check lock time verify and and and a bunch of other um softworks um bip 148 or user activated softwork was sort of an

attempt uh like after seeing that hey no uh there aren't going to be enough minor signaling um sholin fry who um who came on the list uh and and for the first time sort of posted to the Bitcoin Dev mailing list uh propos that you know like since everyone sort of domain over their no own node we can sort of ban together and reject certain blocks from miners uh and sort of forcefully activate segwit and um and essentially what it does is it rejects any blocks bip 148 in particular it just rejects blocks that aren't signaling for bip 141 thus sort of ensuring that on that chain on the chain that the user activated

softwork will accept there will be 100% signaling for bip 141 thus ensuring its activation um but obviously there there are all sorts of uh you know things related to that uh you know sort of side effects of having a softwork that uh that result as as a result of you know doing a softw workk um and that's that's sort of like the main difficulty of a user activated soft Fork is that you're essentially forcing a fork and can you just explain user activated seems to be like sort of interesting term right because I'm a

Bitcoin user but it doesn't seem like I would have a role in the activation of this so so can you explain like H how is that user activated and it still requires right A minor to mine a bit 148 block right uh the the idea behind calling it a a user activated softwork is that really a user who whenever you're running a node you're sort of King over your node you can run whatever software you want um and because of that if enough users band together the thought is that you can bring economic value to what to your fork in whatever fashion you want uh and you know you can

sort of let the other uh side go um you do need a minor to actually mine blocks uh but it's thought it's named such because it's uh it's driven by the user by running this software um instead of sort of miners starting to run that software um obviously it's not all users it's it's some subset of users that are running it and they can do whatever they want um like I said before though the trick to making a soft Fork work is bringing enough of the ecosystem with you that you have enough mining power and development uh going on that it makes sense to sort of uh that it's

possible to keep going uh and that's that's not entirely clear if you if you just sort of like forked off on your own um and that you know then nobody will pay you anything for coins on your fork so let me just rephrase that uh in from so from the user's perspective as as a user I want a signal for segwit uh and bit 148 uh I I I install a client that on August 1st will only accept blocks that are signaling for um for SEC for a sec we get it witness and so I'm I'm sort of I'm cutting myself off from the rest of the world from the rest of the network uh

and I'm only seeing miners that are seg that are signaling for segregated witness and so I automatically have 100% uh of that 95% threshold and so therefore segregated witness is automatically activated on your fork on my Fork right but that that that requires that enough miners uh are mining these segregated witness signal blocks for my chain to have any any value I mean if there's one minor uh out of all the miners that is Mining and signaling for for for bit 148 I'm essentially only

getting one minor to secure my chain and that's a problem if that there's not like a specific threshold that is reached I suppose yeah yeah so um yeah it it can be a problem and hash power is going is going to be crucial if uh if this forking scenario comes to pass pass and this something that I wrote in one of my articles is uh you need a lot of hash power to make this work uh because uh user activated softwork uh first of all to trigger uh to activate segregated witness you need to Signal by November 15th and if you do the math between August 1st and November 15th is about 15

weeks and uh difficulty adjustment period is uh is 2016 blocks you need about you need at least 16 or 17% of the network hashing power to even be able to do one difficulty adjustment period in 15 weeks so that is uh sort of the minimum before which you can you know talk about the user activated software even being really viable otherwise you would do something else after November 15th to get segwit uh for your for your chain uh now I I

mean the big sort of plan for a lot of these user activated softwork supporters is that they would either get miners to mine on their chain because you know they see the economic value or they would um you know go buy miners themselves and sort of mine on their own and be competitive with uh the mining conglomerates in China um yeah uh that's a that's an open question and we don't really know very much about the hashing power that they own or have access to so that's a that's a difficult sort of question to answer beforehand what's also interesting to

point out is just the effect of you know different hash rates when you Fork right because let's say you have 10% of the or let's say we say 20% right a little bit above your threshold so that's still means it's 1if of the current bitcoin Network cash rate so that means the block time is going to go up by a factor of five right so that means the capacity has you have lost 80% of the capacity of that Network and I mean the whole problem is Right bitcoin's full so now you've cut off 80% of the capacity and at the same time you know as a Bitcoin user I would in in that kind of scenario I would like to be able to move my Bitcoins to an exchange you know to

potentially sell them right so and you you probably wouldn't want to do that on both chains right you you'd want to take action and you want to maybe split the coins as well right cuz the whole replay attack is another thing so it seems like you would have you know maybe lose 80% of the capacity or 70% MH the the demand for transaction would would go up dramatically so the cost would go up I mean I can totally see $50 transaction fees or 100 like very very high transaction fees yeah it seems like in in in a case where maybe if you have like 45% of the hash sh it will just be about tolerable but below that I mean this is going to be

basically a like a two week or or you know 4 week or you know six week or something uh complete shutdown of the Bitcoin Network for almost all its current uses yeah and uh and that's yeah there there's so many ways in which it can be screwed up and I I outlined them in my uasf scenarios article but basically what you're saying is right if you have a small amount of hash rate then everything's going to take longer not just on your chain but on the other chain too it's going to be like a little bit slower and uh and you know there's uh Wipeout attacks and uh I mean you need both Wipeout protection and replay

protection on both chains um because it's it's possible for both things to happen um wipe out in particular is if the um if the Minor's chain uh doesn't hard Fork then it's always possible for the user chain to grow longer than the minor chain and wipe out the minor chain so from an exchanges perspective you wouldn't accept anything from a minor chain if the user side has any possibility of overtaking the minor chain uh from the uh and there's also replay attacks right like you can play the same transaction on both chains you may mean to uh uh an exchange May mean

to only send you know 10 Bitcoins to 10 of the user Bitcoins to you uh but you can Replay that Pro that um transaction on the minor side and get 10 minor coins at the same time and that's that's kind of a no-o for Miners and this actually happened with ethereum with uh when they split is coinbase was going giving out ethereum tokens but people were replaying them on etherium classic and getting classic tokens as well and uh and that cost Bitcoin or coinbase uh quite a bit of money and uh so exchanges are going to want both and in order to do that you need to permanently split and this is uh this is pretty much what

bit main said in their press release last week which was hey we're uh if there's a user active ated soft fork and it looks like it's viable then we're going to hard fork and we're going to make it so that there's no replay possibility on either chain and we're also going to add a bunch of these other features um and that that seems to be uh a good way to solve that issue but you know once you get to that point you have two point Bitcoins forever and you're you're never going to merge back to one coin which kind of how would one hard Fork at this point like what what what would bitmain do to hard for the network right so they they would uh release a new client right new software basically

um that that changes uh transactions in this very particular way where uh you know signatures for one TR transaction don't work for the other uh for the other chain uh and it's it's a Sig hash bit that they would Set uh and that that's actually really clever and that means that any transaction on one chain would not be valid for the other and they would also require the forking block to have greater than 1 Megabyte uh block size um and uh essentially they would be at least two meab or have a cap of at least 2 megabytes going on forever um so it it would be a very different

coin than the than the user coin uh but that that's what they would be doing and and should should this hard Fork not happen um so you you mentioned ethereum and and and the and the replay tax that happened there and uh for a while there was a period there before a certain version uh of mist was released where there was a smart contract to which you would send your coins and the smart contract would uh handle the rep the replay protection how I'm I'm curious how that works in in Bitcoin how do you handle replay protection uh without Smart contracts well so ethereum is a little different in that it's account based and uh Bitcoin you uses utxos so as long as you can mix in a single utxo that

appears in one and not the other um then you can sort of mix that in and all coins from their that's that have ever mixed with that utxo would be safe on that chain um there's a very clever um uh script that uh that Luke Jr um was talking about which would be sort of using n lock time that can also work um there there are multiple ways um you know uh after about 100 blocks when the first coinbase transaction uh that exists on one side but doesn't on the other is uh mature then you would definitely be able to um you know transact with anything mixed with that

Co those coins without any replay um threat on the other side so um there there are multiple ways to do it and if an exchange were smart enough they can they can code that it's just uh something that they don't necessarily um yeah it's it's not something that they necessarily should be trusted with until they've proven that they can handle it and the factor of course is that this splitting coins you have to make a transaction right to do that so in in a way that that creates all of a sudden you know if I'm having these Bitcoins that are like sitting somewhere well now I want to split them

you know because so so I can actually transact on the two chains right so all of a sudden that's also going to drive up uh this demand and I mean I I know some people actually working on on Services you know basically for that scenario to to offer like you know splitting coin as a service uh which which could be a could be good business in a scenario like that right because there could be a huge demand for uh to do that and and of course a big Advantage if I'm if I'm able you know if I see that okay let's say this Fork Bitcoin is is losing some value uh and I'm able to split that and and you know I'm able to to sell it first whereas you know you you you are sort of trying to get in I mean there

could be that kind of Rush scenario and and I mean it's it will be a big Advantage right when you be able to transact versus people who are not able to transact yeah um it might I mean as far as the replay protection like no exchange I don't think is going to accept coins as long as there's replay attack vectors um so I would imagine there would have to be a permanent Fork first like along the lines of what bitmain has propos um if if there's not then you know there's all sorts of risk that an exchange would be taking uh but the scenario I think maybe that you're referring to more is sort of like a personto person BET right like uh if I think that uasf is going to be better

and you think that the minor Fork is going to be better we we might just exchange directly but being able to do that is not so simple in that scenario um but yeah I for an exchange to list a coin they're they're going to need a hard fork and at that point there's there's no going back to one coin it's just two coins forever and now of course we we've talked about that right uasf and and I think until recently I was thinking like oh this looks quite probable right like this may happen uh but just today so recording this on on June 19th uh people or miners have really started signaling for this this new thing which uh some people probably know as the New York agreement and the other the other

term for it is you know SEC 2x which is basically the idea to do uh you know two hard for to two meaby blocks and seg at the same time and you know at the moment when I was checking before there was around 80% of miners in the last you know 10 hours or 12 hours have been uh signal support for that so can you just run us through what what is segue 2X and how does it fit into this progression right right so segue 2X or the New York agreement was uh was something that Barry Silber sort of organized right around consensus 2017 this was around May 23rd uh he got about 80% of all hashing power along with a bunch of other businesses exchanges

wallets Etc that signed on to the agreement saying hey we'll do segwit and 2 megabyte blocks somehow and we we we'll do it um there's a GitHub repository called btc1 which is uh it looks like the lead developer is Jeff garic uh that's sort of the client for segt 2X and essentially what they've uh what what the agreement said was we're going to Signal bit four and it's going to C uh and instead of instead of bit one which is bit 141 uh they're going to Signal bit 4 and they instead of 95% they're going to say okay you only need 80% now there isn't a really simple way to do that and uh and for the question

around the community for a while was well how how are these two things going to be compatible how are you going to make sure uh you know if you signal for one that the other accepts it and so forth and uh and James hilard actually came up with uh with a very clever way to do that and this is called bip 91 and that's that's kind of of what got merged into segwit the segwit 2x repository uh I think it was like 3 days ago uh and essentially what it does is it's a it's kind of similar to bip 148 in the sense that once once uh bip 91 is activated you have to signal for bip 141

or else you'll get orphaned off the network but in order to activate bit 91 you need 80% of like 336 blocks which is like 291 or or something like that uh within you know then two 336 blocks is like 2 and A3 days or something like that or uh 48 Plus 8 uh it's like 56 hours within a 56 hour period you need 80% of the blocks to signal for it um and that it and then there's another period where it activates so people can get ready uh but essentially what what it will end up doing is have one chain that's all bit 141 signaling uh so instead of 95% again it'll get 100%

because you're forced to Signal um and what the miners have done is instead of signaling either bit one or bit four um they're right now just sort of putting in the coinbase transaction uh NY as signaling support once BTC one uh that repository produces a client then all these miners can run it and when they start running it presumably it'll be more than 80% uh triggering bip bip 91 which in turn will force every block to signal for segwit at which point segwit will get activated and presumably that would avoid uh bip 148 um but you know we

don't we don't have that much time to do that we we have like less than six weeks before August 1st so this we're going to we're going to cut this close depending on what the uasf supporters would decide to do so let's just recap here then so so today on June 19th miners have started signaling their support but not supporting just just signaling by putting a string in the coinbase transaction that says we support this this New York agreement and then that is supposed to give us some kind of signal as to how many miners on July 21st uh will actually go live with this and and um and put the extra bit and if enough miners do that then

then we have segwit why would we then why would anyone at that point uh want to activate user activated soft Fork uh seeing a segwit would already be activated yeah uh I I I I'm not entirely certain uh what would happen but I bip 148 if bip 141 is locked in or activated won't do anything that's part of the code that's in their code B uh but if we're sort of in that in between state where bip 91 is locked in but bip 141 hasn't been then it it's possible anyone running bip one uh bip 148 client would Fork off the network whether or not they're doing that

accidentally or purposefully is actually an open question uh but you know like it's presumably you know that's good enough like locking in bip 91 should be good enough for user activating softwork uh proponents to just abandon bip 148 uh but it's also possible that it won't um now I I would say that's kind of a small possibility uh but it is something that they could do if they still wanted to um and sort of fork off the network despite the fact that most miners are going to signal for segt um it does look like though that there's more than 80% um minor support for you at least in the coinbase transactions which presumably

means that bit 91 would pass very quickly which would uh enable bit 141 to pass within a twoe period now like if if they can release the client like um like July 7th or something like that then everything would go through without a problem and but you know there there may be some things that the user activated soft Fork people might want before if it doesn't happen before then to sort of abandon their plans and that's uh that's kind of an open question at this point this episode is brought to you by shapeshift the world's leading trustless digital asset exchange quickly swap between dozens of leading

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good-looking Fox you know that's where shapeshift is so to get started visit shapeshift.io and start trading and we'd like to thank shapeshift for their support of epicenter one of the things I find interesting sort of what you pointed out here you know the with this user activated software a bit 148 one of the things that seems sort of you know controversial or questionable to me is this this aspect of like you know splitting off and saying you know you don't recognize this other uh chain but then something kind of similar is happening here too right where you say you have to Signal forsake with so it's kind of a little bit of a strange thing that you're using a similar aggressive strategy against these people who want

segit to lock in segt yeah yeah so bip 91 and bip 148 use basically the same mechanism which is you have to signal for segwit uh the difference is that bit 91 requires 80% of miners to agree first uh so in the case of a soft Fork um you know like the soft Fork is sort of has tighter rule so anybody that doesn't signal for segwit will get orphaned off and you know like with 80% you're you're not going to be able to build a chain longer than the other one so there's not that much risk uh not not nearly as much risk for bip 91 because you you already have 80% of the network for you um I mean it it it's

pretty much the only way people have found to sort of reduce the 95% threshold to 80% and that's essentially what bip 91 is doing is reducing the threshold significantly uh but it's it's a clever and and way to do it uh whether or not you agree is sort of up to you and you know whether or not that that changes things for Bitcoin going to the Future um yeah that that's that's that's an interesting question as well whether or not this will set a precedent for other sort of forks as you know going forward and what have the what has been the reception to this New York agreement it's a good question I I would say that for the most part people aren't quite

aware of what it means uh I think I think the thing that makes a lot of people nervous is is this software going to be safe is this software going to be useful is this software going to get merged back into core if not then who's going to take care of it and all this other stuff um so it's it's kind of an open question um and you know I I'm working on an article actually like even right before this podcast to answer some of those questions uh but yeah it's it's not entirely obvious what's going to happen uh or you know how how many people know about it I uh I was on another podcast a few days ago with uh this guy named John light and he was

saying why are we so down on this news you know like this should be a reason to celebrate we're we're we're unified again and everything else um and you know he may have a point on that well let's let's play this is down on this news well I mean so I I you know I've been spending some time uh you know reading through our Bitcoin and our BTC and it's very interesting to see the responses there and and I mean I think uh on on both sides lots of people are down on this lots of people don't like set 2X and there was an interesting block interesting Reddit post kind of you know long and thorough we link to it in the show note by Greg Maxwell you know basically saying 2x is terrible you

know it has all kinds of flaws you know it says lack of detail isn't clearly defined what's going to happen time pH is too short and and you know he basically says uh and that core developers are unanimously against seg 2X and I think it is the case that this New York agreement you know okay was was has support from all you know the vast majority of minors he has support for many of the big Bitcoin companies but there was no support there really from you know the the current core developers so this what do you think is going to happen with that like you know if they are not on board what kind of response could we see from them yeah I mean th this is sort of

the big open question and I think the re I think as you're pointing out the reason for sort of the pessimism around it well we can agree on segwit I think everybody on the cor side certainly wants segwit there are some others on the other side that are okay with it as long as they're getting 2 megabyte blocks and that's what segwit 2x is it's segwit plus 2 megabyte blocks up to the point where there's segwit um I think everything will be okay but then after segwit when the 2 megabyte block issue comes up that's where I think the rubber meets the road we're just sort of delaying this forking Point uh there's something called bip 55 uh that's the Bitcoin unlimited

Improvement protocol uh or proposal uh number 55 and uh and that essentially says that they will have larger than one megabyte blocks starting on October 15th or 18th one of those two and uh and that means that that will Fork off the network right like uh it'll be one side or the other so we're we're not necessarily like getting peace uh we're we're just sort of having a ceasefire for a few months as a result of the New York agreement and the bigger issue still hasn't been resolved I this whole like core developers don't support it argument to me it just seems kind of absurd I mean think think of any other product right like some I don't know

take like magenta open source e-commerce software if you have like the majority of the ecosystem uh you know hosting companies and companies using this software saying we want this feature why you know in what right mind with the you know developers of that software say no we don't agree with this like that's what your users want that's not what you want and it it's uh it seems like such an an unvalid argument well I I don't think it's about valid or invalid arguments at this point it's it's sort of whether or not uh you know one I mean there's there's plenty of users on both sides of the aisle uh that that want a hard Fork that don't

want a hard Fork um the question is um you know what's the end result i i as long as it's not a contentious Fork uh I think we can do whatever Forks we want without too much trouble uh the qu the the problem is that this once you have a contentious Fork uh well then you're going to have two coins that's just how you know consensus is if you don't have consensus then you're going to fork and that's that's sort of uh how Bitcoin works and that's uh you know it doesn't matter if it's you know just a few people um or a lot of people uh as long as they have enough sort of of the ecosystem on their

side then they can Fork off and that's where it looks like uh you know will be so let's go a little bit deeper into this the the the second part of this seg 2x which is the 2x thing one of the concerns that I've seen people have on on rbtc is is you know that they think it's some sort of Ploy right so seg it's going to get activated and then people are going to you know people are going to back out and and they're basically going to not try to you know refuse to do bigger blocks so what kind of mechanism will there be after seg is activated if this goes through to go to the 2 megabyte blocks and and are there assurances that you know both will

happen and that it's not only just going to be seg gets activated and we won't see the bigger blocks yeah that's a great question um as so they were trying to design something that would force a 2 megabyte block hard Fork along with seg web except nobody can figure out a way to do that um so what ended up happening is hey we'll just do segt first and uh anyone that signed the New York agreement is bound by it I mean presumably to support 2 megabyte a 2 megabyte hard Fork um a lot of developers didn't sign that right uh there's a bunch of companies that didn't sign the New York agreement so they have no obligations to the New York agreement

and um you know it and this is sort of where the conflict point just is uh is put for put out further 3 months we we still don't know what will happen at that point um I mean it's possible that that the companies that didn't sign uh the agreement may be able to sort of for off on their own or obstruct things or make it so that the 2 megab hard Fork doesn't come to pass but you know I mean who knows it's it's uh yeah I mean it's the next debate that's coming up and that's that's something that we're going to see a lot of name calling a lot of lot of accusations a lot of arguments

that that's the that's the next thing that's coming so yeah but even even assuming you know the the companies have signed the New York agreement is it like clearly defined you know is there a clear date when it comes or cuz cuz you know presumably they may say well we signed it we are going to because this is what the core developers have done for a long time right they they were like yes yes we will hard for the bigger blocks just not now right now is seg great and some later point and then of course the challenge has been the other side doesn't believe it that you know that it's kind of a deceptive tactic so is is a similar thing possible here or is it really clear what those companies have AG agreed to with the New York

agreement so that you can say you know you've agreed to run or support these two megabyte blocks at that time in this way H and you know we can hold you to that word yeah so here I I'll read you the the first paragraph of the New York agreement we agree to immediately support the following parallel upgrades to the Bitcoin protocol which will be deployed simultaneously and based on the original seg 2 megabyte proposal activate segregated witness at an 80% threshold signaling at bit 4 activate a 2 megabyte hard Fork within 6 months so there is sort of a deadline of six months to do something um and you know anything after that I guess uh wouldn't

be it but uh there there is an obligation according to that agreement to at least attempt a hard Fork uh to 2 megabytes within 6 months so what's your assessment how this is going to be a tricky question but uh what kind of probabilities do you assign to different uh results so do you think that uh the seg 2x is going to go through like that and that the 2 megabyte blocks will get activated in that time or do you still see a significant risk of a a division and the hard Fork well umk I mean the split oh yeah yeah so the August 1st hard Fork is uh significantly reduced in probability I think as a result of uh what's

happened recently um a permanent Fork sort of later on say on October 15th to 18 something like that with bip 55 uh that's still sort of significant at least in my mind the biggest risk to sort of an August 1st uh non-event uh would be uh the you know segwit 2x client being ready in time that is like tested to everyone's satisfaction and running on the minor uh at the Minor's uh uh you know yeah being used by the miners essentially um I I think it'll be ready in time and hopefully it avoids an

August 1 dat but you know we we have something even further down the line and like really nobody's agreed to anything it's just sort of Waring parties having a ceasefire for a few months and that's uh now what will what will happen after that it's hard to tell cuz the current situation hasn't exactly shaken out yet it's kind of like you know at the end of World War II there were all these like things that were happening and nobody really knew how the map was going to be drawn after the war um yeah it's kind of like trying to predict that we don't we don't know what the map looks like at this point cuz it's a little the this current War isn't over yet or this current battle isn't over yet and we have another battle

afterwards so I'm not really comfortable making any predictions in other words so so in this like metaphorical representation of the second world world who's who's Hitler in this version of it no comment I'm not I'm not going to make any comparisons to Hitler despite Godwin's law yeah uh so in your opinion what's what's the greatest risk here like what is the single greatest risk that we might run if things go like catastrophically wrong hard Fork uh too viable coins and a heart Fork um I think that destroys bitcoin's um value proposition as a store of value um and

uh and that causes a complete price crash uh which would be terrible um uh you know for for obvious reasons uh that to me is the biggest risk um yeah I mean I I'm okay with almost anything that will keep Bitcoin on a single chain um and and right now I'm not seeing that yet um I for now I think uh we'll we'll have segwit but you know there's this other issue of a hard Fork that's in the New York agreement that 80% of you know of people are have agreed to so I does that mean that you know uh something bad will happen not necessarily but I I mean it's it's not

over yet either uh so yeah we're we're still sort of in the middle of this whole drama and we're we're not going to see resolution for while still yeah I agree with you I think if you if you look at you know the viability of Bitcoin right today I mean I think Bitcoin is is not in a great position right because it's it's obvious that the the usability of Bitcoin and and has greatly suffered uh in that you know that the just the transaction fees and and the times have have been uh certainly you know for example for us using Bitcoin as a company it's it's become much much less attractive and you know you can't really recommend it or show it to people like you could in the

past sent them some you know all lots of things that you know we used to Claim about Bitcoin aren't true anymore that you used to showed Bitcoin explain the benefits all of those things Fallen apart but at the same time um if Bitcoin just stays together I do agree that there's still a very very strong case as this digital goal digital store of value and and of course the ideal would be that you able to increase capacity at least in my view both onchain and have offchain solution and SEC right all of those things and I think if those happen then there's really a chance for Bitcoin to to grow tremendously but if it forks and there's two Bitcoins I'm just thinking about the mainstream media narrative right which

just been so so much you know Bitcoin is booming Bitcoin is coming and then all of a sudden there's two Bitcoins now everybody's at War you can't really transact the capacity I mean the the stories will be would be be awful and I think uh it would be um yeah it it could you know I'm sure Bitcoin would still continue in some way but I think the the biggest arguments and reasons why people were excited about Bitcoin would be permanently destroyed yeah yeah absolutely I mean immutability is is a huge property that you need for store value once you split them you've broken immutability and that that I think takes

away more value than anything but uh I mean I think you're also right in the sense that you know the Bitcoin will still survive uh it'll be in two different coins it's I I think we've seen through like the recent altcoin pump like no coin actually really ever dies right like as long as someone's willing to mine it it will just keep continuing uh no matter what um and uh and I I see that for Bitcoin as well uh whether or not it's something that's that useful uh you know once you have set a precedent for a hard Fork uh or a permanent Fork into two coins is is a big question in my mind so yeah I mean uh yeah sorry to end on such a sour not

but yeah it does does seem like uh there it's not all good news as a result of the New York agreement it does seem like there's still more hardles ahead cool well thanks so much uh Jimmy for coming on today I know perhaps we'll have you on again at some point I know you also wanted to speak a bit about Drive chains about some other scalability ideas that might be very uh exciting and and I think this entire debate is going to be with us for a while right about the the conflicts that going to come out of that the attacks and I have to say you know on some level of course it's a bit sad right in some level you you your bitcoin's obviously suffering right and bitcoin's future is threatening in some way but on on

another level it's also just enormously exciting and interesting like the different scenarios and the different ways this could play out so in terms of uh in terms of tension and what's going to happen uh it's it's rarely been as interesting in Bitcoin as today yeah and don't forget like we've doubled since the beginning of the year I mean we we're from a price standpoint there's uh I mean we're we're doing fantastic if you asked anyone a year ago what would you think about Bitcoin at $2,500 or uh I think a lot of people would have said I'll take that you know doesn't matter what other Strife comes with it um and you know I don't I don't I I want to end on a more positive note

so I mean remember that Bitcoin survived a lot of stuff already you know it survived the mount Gau collapse it survived many many different hacks of exchanges uh you know Bitcoin forked against itself way back when and it still survived so there there are many ways in which uh people have tried to kill Bitcoin and it's always survived so so uh you know I mean I I I would love to see something like Drive chains uh make scaling a non-issue uh unfortunately it it seems to not really have that much Community Support largely due to the fact that not a lot of people know what it is but and you know I I would love to come on your show sometime and and and talk about uh you know side

chains and a way to scale and do a lot of other exciting things with Bitcoin uh with it but uh but you know for now I think you know talking about scaling as that's the main issue on people's minds it makes sense to um you know explore that issue thoroughly excellent well thanks so much for coming on Jimmy uh it's been a pleasure yeah thank you and of course thanks so much for a listener for once again tuning in so we're going to have links to many of of the interesting articles Jimmy has written as well as the New York agreement debit main article and Greg Maxwell's post and a few other things that you can check out if you want to go a little bit deeper

here and uh yeah if you we are part of the let's Bitcoin networks you find this show and other shows on let's bitcoin.com and if you want to support the show you can do so by leaving us an iTunes riew that helps new people find this the show thanks so much and we look forward to being back next [Music] week n [Music]