Saturday, December 30, 2017

High Fees Is An Extinction Event

Make no mistake. The rats are scrambling off this BTC sinking ship. High Fees is an extinction event. Like all extinction events there is always a group of loutish and very vocal band of hard core deniers. Their arguments are hypocritical, and their reasoning always seem incomplete.

BTC dominance below 40%

Today BTC dominance dropped to 38.4%. Total Market Cap is still 600 billion. This means that value have flowed to other currencies this time to Ripple. Value flows to crypto through BTC because it is the main bridge with all fiat currencies.

This happened before when value flowed to Ethereum. That was stopped in its' track because Ethereum encountered several major problems. ( DAO, more hacks and scaling issues )

Will Ripple become the new No 1 crypto coin?

Possible but it will be temporary, until BCH takes over. This upsurge is a pump and FOMO event, timely as many investors are looking to exit BTC. The fact that bankers like it strengthens their believe that this could be a major crypto coin. Again do not be fooled. Ripple is nothing but a token. Issued by a central authority. 38 billion are in circulation and 62 billion is in reserve.

It is not a mineable coin ( POW or POS) It is just issued (printed) out of thin air. Its value is in saving banks and financial institutions billions in interbank transfer fees. For this system to work it needs a large market cap. It certainly has that now. Banking transfer systems like SWIFT will not be silent in the face of this development eating into their business model.

It will be an intermediary token for financial institutions to move value among themselves. In short Ripple is not an everyday currency to be used by common folks. I don't think there is even a wallet for it. I suspect that most are held on exchanges and by the banks.

High fees is an extinction event.

Anybody who has a sizeable BTC holding is certainly now worried that their "store of value" may be in jeopardy. As we can see most of this value is moving to Ripple. When they realise that Ripple cannot be a store of value, much of that value will look for a new home - Bitcoin Cash.

Bitcoin Cash is the real bitcoin. It always was. The fork was BTC which added Segwit. Bitcoin Cash is still the same Bitcoin that I knew and loved in 2013. More and more people are beginning to realise this, as they find that they can no longer use their bitcoin to transact. All businesses that use to accept bitcoin have stopped accepting it.

The only argument left is for it to be a "store of value" and that is gone too, now that value have moved to Ripple! of all things. I guess people still want to trust banks. But they have to realise that banks do not own Ripple, and Ripple does not represent shares in the banking system.

Bitcoin will still achieve valuation of 100,000 and even 1 million a coin.

However that is in reference to Bitcoin Cash. This will happen when BTC is booted off the bitcoin mining algorithm. For me this can't happen soon enough. Bring on the Chain Death Spiral.

What are miners are waiting for? They are in control of BTC's fate.

What do you know. BTC's hashrate just plummeted 6EH from 18 to 12 and still dropping. Maybe this is the flippening happening now. Watch BCH price action to confirm.

Wednesday, December 20, 2017

Merry Christmas From Bitcoin Cash - It Is The Flippening

Woo-we. What a day we had yesterday. This was my post yesterday when Bitcoin Cash was at 0.11. It has double to .22 in less than 24 hours. Was it prescient? No. It is the same story line that I have been pushing these last few months. Let us recap.

Update 23/12/2017 : The reason BTC price is going down is because people are exiting. Proof BCH is going up. The flippening is happening. Enterprise are leaving BTC because fees and confirmation times are too high. BCH transactions and hashrate increasing. Value flows to Alts through BTC, and as it does BTC dominance reduces, now down to 44%. When Viabtc leads the way with Coinex, BCH will take over this function.

     Of course it does not matter if CSW is Satoshi, but if you did think or believe he was, you would have bought into Bitcoin Cash, and look at how much you would have benefited financially. Blind faith? Not really. 
     CSW is the most fertile mind in the crypto space. Not just technically but economically and philosophically as well. If he is leading an equally competent team at nChain and putting his support behind Bitcoin Cash then you should take notice. CSW through nChain have openly said that they will give free access to Bitcoin Cash for some patents owned by nChain. This is a huge endorsement for Bitcoin Cash.

Bitcoin was hijacked.

    Those of us who have been long enough in this space, live through the scorn, ridicule, and pain in promoting a nascent technology which we know in our hearts then will change the world. Bitcoin would not be where it is if not for people like Gavin Andresen, Roger Ver, Rick Falkinge, and many more like them who promoted the idea of Bitcoin with a passion. 

     The cracks appeared with the scaling debated though the stage was set with the funding for developers when bitcoin was worth only $200. The Bitcoin Foundation fell to the wayside and the /money men moved in with Blockstream. Bitcoin Reddit was heavily censored, Gavin was pushed out of Bitcoin Core and the early evangelist were demonised, to be replaced by developers who presumably knows what is best for the rest of us.

       Fortunately Bitcoin by design is anti-fragile. If a chasm appear that is deep enough and consensus cannot be reached, the community will fork. This is freedom at its' very best. Bitcoin Cash was just such a fork. It represents the hearts and minds and aspirations of the early adopters and evangelists who harbored Satoshi's vision.

       The people supporting Bitcoin Core pushed the narrative that Bitcoin Cash is an alt coin fork like Bitcoin Gold, Bitcoin Diamond and countless others coming up. It is not. It can be and will be the original bitcoin because it has the same mining algorithm. The other forks are just alt coin clones, because they cannot exist on the same mining algorithm as BTC and BCH even if they contain the genesis block. Do not be fooled.

       Core has been very successful in pushing forward their agenda convincing the majority of the community on all the social media forums, in pushing their narrative, and they do it to a point of incredulity that you would not expect from smart and intelligent people. My only explanation is that these people were seduced by the technology. 

       It is sad that they of all people should know that the computer field has always been seduced by people pushing vapor ware and we always move forward with what we got, and what we have now was a simple blocksize increase to solve the transaction backlog issue. That such an easy solution was resisted should have raised flags among these people. I can only surmise that this is a symptom of cultist behavior. The tide is turning and most of these people will come to their senses. When you are so used to the dark, your eyes have to adjust to the dawn.

The Consequences Of Bitcoin going to zero.
     Bitcoin (BTC) and Bitcoin Cash (BCH) are like 2 Siamese twins on the same body. When we look at the price of Bitcoin now, we should add the price of both coins. This situation is precarious and unstable for BTC because without the Emergency Difficulty Adjustor it cannot survive on the same mining algorithm as BCH. BTC is forever just one price crash away from oblivion through the Chain Death Spiral.

     My greatest worry in the consequences of BTC going to zero was that innocent people will be hurt. Many who owned BTC before the 1 August fork have heeded Core supporters call and sold their BCH as dividends. Some purchase BTC after the fork at prices as high as $19,000. They are now left with BTC that they can't move. I feel nothing but sorrow for their plight. I am truly sorry. Our voices were too small to counter the censorship and the vast and extensive social media propaganda of Core supporters.

      Just last week Xapo sold the last of their Bitcoin Cash and converted all their customers accounts to BTC. I warned in the article BTC is dead long live BTC ELI5 that as custodians these people have a fiduciary duty of care to not put funds entrusted to them at a non zero existential risk. If Wences Cesares, a smart and early promoter of Bitcoin can fall into this trap shows the depth of deception that have occurred. Wences will pay a very heavy price for this decision. Xapo as a company may not survive BTC fall to zero which can happen very quickly, perhaps even before the New Year. The losses and coming litigations will be insurmountable.

BTC as a store of value coin

    BTC cannot be a store of value if its' price can drop by 30 - 50%. I find it difficult to understand the reasoning of core supporters when they accept this reality and at the same time argue that it is a store of value. The same logic is at odds when they argue that a store of value coin need not be useful for everyday transactions. It is its' usefulness as a currency that gives it its' store of value property. Not the other way round.

    Most of these people are smart, intelligent and have foresight, or they would not have been early adopters. Yet in many cases these same people have acted against their own self interest. If BTC goes to zero many stand to lose all they have worked for in storing their wealth as BTC.

How soon to the flippening.
    It can' be too far off. The last time BCH reached .22 the flippening nearly happened. This time the majority of hashrate is still with BTC holding off the Chain Death Spiral, but for how long? some of the factors slowing the inevitable are ;

a) Large holders of BTC know that they have to support BTC price and sell down the price of BCH. Most of these whales have already sold off their BCH and so their ability to sell down the price of BCH is limited. In any case they will find a huge buy wall that will eat up anything they throw at it. 

Buying up the price of BTC is an admission that they have made the wrong choice and they are doing it just to buy time for disposing off their BTC in an orderly manner and limiting their loss.

b) Miners have not moved wholesale to BCH because the fees in BTC are higher than the coin subsidy from mining. It is estimated that the fee back log is as high as 1000 BTC. As long as fees are high and as long as the price of BTC holds up they will keep mining BTC. This equation is changing fast.

c) As the price of BTC drops the price of BCH increases. More and more people will make this connection. Already those holding BCH feel secure while those holding BTC are increasing insecure. At .25 the tide has changed and my guess is that at .33 the flippening will really get on it's way, and at .50 it is THE END. 


Tuesday, December 19, 2017

Back To The Future With Bitcoin Cash & The Shape Of Things To Come.

Non activation of Segwit2X was intentional, dishonest and a fraud

This half confession and analysis by Two Bit Idiot (Politics Religion and Bitcoin) is an honest and candid appraisal of the mindset and thinking of people on both side of the divide.

Segwit2X was never meant to be activated. It was a ruse to get miners agreement for activating Segwit. They were not told that btc1 had faulty code until the cancellation of Segwit2X. The 93% who were warned took action to prevent activation but the 7% that ran the code got their "surprise".

Big block miners were fooled once, ( Hong Kong Conference ) fooled twice, ( NYA Agreement ) and finally F**#ed over with intentionally buggy code. Coders of Jeff Garzick caliber do not write rookie error buggy code unintentionally. It is a wonder how some seemingly incorrigible people we look up to, are willing to prostitute themselves. This guy no longer has any credibility. He is making another attempt with United Bitcoin. Don't get caught in this scam. Avoid anything he does like the plague.

The Chain Death Spiral hangs over BTC like the "Sword Of Damocles"

As long as BTC is on the same mining algorithmn as BCH, BTC is always in danger of annihilation.

1) Price Action.

The new CBOE and CME futures market increases the likelihood of BTC price being shorted. Such a drop in price for BTC, will lead to miners moving to the BCH chain and putting BTC in danger of the Chan Death Spiral.

2) BTC is a Ponzi scheme

BTC is progressively losing users mainly to BCH as fees go higher and confirmation times gets longer. Erosion of existing user base makes it reliant on uninformed new users to prop up its' value. The system will collapse when this flow of new money stops, making it a Ponzi scheme.

BTC have not had a major price correction since the last correction from 8,000 to 5000 when Segwit2X was cancelled. That event very nearly caused the flippening. It is finally correcting now. If it gets caught in the Death Spiral again, this time it will not get out.

3) Store Of Value

The proposal that BTC be use only as a store of value and not as a transactional currency does not fly. The first ever recorded use of BTC was the purchase of a pizza. Today the transaction fees are in excess of the price of a pizza. A coin that is not useful cannot maintain a value.

The stated purpose for high fees is to push users towards off chain solutions like the lightning network. However BTC no longer have a monopoly in this space and must compete for users. Gaining adoption is hard, and there are not many users left to use the lightning network if and when it is released. After 5 months Segwit is hardly used. Core has to react to the market and not attempt to drive the market. Governments do that. ( Picking winners and losers)

Is Bitcoin A Bubble 

Bitcoin is an asset class that undergoes periodic bubbles. meaning that after each crash it will recover to make higher highs. The last Mt Gox crash took three years to recover its' previous high. Today BTC is in another periodic bubble. However this time things could be different. This time it could really crash to zero and never recover.

Core have turned BTC into a Ponzi scheme and like all ponzi schemes when the participants realise that there is really no economic value produced in the scheme, it will collapse dramatically.

When this BTC bubble burst, Bitcoin Cash will be the new Bitcoin. There will be no other forks of bitcoin because none can compete on the same mining algorithm.

A Generational Wealth Transfer Of Epic Proportions.

What we are witnessing is a transfer of wealth accumulated over generations currently in the hands of a small elite, to a new generation of  libertarians, anarchist and crypto savy nerds. Young computer savy kids not even out of their teens are becoming millionaires overnight.

Wall Street is terrified. Never have they seen so much money flow so quickly into a sector that they don't understand, don't control, and are unable to react to effectively.

Scaling - The next big challenge for cryptos

Both BTC and Ethereum networks are clogged up because they are unable to scale to the unexpected demand for transaction. To this extent even Litecoin is being co-opted to fill this demand and as a result the price of Litecoin have increased tremendously over the last week.

It is not inconceivable that even Litecoin will reach its' transaction limit. Bitcoin Cash has shown that with block size of 8MB and increasing to 32MB it can handle the transaction demand now. A massive negative campaign launch against it by the BTC supporters and having to rebuilt its' whole infrastructure means that it is virtually unknown among new crypto investors.

These barriers are quickly coming down. Already OKex and soon CoinEX will be trading BCH based trading pairs. will soon offer a Bitcoin Cash Visa debit card. Businesses are changing to Bitcoin Cash for faster and cheaper transaction. These developments in Bitcoin Cash will erode BTC's user base over time. The day is not far off when BTC will succumb to the Chain Death Spiral.

The Shape Of Things To Come.

There will be many token each specialising in different use cases and segments of the industry. This is my analysis on how the crypto market will shape out.

Currency, Store Of value, Smart Contract : Bitcoin Cash ( BTC will go to zero )
Privacy : Zcash  ( No Premine )
Tokenisation, ICOs : Ethereum ( Already the best use case )
Data Access, Web Pages : EOS ( Unlimited free transactions )

1) Social Media

The future of the World Wide Web is the blockchain. All the web pages on Steemit, is stored on the Steemit blockchain. Steemit already handles more transactions than BTC, Ethereum and BCH combined and it is free to access.

There was a time when I thought that micro transactions was the killer app for cryptos. However I now believe that micro transaction may be suitable for the internet of things, but for social networks, it introduces friction. Facebook could never scale if users had to pay fees to access it.

2) Decentralised Marketplace

The future of the market is peer to peer and decentralised. Bitsquare, Open Bazaar, Bitshares. Centralised exchanges will be dominant for years to come but look out for peer to peer to improve and gain dominance in the coming years.

3) Collapse of BTC

As BTC's valuation goes higher its' user base actually gets smaller as less people can afford to hold and use it. BTC's position on the same mining algorithm as BCH is unstable. Collapse is inevitable. The risk of putting your money in Bitcoin is high.

People who still support BTC and claim that it will become a reserve currency for international transactions are deceiving themselves. Without the power of the open source development community, it is noting but a FED COIN.

Wednesday, November 15, 2017

The Flippening - 120 Billion Reasons Why They Won't Let It, plus Innocent BTC holders will be harmed

                     27/10       27/10    30/10      10/11      11/11     12/11      13/11      13/11
                         A             B           C              D            E              X           F            G
BTC  Hash    14.00       6.50     11.04       12.51      6.21      5.85         3.43       10.13
BCH Hash       0.46      3.26       1.08       0.80       3.80      5.11        6.84        0.92
BTC               5910      5866      6199        7198       6491     5402       5799      6257
BCH                360         351       464         863       1622      2863       1391       1188
BTC Diff        12.00     14.50     14.50     14.50      13.60    13.60       13.60     13.60
BCH Diff         0.67      0.67        2.70       1.13        1.30      1.30         5.22        5.22

1) A - B
    7.5 EHash left BTC.
    2.8 EHash migrated to BCH.
    4.7 EHash left system

2) B - C
     2.18 EHash moved from BCH to BTC
     1.74 EHash returned
     3.00 EHash still out

From A to C mining profitability is affected by difficulty adjustment only. BTC (B) and BCH (C). Prices were largely unaffected.


3) D - E  ( BCH Price Push )
     6.3 EHash left BTC
     3.0 EHash migrated to BCH
     1.0 EHash more left System
     4.0 EHash in total now withheld from system

4) D - E - X ( November 12  Hash Rate Crossover )
     0.3 EHash migrated from BTC to BCH  leaving 5.85 EHash
     1.0 EHash returned to mine BCH  increasing to  5.11 EHash
     3.0 EHash Still off the system

5) X - F  ( Hash Rate Flipped )
     2.42 EHash taken off BTC  leaving only 3.43 EHash
     1.73 EHash  added to BCH to max of    6.84 EHash
     Additional 1.0 EHash taken off system

6) F - G ( Hash Rate Returned )
     6.0  EHash migrated back to BTC and order was returned to the system
     3.0 EHash still off the system

Bithumb servers went offline for several hours

On the 11 of November there was a 100% price movement in BCH from $863 to $1622 and a sell off of BTC from $7198 to $6491. This resulted in a "Black Swan" event driving the price of BCH to a high of $2863 and BTC to a low of $5402 at 6.00 am on 12 November (Bitfinex).

For yet unexplained reasons when BCH price peaked at 6.00 am, Bithumb  servers crashed. This took out most of the demand out of the market and sell pressure from the remaining exchanges was able to bring the price of BCH down to around $1400 by 10.00 am. All this while Bithumb was off-line.

This massive increase in mining profitability on BCH caused miners to switch and the hash rates on the two chain crossed (X). Had this carried on the BTC chain would have succumb to the Chain Death Spiral as the hash rate between the two chains did flip (F).

My guess on what happened.

I believe nobody was prepared for this. It was a "Black Swan" event. Bitcoin markets are unregulated and there are no trip mechanism built in. More than likely the major players realised what a disaster this would be if the Bitcoin market crashed and maybe even go to zero as the hash rate was rapidly exiting the BTC chain.

The decision must have been to "turn off" Bithumb servers to kill the demand. At the same time they borrowed BCH on margins to sell BCH down. Those who bought at peak on Bithumb and were unable to liquidate lost big time. Many would have been bankrupted. Still facing limited number of lawsuits is better than having the whole BTC market collapse with total wealth transfer from BTC to BCH.

So we now have a trip mechanism in the crypto markets. We turn servers off. May this be a warning to all those who trade in this market.

BTC Recovery

Over the next few days the price of BTC recovered and as of today 15 November is over $7100. Here is the problem. How can anybody put money into a coin that has a non existential possibility of going to zero because it does not have the protection of an Emergency Difficulty Adjuster (EDA) like in BCH.

On top of that it is practically useless because of extremely high fees and long confirmation times. I sent some BTC over 10 days ago with 0.0002 BTC in fees and that transaction is still in limbo. I tried to send $500 out of my wallet with priority fees and the fees was calculated at over $200. This coin has turned out to be a joke so why does anybody want to support it?

Of course there are 120 billion reasons that it must be supported. And think of all the people who bought into BTC since 1 August. What can we tell these people if BTC went to zero and BCH became the new Bitcoin. Something has to be done. If the problem is bad at $7000 how much worse at $10,000 or $100,000 per coin.

It is very simple. The coin without EDA (BTC) cannot share the same POW algorithm as one with EDA (BCH) and expect to survive without intervention. Another "Black Swan" event is just around the corner. If we want to protect innocent people who have purchased BTC since 1 August we have to hard fork EDA into BTC. This way both coins can compete for mining hash power on their respective merits.

Segwit2X Solution

It is possible that there may be a solution round the corner. In less than a day the "cancelled" Segwit2X will activate. 3.0 Exa Hashes of mining power is still unaccounted for and did not play a part in the last crisis.

What if Bitpico is real and they really do control 30% of total hashpower. They could hard fork Segwit2X with EDA built in and this could replace Segwit1X as the new BTC. Segwit1X would of course die without EDA in this tussle. This way all BTC holders are protected and both chains can co-exist. The value between BTC and BCH will depend on their merits, usefulness and adoption. It also allows for orderly transfer of values between the two chains.

Here is another link that say Bitpico retracted. We are kept guessing.



Monday, November 13, 2017

The Flippening, BTC to BCH The Last Mile

We had a glimpse of the flippening on 12 November when the ATH for BCH reached $2800. There were many people who truly believe that the flippening was actually going to eventuate. You could smell the fear. Well as they say " You ain't seen nothing yet". To explain it all we have to enlist the help of some chartist. Like me, most of you, are not day traders so will have very little understanding of Elliot wave theory, but would just like some inkling of how events are going to play out in the next few days.

1) What we know

a) BCH upgraded to a new EDA which just activated at block 504031. The wild gyrations in difficulty should be a thing of the past and miners will be more incentivise to stay mining on the BCH chain. This time, once the BTC chain come into the orbit, of the death grip, of the Chain Death Spiral, they will not be "rescued" by a BCH difficulty adjustment.

b) Many people wanting to sell BTC to purchase BCH have their transactions stuck in the huge mempool backlog now at 114 MB. God only knows how much sell pressure is locked up in the mempool. Just means that when the next wave hits it will be stronger than the last which was already a record at about 8 Billion dollars. It was a third of BCH market cap.

c) Segwit2X activation is scheduled at block 494784, another 543 blocks or in just under 4 days. Will Bitpico carry out their promise to start mining the Segwit2X chain? Thus far, out of the 14.5 Exa hashes of mining power available, only 10.5 EH is mining on the BCH and BTC chain combined. These 4 EH when they are deployed will be the final thrust sending BTC into the CDS and effectively evicting it from the Bitcoin mining ecosystem.

d) BTC still needs 1690 blocks for the next difficulty adjustment. BTC may never see another difficulty adjustment and they will most probably fork off the current Proof Of Work, as proposed by Cobra. This in an attempt to keep the Bitcoin name. However it is futile, as Bitcoin can refer to any particular blockchain. It is Generic.

Even the BTC handle can be change by exchanges and wallets. Bitcoin Cash was referred to as either BCH or BCC by exchanges and wallets but we all know they mean Bitcoin Cash. There is no register to claim a name. It is just naming by consensus. If BCH is the only coin left on the current POW, it will be referred to as Bitcoin. It contains the Genesis block and all the properties that we know, love and accept as Bitcoin.

e) BCH transaction volume is fast catching up with BTC. This means that a large chunk of institutional players have and are moving over to Bitcoin Cash. It is just impossible to use BTC for any kind of  "normal business" transaction. What the small blockers should honestly admit is that if a coin is not being used it has no value.

2) The Juicy Parts

If you have followed this blog you probably also believe that BCH will take over BTC as the real bitcoin. To have an idea on when and how this will play out we refer to some chartist predictions. I do not follow chartist or day trade but taken in totality with what we know we can derive trends and gain some idea of time horizons.

His last video correctly predicted the ATH of $2800 on 12 November. Then came the correction. His long term prediction based on Elliot wave theory, predicts a third wave peak at $3300 and a fifth wave peak at $4500.

Taken with what we know, in 4 days Segwit2X activates and Bitpico may start mining the chain. This may be the third wave pushing BCH price to $3300 close to 1.0 BTC (50% BTC market cap). This will panic hard core holders to defend BTC by pushing up BTC price and selling down BCH. That will be the expected Elliot wave correction leading into the 5 wave push to $4500 or about 1.25 BTC. If this happens it is game over for BTC.

I don't sadvice trading into any of these predictions. Basically holding on to your BCH is the safest and best policy. The above scenario may be all done and dusted within 2 weeks. I will not want to miss any part of this exciting phase of Bitcoin history "for all the tea in China". The last run was memorable, was it not?


You can read about the process on Segwit2X hard fork effect on the flippening here.

Segwit2X Still Go - Complete Wealth Transfer

Wealth Transfer In Progress

You can read about the Chain Death Spiral Here

Chain Death Spiral

Elliot Wave. - In my very limited understanding, they are basically fractals pattern and are all nested within each other. So if you look deeper into smaller time frame on the charts you see the same 5 wave pattern. On the long time scale the third wave is at $3300 and 5th wave at $4500. From our knowledge of what is happening we narrow the time frame to within the next 2 weeks for the fifth wave to play out. Let us see if it is as we expect.

Sunday, November 12, 2017

The Flippening. BTC to BCH Wealth Transfer In Progress

What a wild day we got on 12/11/2017. Bitcoin Cash went as high as .52 BTC and dropped back down to .19 BTC. At the same time BTC dropped below $5500 and recovered to above $6000. What happened ? This movement caught me by surprise. Thought that it would be another 4 days before the action started. In light of this development I think I need to revise my analysis.

1) Price of Bitcoin is about $7800 and it is Total of BTC + BCH

Currently on Coinmarket Cap.     BTC = 6123   BCH = 1731   Total = 7854

What seems to be happening is that value is flowing to BCH.

Take Note :  BTC and BCH share the same Proof Of Work where miners can move from one chain to the other following the most profitable coin. BTC does not have the Emergency Difficulty Adjustment (EDA) coded in so is vulnerable to Chain Death Spiral. If it "dies on the vine" BTC goes to zero.

Large holders are preparing, and today's episode will scare the shits out of them, if they have not hedge their positions. The situation has stabilised but probably only with massive and costly support. Look upon this as the market being propped up while whales shift their portfolios. In the meantime the propaganda machine will be on full blast to restore confidence, and the cyber army will prepare DDOS attacks on exchanges to slow access and trades. They can slow the process but cannot change the outcome. Two coins cannot co-exist on one Proof Of Work chain if one does not have EDA. Core is not likely to encode EDA into BTC with a hard fork anytime soon.

Treat this calm as the passing of the eye of a cyclone. Make your move to protect your financial position. If all your holdings is in BTC you need to hedge by holding some BCH. At this point you still have a 4 to 1 advantage. At the least hold 1: 1 so that you will be wealth neutral whatever happens. I notice that all the Core supporters on Youtube channels are starting to tone their rhetoric and are themselves advising their listeners to hedge their positions.

With the mempool so clog up and block time in the hours you may not be able to move your BTC to an exchange to sell even after paying high priority fees. Take this opportunity to move some BTC to exchanges ahead of time. Do not use low fees options or your transactions will get stuck. Use peer to peer systems and even services like Shapeshift. Coinami and Jaxx wallets have shapeshift support.

2) The Mining Action

a) There is more hash power mining on BCH than on BTC right now.
b) BCH difficulty will retarget in the next day or 2 at the most.
c) BCH hard forks to adjust the EDA so as not to have wild swings in difficulty tomorrow.

After the difficulty adjustment, BCH will still be more profitable to mine. So the majority of hash power will keep mining BCH. The next difficulty adjustment for BCH will smooth out the wild hash rate swings to lock in the miners.

BTC just had their difficulty adjusted and it will need another 1880 blocks for the next difficulty adjustment. With such long block times, BTC may never see another difficulty adjustment, before they are forced to hard fork off the network to another Proof Of Work algorithmn.

Segwit2X is still on. Complete wealth transfer from BTC to BCH
Chain Death Spiral

3) What I think happened
The interesting thing about this whole episode is that the 30% of hashing power, about 3 Exa Hashes, did not come into play. They were still held offline. They were not even mining on the BCH chain. This means that what happened was more of a Fear Of Missing Out ( FOMO ) event.

Many investors and crypto holders are waking up to Bitcoin Cash, and started buying in. Many were moving out of bitcoin and alt coins into Bitcoin Cash which is why the total value of BTC and BCH was almost unchanged throughout the episode. Ultimately this somehow turned into the banking equivalent of a bank run, but unlike banks and stock markets there are no trip mechanism in crypto, and so a feedback loop kicked in and the whole process went berserk.

What ended the panic was the Korean exchange responsible for about 40% of trading volume going offline. This allowed bitcoin support levels to kick in pushing bitcoin price above $6000. At the same time profit taking on BCH drop the price to 0.20 but was still above the price of 0.15 where it started. Seems like the huge demand for BCH came from the Korean exchanges causing this run-up, same as the last one in August. One thing for sure, the Chinese have not gone away. They may be routing their trades through the Korean exchanges as well. Brace for more to come....

This event will not be a one off. We may see two more of these run-ups up to Segwit2X activation. BCH will settle higher and BTC will settle Lower after each episode. When this run-up happened most were caught unprepared and were unable to move their BTC to exchanges. The next episode will see even higher volumes transacted with less gyrations. The DDOS army will be on standby.

4) Too little too late
Do not bother listening to any explanation, excuses, blame or whatever being brandied about, from any side. Bitcoin does not care. What it comes down to is that 2 coins are competing for the same miners to secure their network. BTC does not have the protection of EDA. It is like playing a game of ice hockey where one team is not wearing helmets, because they don't want to stop the game to put their helmets on. It is a foregone conclusion that the longer the game goes on, the team without helmets will be annihilated.

Saturday, November 11, 2017

Segwit2X Is Still Go - Complete Wealth Transfer From Legacy Bitcoin To Bitcoin Cash In Progress

October 26 2017  Email from Jeff Garzik Segwit2X is full steam ahead.
November 8 2017 Segwit2X Cancelled announcement by 6 industry leaders.

Since Segwit activation on 23 August, the Segwit2X team had endured 2 months of relentless bashing from the small blockers, all the while remaining mostly silent. So what happened between October 26 and November 8? It can't be for the lack of consensus which was the reason given. They already knew there was never going to be consensus. Something unexpected happened, causing them to push the "kill" switch. What was it ?

This Happened

                               BTC        BCH        TOT

 26 Oct                   12.16        1.33        13.49
27 Oct                     9.11         3.97        13.08
28 Oct                     7.37         4.29        11.66
29 Oct                     8.51        0.60          9.11
30 Oct                   10.46       0.38         10.84
31 Oct                    11.07        0.43         11.50
01   Nov                  9.72        0.45         10.17
02 Nov                   11.49       0.46         11.95
03 Nov                    9.76        1.99         11.75
04 Nov                    8.52        1.68        10.20
05 Nov                   10.51        1.02        11.53
06 Nov                  10.52        1.25         11.77 
07 Nov                   9.86         1.24         11.10
08 Nov                  11.16         1.22         11.38 

From October 27 the hashrate for Bitcoin dropped by over 30%.

In my previous post I postulated that the Segwit2X hard fork is a billion dollar windfall opportunity for miners. It is inconceivable that miners can let this opportunity go by, without exploiting it.

My guess is that a consortium had indeed hatch a plan to take advantage of this opportunity. I suspect that they approached Jihan Wu and he turned them down. Bitmain is a Billion dollar international business with venture capital investments and cannot be seen to be tainted by any fallout from this "Billion Dollar Hiest". If you look at the names of the other signatories, aside from Jeff Garzik, all are well known names in the Bitcoin space, operating front end customer based businesses. These people are distancing their businesses and themselves from the fallout, when "the shit hits the fan". Jeff Garzick provided credibility as he is lead developer.

Sure enough within 12 hours this response was posted. This message by Bitpico

"We are carrying out the fork regardless as everything is set in motion. Backing down the difficulty right now is a strategy. Wonder why 30% network hash-rate disappeared? It’s ours; the miners that will continue what is set in motion... A handful of humans cannot stop what they have no control over..."

This message was dismissed as FUD and trolling. I disagree. I think they are deadly serious. There is too much money at stake. Since then they have also put up a website

Can They Execute ?
1) A Consortium Of Miners.
Examine the miners pie chart. The pool ratio for the 4 days and 24 hours are fairly similar. We don't see a drop out of any single pool or group of miners. Suggest a consortium working together. From the table above, they do seem to control 30% of the hash power as they claim.

2) The Play
I see this play out in two parts. First the flippening ( Pivot to Bitcoin Cash ) and secondly the Segwit futures. For the flippening they start by taking huge positions in Bitcoin Cash at around .05BTC.

Possible mining share breakdown on the separate chains.

Bitcoin Cash  :, Viabtc, Unknown : 30%
Segwit2X       : Consortium, Unknown : 40%
Segwit1X       : Antpool, Bitfury : 30%

Come 16 November both Segwit chains will be slow. We may get 1 hour blocks on the Segwit2X chain, and even longer on the Segwit1X chain. Bitcoin Cash will have very fast block times and the number of transactions processed on this chain will also escalate. As the price of Bitcoin Cash increase miners will move from Segwit1X to Bitcoin Cash and this chain (Segwit1X) will be the first to suffer the Chain Death Spiral. In the meantime, the "Rouge" miners will continue mining the Segwit2X chain at a loss.

Will the exchanges recognise Segwit2X as Bitcoin if it has the greater accumulated hashing as announced before the fork was cancelled? I doubt it. They will more likely view it as an attack on Bitcoin and refuse listing them. If other exchanges like Hitbtc start listing their coins then the game changes again, and that will be another complication.

How long would they continue mining at a loss? My estimate is that with 30% of hashpower it will cost them approximately 1 million dollars a day. They will make many times that with the gains in the price of BCH. I think they can continue this stand-off for as long as is needed.

When the "Rouge" miners are sure that Segwit1X is no longer viable, or if Segwit2X hard fork off the network, they will abandon the Segwit2X chain as well and move over to Bitcoin Cash. By then even Antpool cannot save the day. Both the Segwit chains will be "dead". Only 1 chain will be left - Bitcoin Cash ---> Bitcoin.

Bitcoin Cash Is The Real Bitcoin

Will the real Bitcoin please stand up

Bitcoin. Its a matter of trust.

The futures play was easy. Intially it must be to purchase BT2 tokens and make them BTC for a huge profit, then proceed to the flippening. The Segwit2X cancellation announcement was probably unexpected. It stopped this play by tanking the futures, however they were able to pick up tens of thousands of Segwit2X tokens for pennies, and are now selling to high risk taking investors betting that Segwit2X will become the new BTC.

No Segwit2X free dividend

3) Bitcoin has no masters and takes no prisoners
The announcement signed by just 6 people cancelling the hard fork, is in itself ludicrous. This is not how Bitcoin works and they know it. Did they really expect the miners to just abide by their proclamation, leave their money on the table and walk away from billions of dollars? Get real please. Legacy Bitcoin's seeds of destruction was sown when "self imposed managers" surreptitiously forced the back door activation of Segwit. The consequences and the follow on effects after Segwit2X activates, just dawned on them, and they find themselves "staring into the abyss".

People holding legacy bitcoin are going to lose their money, investment and nest egg, through no fault of their own. I can't even begin to think on how this fallout will devastate peoples lives. This will be a total wealth transfer from BTC to Bitcoin Cash. The lesson is simple. Leave Bitcoin alone. Bitcoin has no masters and takes no prisoners.

4) Disruption
If disruption to their services is what they hope to avoid by cancelling Segwit2X, I am afraid disruption is what they will get. Bitcoin is immutable code. Not managed protocol. Only Bitcoin Cash will remain on the current most secure Proof Of Work. There will be no more "opportunistic and contentious forks" from the Bitcoin blockchain in the future, after this episode plays out.

Bitcoin Cash does not need anybody to confer upon it the name Bitcoin. It just is. It always was. Should Bitcoin Cash worry about "Rouge" miners? I think not. We don't fear "Rouge" miners. Only  "Rouge" developers.

Core will have to change Segwit1X POW to survive and proclaim their chain to be the real Bitcoin. But it wont work. A chain with a different proof of work is not Bitcoin. They can tinker with Segwit on their chain as much as they like but without the economic incentives to follow, they will soon lose interest.

5) Final Analysis
a) I feel sorry for people who bought bitcoin after 1 August 2017. Theirs will be a huge loss. Buying in at up to $7500 and seeing it go to zero. Some of these people climb onto the bandwagon trusting bitcoin to be a store of value. To some this will be their life savings and they will see it disappear. I cannot express my sadness for these people. I covered this in my posts

BTC Is Dead. Long Live BTC.

BTC Is Dead. Long Live BTC, Updated and Explained ELI5

b) People who own BTC before August 1 got their allocation of Bitcoin Cash. The sad part is that most were persuaded by the dominant crypto media and forums to sell their Bitcoin Cash and buy more BTC. If they had taken that advice, they will end up penniless. Lesson for the media is, inform and educate, not indoctrinate. Will they learn? NO. At least they will know the pain of those they hurt if they took their own advice.

c) For fund managers who have divested their holdings of Bitcoin Cash, there will be much explanations ahead. Segwit1X without EDA protection always had a non zero existential threat of going to zero, a victim of the Chain Death Spiral. Not great to wake up one morning only to see a 100 million dollars bitcoin fund go to zero.

d) Coinbase would actually come out smelling like roses because they would have protected their customers from heir own folly, by witholding their BCH until January 2018.

5) Fear Uncertainity and Doubt?
In my earlier posts I placed a caveat hoping that I was wrong because the implications of people losing money and their savings through no fault of their own is too horrendous to comprehend. I am now convinced that I was not wrong. I am afraid. Very afraid.

Will this kill Bitcoin. Of course not, but hopefully we can put in place some programs to minimise the negative human cost of this momentous wealth transfer and its' aftermath. There will be many who will not believe in this coming apocalypse. All I can do is warn and inform. Must add that my posts have been censored from r/bitcoin.

6) Can It Be Averted?
Sadly no. In the long term, only one coin can remain on the current Bitcoin Proof Of Work, unless both coins have EDA. In the short term, that is in 4 days, some miners will start mining Segwit2X, thus starting this whole process of destruction and renewal of the Bitcoin landscape. I had previously expected it to happen in two stages. First the demise of Segwit1X and an extended tussle between Segwit2X and Bitcoin Cash over several months. It is now clear that the time frame for both these events has been compressed and will play out next week. When the dust settles, Bitcoin Cash will be the only coin left standing and will go on to achieve the predicted valuations of 1 million dollars a coin. I suppose we have to break eggs to make omelette.

We will know in 4 days nevertheless. When in doubt "Follow The Money". 

Footnote: Legacy Bitcoin mempool exceeded 100K. The chain is unusable for the majority of users. This is only 4 days away from the activation of Segwit2X. It is going to get worse. Much worse. Was not going to post until after the fork but the cancellation of Segwit2X changed that.

Sunday, November 5, 2017

Segwit2X - A Billion Dollar Windfall Event And Opportunity Bitcoin Miners Control

This is my final post before the coming Segwit hard fork. Note that I do not have access to miners, developers or whales. These observations are my own and they are deduced from the available public information accessible to everyone. Do not take this as investment advise. If it helps you  .... You're Welcome.

A Once In A Lifetime Golden Opportunity For Bitcoin Miners

Segwit2X futures are trading at 0.15 BTC. If you are a miner supporting Segwit2X, can you pass up on this opportunity to make a quick, clean, and legal, profit of 5X on your investment, in a situation where the outcome of the event is in your (industry) control?

If it all works out for the miners, and they reap this huge windfall, you cannot criticise or sue them for being deceitful or for insider trading because they have actually signed an agreement publicly stating that it was exactly what they are going to do. They can't be blamed if you did not believe them.

As a miner they are in business to make money. We even assumed that this profit motive drives them to mine the most profitable coin. Mining margins after costs are at best small, and it may take years to recover their investments. Why would they not take advantage of this golden opportunity? A million dollars "invested" will nett them at least 5 million, after BT2 is declared to be the new Bitcoin.

Major companies like, Bitpay, Xapo and Coinbase have publicly stated that they will recognise the chain with the most accumulated hash power (hashrate x blocks) as BTC. This calculation will not take into account the price of BT1 or BT2. This means that if a majority of them (miners) are supporting Segwit2X then Segwit2X will become BTC. Note that it needs just a majority and not 80 or 90%.

Opaque messages from exchanges recognising Segwit1X as BTC. Eg. HitBtc

1) "On the day Segwit is activated B2X withdrawal and deposits enabled". All it means is that they will trade B2X, and if B2X become BTC so be it, if not they will trade it as a token. It means nothing really. Just stating the obvious.

2) "We may temporarily suspend BTC deposits and withdrawal ...... once we are sure it is safe, we will restore full functionality"

It is actually the same policy as Coinbase. They did not insist that if B2X has more accumulated hashrate, they will still treat B1X as BTC, because they can't. No customer will accept that trade. So it is clear that even if exchanges say that they prefer Segwit1X to be BTC they still have to wait till the situation resolves. It is just a PR stunt or it may be construed to confuse as they may also be keen to jump in on this "golden opportunity".

Trading volumes were light in the begining but now with 10 days to go, the 24 hour volume have reached 5700 and increasing. It is conceivable that we could have 100,000 or more contracts outstanding at the fork. This could easily become the record single Billion dollar wealth transfer event in the history of Bitcoin.

So why would anybody take the opposing view if they stand to lose that much money?

Perhaps they are committed (Blockstream) and have to protect their position. Perhaps they are putting up their money to protect their principles (misguided), or maybe they just can't see the wood for the trees. The truth is - They are not in control. The miners are. We have to at least expect that human beings will act in their own self interest.

Group 1 losers : Bitcoiners, and new bitcoin converts who believe that they will be getting Segwit2X coins as dividends which they can quickly sell for a profit. (ALA Bitcoin Cash). See my last post on No Segwit2X Dividends. No dividends but they will still have their BTC.

Group 2 losers : Investors who purchase Segwit1X futures thinking that they are getting BTC at a discount. 100% loss if Segwit2X wins as the Segwit1X chain is unlikely to survive.

Group 3 losers : Those who believe that miners will mine the most profitable coin and so factor in the future price of BT1 and BT2, but as stated above, price is not a factor in calculating accumulated difficulty. If you really think about it, the most profitable option for miners is the windfall scenario.

If Miners End Up Supporting Segwit1X

In the unlikely event that miners end up supporting Segwit1X, they will have to answer to why they reneged on their word and agreement. There could be class action legal suits (against NYA signatories) flying about from the people who lost money trusting them. Why would they sully their reputation and risk the wrath of these investors. Sticking to their word and agreement is the most profitable and safest course of action.

The Battle For Bitcoin Cash To Become Bitcoin Is Not over.

Bitcoin Cash is not an Alt Coin. It is still in the running together with Segwit1X and Segwit2X to be the real Bitcoin. They all have the genesis block and compete for the same hash power. The tussle between Bitcoin Cash and Segwit since the last fork is still continuing. It has now morph into a tussle between Bitcoin Cash, Segwit1X and Segwit2X. In this coming fork Bitcoin Cash is not in the running for the title of BTC because it is very far behind both Segwit coins in terms of accumulated hash power. What can happen to Segwit1X if it becomes the minority chain is covered in my previous post. However, in the long run only one coin can survive on the Bitcoin proof of work. This has implications if you are a fund manager.

Wednesday, November 1, 2017

Segwit2X Equals Free Dividends ... Come On ... Tell The Truth ... PLEASE!!

In my last article I was curious as to why the BT2 futures price is at 0.15 BTC while miners support is at 90%. Totally weird. This is as though - with the Reserve Bank announcing a 1%  interest rate increase, the banks react by dropping mortgage interest 2.5%. Bonkers!

The article here : Battle Royale Segwit2X And Segwir1X

I realise now that the reason is because investors are thinking that after the fork they will be getting Segwit2X fork coins as dividends, which they can immediately dump just as they did after the Bitcoin Cash fork. This may also to some extent explain why bitcoin price is increasing now just before the fork.

Wow! Stop! Newbies Beware! Stop swallowing this nonsense! It is not going to happen this way. Segwit2X is not the same as Bitcoin Cash. All major exchanges have announced that they will treat the chain with the most work done as BTC ( Bitpay  Coinbase  Blockchain ). Take this announcement seriously. It means that everything freezes after the fork and the large bitcoin companies ( users by proxy effectively) will decide which chain is BTC and that is by observing which chain has the Most Work Done. It is a race and the winner gets the Bitcoin name. Price does not come into the calculation. Only mining hashrate. Because of this decision,

Segwit2X will be the chain with the most work done after the fork.
It will be given the Bitcoin name.

How it will play

24 hours before the fork all BTC deposits and withdrawals will cease.  They will  now wait to see which chain will have the most work done basically the most hashing power.

Segwit2X will have 90% hashing power. The first block will be mined in about 11 minutes then the next in another 11 minutes. At the end of 2 hours there will be at least 10 Segwit2X blocks found. If Segwit 1X is lucky it will find 1 block after 2 hours. If we stop here we can already conclude that the Segwit2X chain has the most work done and so will be named BTC.

If we carry on longer, miners on Segwit1X chain will find that they are continually lagging behind Segwit2X in total work done, and at some point will start to switch over. When this happens the Segwit1X chain eventually dies ( Chain Death Spiral ) and will be abandoned. All blocks found on the Segwit1X chain will be worthless. The longer this carries on the more miners on this chain stands to lose.

Miners Miners Miners (Update)

Do not take your eyes off the miners. They control the play. You can be sure they are talking to each other. Look at it through their lenses and it will appear less hazy. So if you are a miner and you see this 6X play on Segwit2X what will you be doing?

Firstly you will want to keep the price down while you buy in. What an opportunity. If they make the play for 6X gain. They can say " it's what we said we would do " and no one can pull them up for insider trading. Then there is the longer game. What is the long game. I will have one more post before the fork next week to square up all these events and happenings since the last Bitcoin Cash Fork.

It is strange that there is quite a premium on the asian exchanges for Segwit2X. Do they know something?

No. Miners will mine the most profitable coin and they will move back to BTC (Segwit1X).

Get this. Do not fall into the argument that Segwit1X is BTC before the fork and Segwit2X is a new coin after the fork and so is an Alt coin. Both are bitcoin at the point of the fork. If you send btc from a wallet after the fork it is a valid transaction on both chains. The wallet does not care which chain wins. SPV wallets will follow the longest chain.

At the exchanges, and users like Coinbase, Bitpay effectively suspend trading. They wait to see which chain becomes the longest chain. This now depends on which chain has the greater mining power. They will not wait forever and at some point after they see that hashrate have stabilised, they will start trading the longest chain as Bitcoin. When this decision is made by consensus, the other coin is effectively dead. Price does not come into the equation only hashrate matters. 

No. The nodes will reject Segwit2X and miners will go back to Segwit1X

Nodes do not matter is this fight and is another fallacy thrown in to confuse. If this was true Bitcoin Cash could not have happen. It did. So this argument is false. And don't fall for the argument that Bitcoin Cash uses a different Proof Of Work too. It uses the same. Nodes do not matter because the system will propagate even with 2 nodes.

No. The users will rebel they will boycott all the "enemy services" and those services will pay a heavy price.

After the fork and if Segwit2X becomes BTC, the decision is made. Election is over. We could argue forever and never agree. So those that do not agree - can exit. The rest will carry on. No point spitting in the wind! Nothing will come off it. The community will move on. There will be more controversy and fights for "the soul of Bitcoin" going forward. For now this argument is over. The next fight will be between Segwit and No Segwit.

Effect of Bitcoin Cash hashrate

The impact of Bitcoin Cash will probably not be great because of a change to their Emergency Difficulty Adjuster (EDA) through a hard forked on 13 November. Bitcoin Cash hashrate would reduce in volatility and probably fluctuate around 1 Peta Hash.

51% attack and Wipeout

If Segwit1X gets only 10% or less in hashing power it can also be 51% attacked. However this is not likely or necessary as such an attack by miners will not look good on them.

Bitcoin Core is Legacy bitcoin and it will never die, may get smaller but never die.

Very dangerous unmovable position to take. Not healthy if you are betting your own money on it. Sometimes an immovable object meets an irresistible force. Only tenable if you are betting with someone else money. What if it does die? and it can without mining support.

What happens to the Core Chain

1) They can change the Proof of Work algorithm and branch out like Bitcoin Gold, but they won't be Bitcoin. This is not easy to do and will take some time to accomplish. Then there is all the infrastructure to build around it like wallets, exchanges, nodes etc. This is not easy as can be seen from the experience of Bitcoin Cash. Add in the need to finance the development and it is really nearly impossible.

Note :- Bitcoin Gold self mined 100,000 coins presumably for development. The price of futures started at $400 and is now about $150. These are futures. There are no coins yet. The longer it takes to release coins the less it will be worth. To me, Bitcoin Gold looks more like a get rich quick scheme preying on the uninformed, misinformed and the greedy.

2) They can hard fork to 2MB and remain as a competing client, and keep developing Segwit.

3) They can hard fork incorporating EDA, but it is rather too late to implement now.

Whatever happens there will be no Segwit2X dividend coins to dump.

The aftermath

If you own BTC in your wallet they will just continue to be BTC. Nothing changes. SPV wallets will just recognise the longest chain.

What if Segwit2X does not get 90% of hashing? Well, it just need to get the Majority. Add to this the probability that miners on Bitcoin Cash will move to help Segwit2X and you quickly see that, because the criteria is total work done, Segwit2X will win and become BTC.

Back to Segwit2X futures

So what happened with Segwit futures. For every BT2 coin sold someone must split 1 BTC into 1 BT1 and 1 BT2 coin. These are just numbers on Bitfinex ledger. These coins do not exist. So if someone holds 100 BT2 another person must hold 100 BT1 on Bitfinex ledger. If BT1 chain dies as the above scenario would suggest, then those holding BT1 coins will be valued at zero and BT2 coins will become BTC.

There will not be any BT1 coins to issue unless Segwit1X successfully hard fork which as explained above is a tall order. Even if Core hard fork to 2MB it is still a Segwit2X chain. If you have been deceived by the No2X campaign, than you will be very angry indeed. If you bought BT1 coin at 0.85 BTC thinking it is a 15% discount. You will lose 100% of your investment.

It is very important that you do your research. Do not listen to one side only. Be wary when people vent and rage loudly, aggressively, uses censorship and threats to make their point. Also be careful of those who do not fully know what they are talking about. Don't just accept their point of view. Examine their reasoning. If non is forthcoming - RUN.

Am I right?

I could be wrong! But it comes down to this. Do you think Segwit2X will start with more hashing or Segwit1X? I have described the above scenario if Segwit2X gets the majority hashing power come fork day.

If you still believe that Segwit1X will get the majority hash power then take the opposite view. However do consider :
1) There are 90% miners signalling for Segwit2X already. Are they lying?
2) There will be hidden hash power that will come up on fork day. These will more likely be for Segwit2X as their supporters have more money.
3) Nodes play no part in this fight. Don't be fooled by this argument.
4) If you are wrong you lose 100% of your investment.
6) Bitcoin Cash miners are Segwit2X supporters. They can switch their hash power.
7) Reputable People in business honor their agreements. Re NYA.

Can't emphasise this enough. DO YOUR RESEARCH. If you want to gamble on the futures, DO YOUR RESEARCH. I repeat again. THERE WON'T BE ANY SEGWIT2X COINS TO DUMP. One or the other will go to ZERO. If in doubt Do Nothing. Your bitcoins are safe.

The argument stops. We move on.

Regardless which side you are on in this argument the issue will be resolved. ( Good Video )The fork will happen. One coin will emerge. If you gamble on an outcome and you are wrong you will lose 100% of your bet. Unless you are willing to lose all just hold. Your BTC before the fork will still be BTC after the fork. There will be no Dividend Segwit2X coin that you can dump. It is not a repeat of the Bitcoin Cash fork.

Bitcoin Is A Beautiful System. It Will Win.

Despite all the noise, internal fights and external attacks, the price of Bitcoin goes higher. It will survive and get better. Even China can't kill Bitcoin. Bitcoin is what the majority of users agree is Bitcoin and the consensus process is constantly changing. We can't explain what is Bitcoin but we all know one when we see one. This is a social movement like we have never seen before. Hope you profit from this.

Monday, October 30, 2017

Battle Royale Segwit1X And Segwit2X

The strangest aspect of the upcoming fork is that Segwit2X is priced at 0.15 BTC on the futures market, despite there being an expected 90% of mining support for it. This is an unusual situation and is totally at odds with known facts and logic. Logically the chain with the greater hashing power should command the higher price.

When Bitcoin Cash hard fork on 1 August, Bitcoin Cash was expected to have the lesser hashing power, and the futures was priced accordingly.  In this situation, it is as though the current 90% hashrate signalling for Segwit2X is not real.

Adding to this anomaly is that many Segwit1X supporters have already resigned themselves to the fact that the fork will proceed as scheduled. They concede that a hardcore of Segwit2X supporters controlling more than 50% of the hashrate, have already "burned their bridges" with Core developers.

The most profitable chain is a function of the Price, Block Speed, and Transaction Fees and miners will choose to mine the most profitable chain. As we examine these three variables below we can see that Segwit2X comes out on top in all three criteria. Something is not right.

Transaction Fees.

Fees on Segwit1X are on average 1 BTC per block, which means that Segwit2X should yield about 1 BTC more per block, as transaction fees on Segwit2X will be twice as profitable, because blocks are twice as large.

Block Speed.

Both Segwit2X and Segwit1X will start with the same difficulty. As Segwit2X is expected to have 90% of the hashrate at the start, BT2 can have a price 10 times less than BT1 and still be more profitable to mine.


Segwit1X supporters push the narrative that the current BTC price will be the price of BT1 immediately after the fork, and thus will be more profitable to mine.

The first flaw in this argument is that BT1 price will be at best 0.85 BTC and not 1 BTC after the fork. This makes it only about 5 times the price of BT2 not 10X.

The second is to assume that the futures price equates to the price after the fork. The futures could be manipulated.  Given that the price of BT1 or BT2 is unknown, price discovery will be decided by miners and the users after the fork. The chain with the majority hashrate will become the longest chain, with the most work done, command the higher price and become the "real bitcoin".

The third fallacy is to think that because the majority of users believe that BT1 is bitcoin, they will be willing to pay $6000+ for BT1. Highly unlikely if it is their own hard earned money. They will only be willing to pay that much money for the "real bitcoin". Sentiments go out the window when it is their own money is at stake.

If an exchange makes a proclamation that BT1 is BTC and the BT1 chain dies, they will incur financial and administrative costs in making their customers whole again. No exchange can afford to take such unnecessary risks for no reward. Any exchange that claims one or the other token is BTC is only stating an opinion.  The only rational course of action is to let the market decide.

Other Factors

1) Mining pools will have to let their customers decide on which chain to mine. Not to have both option will mean that they will lose some of their customers. It is silly to take a stand and incur unnecessary risk when they don't have to.

2) A businessman prides himself on keeping his word. It must mean something. It will be a terrible blow to miners reputations if they signaled 90% Segwit2X support and end up contributing much less. We can all understand if they change their mind after finding out that Segwit2X is less profitable, but to start off doing the opposite of what they promised is deceitful.

3) Other signatories to the NYA agreement also face the same issues as miners, if they do not follow through on their word. The bigger their business the more their decision will impact on their reputation and business.

4) Segwit2X is the second part of the NYA agreement. The first part was the activation of Segwit which would have never occurred without the agreement as it never had more that 40% miners support for over a year. It is inconceivable that they not follow through with this second phase of the agreement.

5) Is Segwit2X a takeover of Bitcoin by big business? Bitcoin as they say is anti-fragile. It is designed with three groups exercising checks and balances on each other.

a) Miners verify transactions and is paid by the protocol. They are not beholden to anyone for their income.

b) Developers maintain the protocol through compatible clients, competing for users.

c) Users build, support the infrastructure and give value to Bitcoin.

Bitcoin's weakness has always been that there was basically only 1 client - Core, in use. For the first time we have a second client - Btc1, competing against core with a 2MB block size difference. This competition and choice is the Bitcoin protocol working as it was designed. Through this trifecta of checks and balances consensus is reached. Segwit2X is not a takeover. It is simply an upgrade.

In conclusion, we assume that if Segwit1X has less mining support they must hardfork to another proof of work. We should not discount the fact that they could simply also adopt 2MB blocks, remain a competing client and most probably assume the role of being the main client yet again. In other words, adopt the Segwit2X hard fork.

Wednesday, October 18, 2017

Countdown To The Real Bitcoin

From the beginning we were one community pushing the Bitcoin message to anyone who would listen. Enduring the continuous flow of bad news, disappointments and barrages of ridicule from mainstream experts continually predicting Bitcoin demise. Then came 3 years of bitter infighting ridiculously over a  block size increase, which essentially is a battle for the "spirit and soul" of Bitcoin. 

After the Bitcoin Cash hard fork on 1 August and with another upcoming hard fork, Segwit2X, we are in the midst of the most exciting and interesting period in Bitcoin history, and with interesting times, opportunities abound. Fortunes will be made and lost. With that in mind let us drill down for a closer look.

Blockchains containing the genesis block.

There have been many alt coins cloned and inspired, from Bitcoin in the past, but Bitcoin Cash, Segwit2X and Segwit1X are the blockchains that contain the genesis block and share the same hashing algorithm. It is for this reason that any of these three can claim to be "The Real Bitcoin". This outcome will be determined by widespread use and adoption, and the metric to track this is transaction volume, because in the long run, transaction fees will replace block rewards.

Bitcoin Gold does not belong to this class, as it does not have a clear raison d'etre and does not share the same hashing algorithm. It will struggle to get adoption even as it tries to use the huge Bitcoin user base for token distribution. This project will be stillborn, destined to be a footnote in Bitcoin history. If anything it will highlight how difficult the process is to successfully launch a new coin.

Wealth transfer.

The upcoming Segwit2X hardfork will be one of the greatest "shake out" and crypto wealth transfer in Bitcoin history. Entrench stakeholders will, pick a wrong side, make a wrong decision, and win or lose a fortune. The crypto wealth landscape will again change and there will be three distinct phases.

The first phase was the Bitcoin Cash hard fork. The decision was easy then. All you needed to do was hold and you would have increased your total wealth, as BTC and BCH together had a valuation higher than before the fork.

This upcoming Segwit2X hardfork will be the second phase. Many will sell Segwit1/2X out of pure sentiment, ideology, and misleading or incomplete information. However this time if Segwit2X survives, Segwit1X will succumb to the chain death spiral and vise versa. Pick the wrong fork and you will lose all your money. If Segwit1X survives by hardforking to a different proof of work, it is no longer Bitcoin.

Do nothing and you will be safe for a little while, until phase three which is the struggle between Bitcoin Cash and Segwit. This will come down to adoption and useability which will be reflected in transaction volume.

Bitcoin Cash and Segwit2X.

Ultimately Segwit is the difference between the two chains as Segwit1/2X can also increase blocksize. What then determines adoption and useability?

Bitcoin introduces the notion of triple entry accounting. The payer, the payee and the blockchain. Any two of these records can validate a transaction. We are looking to a time, beginning perhaps five years hence, when all commercial transactions are conducted and recorded in bitcoin instead of fiat. The key word here is "commercial". Yes. it is businesses that will account for the overwhelming majority of all bitcoin transactions. Legitimate businesses need transparency and be as open or as private as the Bitcoin protocol allow. Legitimate businesses will need to have the functionality to track and trace all their "open and public" transactions.

Segwit and small blocks introduces legal and transaction cost (high fees) issues which will preclude its' use as a transactional currency for businesses. The lightning network is not suitable for recording business transactions as those transactions are off-chain and not traceable.

Bitcoin Cash on the other hand retains the original design of Bitcoin and with Gigabyte blocks, can scale on-chain with low transaction fees. A business transaction will comprise of 

1. a signature of the transaction
2. a hash of the source document 
3. a value of the transaction

With this data structure as the building block, a new accounting system will evolve that can be as open as required or as private as needed and anywhere in-between. 

Bitcoin will truly revolutionize business accounting as it introduces new concepts of open audit and real time accounting. Coupled with decentralised autonomous corporations and atomic swaps, new forms of economic entities will emerge.

The upcoming hardfork. 

If there was consensus Segwit2X will just assume the BTC name after the fork and the process will be smooth and seamless. We assumed that all interested users will upgrade to the latest version of the software. Let us examine the process in the absence of consensus.


1.0 Miners choose to mine Segwit1X or Segwit2X. 

1.1 Are 100% of miners mining Segwit2X. If Yes, Goto 3.0

2.0 Compete for hashpower. 

2.1 Does Segwit2X have 100% hashing power. If Yes Goto 3.0
2.2 Does Segwit1X have 100% hashing power. If Yes Goto 4.0
2.3 Goto 2.0

3.0 Segwit2X is the real bitcoin. End

4.0 Segwit1X is the real bitcoin. End

Losing chain will undergo chain death spiral and cease to exist.


Each BTC = BT1 (Segwit1X) + BT2 (Segwit2x) and will be traded as such. It is neither BT1 or BT2. New trading pairs of BTC/BT1 and BTC/BT2 will be introduced. This situation will continue until the winner of the hashrate war resolves the issue.

Update: Bitfinex and Coinbase will trade BX1 as BTC until situation is resolved. Miners will mine the most profitable coin. Will be interesting to see which is more profitable. 

If the price on Bitfinex is right, then Segwit1X will be the expected winner. However if Segwit2X does gets the majority of hashing power the situation will get interesting.  Miners with 85% hashrate are signalling Segwit2X but they have not confirmed their intentions.

Before Segwit activation in August, Segwit1X could never get more than 40% miners support. This may mean that there is at least 60% hardcore Segwit2x miners support. 

Competition for hashing power

Miners compete based on sentiment, ideology and profit. Profit calculus is now based on the price of BT1 or BT2 and the price of BT1 and BT2 will be related to hashing power rather than sentiment or ideology. The BTC traded on exchanges is BT1+BT2 and is neutral.

Nodes are not part of this equation. This is how Bitcoin was designed. The protocol pays the miners (and only the miners) for securing the network. The miners should only be loyal to their paymaster which is the Bitcoin protocol, and no one else. Anyone can participate in this process. Anyone can be a miner.


Currently hashrate signalling favours Segwit2X. If so the price of BT2 will be higher than BT1 possibly in the ratio of their hashing power. However the price of BT2 futures is 1/5 of BT1. There is a disconnect between signalling intentions and expected outcomes. Either the futures market is not representative of all participants or the signalling is false.

The standard argument is that hashrate follows price. In this case the price of  BTC = BT1 + BT2. Segwit1X supporters were advocating that the price of BTC is the price of Segwit1X because it was that before the fork. This argument is not supported by the exchanges. Most have and will choose to remain neutral and let the market decide.

If Segwit1X fails, Litecoin will benefit as some Core developers will move to work with segwit on Litecoin. If Segwit2X succeeds unless the Core developers responsible for Segwit supports it, it will be a less than optimal blockchain divorced from its' original developers. 

In the long run Bitcoin must be able to handle trillions of transactions a day. All the transactions in the world currently using fiat. Segwit and small blocks preclude this from happening and while lightning may be useful for streaming micro payments it is not suitable for recording transactions.

Please note :-  These are my views and are not investment advise. Analysis are usually based on incomplete information. Trading and investment in Bitcoin is risky. Even if the analysis is correct the execution can be faulty. Use Caution.

Signatories to the NYA agreement.


ANX (Hong Kong)
Bitex (Argentina)
bitFlyer (Japan)
Bitso (Mexico)
BTCC (China) (China)
Coinbase (United States) (Phillipines)
CryptoFacilities (UK)
Korbit (South Korea)
Safello (Sweden)
SFOX (United States)
ShapeShift (Switzerland)


1Hash (China) (St. Kitts & Nevis)
Bitfury (United States)
Bitmain (China) (China)
Genesis Mining (Hong Kong)
ViaBTC (China)


Abra (United States) (St. Kitts & Nevis)
BitPay (United States)
BitPesa (Kenya) (UK) (China)
Circle (United States)
Coinbase (United States) (Phillipines)
GoCoin (Isle of Man)
Jaxx (Canada)
Luno (Singapore)
Ripio (Argentina)
Unocoin (India)
Xapo (United States)

OTHER /Chandler Guo (China)
BitClub Network (Hong Kong)
Bloq (United States)
Civic (United States)
Decentral (Canada)
Digital Currency Group (United States)
Filament (United States)
Genesis Global Trading (United States)
Grayscale Investments (United States)
MONI (Finland)
OB1 (United States)
Netki (United States)
Purse (United States)
Veem (United States)