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.
Price
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.
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.
Price
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.
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