BitGo Reveals Hard Fork Planning; Will Not Support Bitcoin Unlimited

With a hard fork looming, BitGo, a multi-signature bitcoin wallet, has advised its customers what to do in the case of a new chain, whether it is Bitcoin Unlimited, which BitGo deems unsupportable, or a supportable option such as Segregated Witness.

Ben Davenport, co-founder and chief technical officer, advised users in a recent blog what actions BitGo will take and gave recommendations on what they should to in the event of a hard fork. BitGo did not assign a high probability of a hard fork until recently.

Bitcoin Unlimited Unsupportable

BitGo will not support Bitcoin Unlimited, which it does not consider supportable. It will support Segregated Witness, (SegWit) which it consider safe and tested in the core code.

BitGo believes any near-term fork will be contentious and bad for the bitcoin ecosystem. Brand dilution and user confusion will remove billions of dollars from the bitcoin market capitalization, Davenport noted.

SegWit, on the other hand, will provide additional block space in the near term.

BitGo cannot predict how the scenario will unfold, but the company will move as quickly as possible to provide solutions to protect customers’ interests.

Unsupported Hard Fork = Altcoin

Any hard fork introduced without industry-wide consensus will be an altcoin, regardless how much hash power that coin has. The majority of bitcoin exchanges share the same view, Davenport said.

If a hard fork were executed in a supportable manner, BitGo would support it with an API as soon as possible.

To support a hard fork, according to Davenport, it must meet the following:

1. The hard fork has to be coordinated by a clear on-chain mechanism and have a grace period between activation and launch.

2. It must provide strong two-way protection, whereby transactions are only valid on one of the two chains. Minus this measure, users can safely transact separately with splitting techniques that place an excessive burden on the end user.

3. It has to offer “wipe out protection,” so that once it forks, it remains permanent. The new fork’s software should not be capable of producing a reorganization back to the original chain as it will wipe out the new chain.

Bitcoin Unlimited does not meet any of these criteria. In addition, there are problems with “emergent consensus” that can lead to ongoing network splits and reorganizations of arbitrary length chains based on the way miner groups establish consensus parameters.

There are also concerns about the quality of the peer review process and the general code of Bitcoin Unlimited. Because of this, BitGo will not support a Bitcoin Unlimited hard fork in its current form.

BitGo will change its position on Bitcoin Unlimited if it makes changes to make the fork supportable.

What Users Should Do

Davenport recommends users take the following actions if the Bitcoin Unlimited hard fork launches.

1. Pause any outgoing transaction activity from BitGo. Otherwise, transactions can occur on both chains.

2. Keep in close contact with BitGo for assistance in moving coins safely or in splitting coins. BitGo will help customers split their coins, but it cannot determine how long this will take.

3. Once a hard fork has resolved itself back to a single chain due to it being abandoned by miners, or a splitting plan has been deployed, it will be safe to transact again on the original chain.

Should there be a supportable fork, BitGo recommends the following steps.

1. Continue to safety transact on the original network with the BitGo API. Users will not be able to transact on the new fork immediately. Transacting will not affect the coins on that side of the fork.

2. Be ready for block times on the original network to increase significantly, due to an increased load on the network. Execute only necessary transactions and be ready for possibly higher fees for a number of weeks due to the extended number of blocks.

3. Transact the value on the new coin by waiting for BitGo to add support for the new coin, or use the two keys with software built by others. BitGo cannot commit to any time frame for supporting the new coin.

Also read: Here’s why a hard fork can’t work

Other Concerns

Malicious forking that undermines the existing minority chain with excess hash power is also a possibility. This can create a chain of empty blocks or a working chain suddenly experiencing a chain reorganization many blocks deep. BitGo considers this to be the same as a 51% attack on the bitcoin network.

In such a case, BitGo recommends halting all bitcoin activity, including outgoing transactions and crediting incoming deposits. One cannot make normal assumptions about block confirmations to finalize a transaction.

Featured image from Shutterstock.

BitPay Won’t Use Bitcoin Alternatives For Payment Systems Despite Scaling Issues

While many expected bitcoin to replace the use of credit cards and replace the banking system in 2013, the cryptocurrency has faced challenges as a payment system since it has not been able to safely accommodate its growth, according to Nasdaq.

Bitcoin is currently dealing with some issues as a payments platform, mainly because the system is experiencing growth at a rate faster than it can safely scale.

Stephen Pair, a co-founder of BitPay, said customer service inquiries have increased due to transaction confirmation delays. BitPay has also witnessed higher transaction fees for its own transactions, causing the company to stop covering bitcoin network fees on invoice payments.

BitPay Responds To Payment Delays

BitPay has become more creative in designing user experience for delayed payments. Delays are often an opportunity to explain the way the bitcoin network works and direct people to wallets with dynamic transaction fees.

Copay and BitPay wallet users have largely escaped transaction delays since their wallets dynamically calculate transaction fees.

One method for addressing transaction delays and increased transaction fees is the Lightning Network. Its caching layer would allow for improved versions of features such as immediate transactions at no cost that people have associated with bitcoin.

Pair said BitPay is exploring all possible scalability solutions. He is not surprised bitcoin has to scale. He is surprised that while short-term throughput bumps were expected, changes for on-chain throughput were expected a few years ago.

The slow pace of increased throughput was not foreseen, he said. A scalability limit will be reached at some point that will be addressed by solutions like Lightning Network.

BitPay Will Stick With Bitcoin

BitPay has studied alternatives to the bitcoin blockchain and concluded none are compelling, Pair said.

Some observers suspected BitPay and similar companies might switch from bitcoin to altcoins or permissioned blockchains on account of the high U.S.-dollar-denominated fees and network congestion.

While Pair acknowledged there are scaling issues, the company continues to witness more consumers using the existing technology.

He said bitcoin is the most cost effective, secure and fast means of value transfer on the Internet.

BitPay sees itself as a payment innovator. Consumer and business-to-business payments are no different on BitPay’s platform and the bitcoin network.

Tony Gallippi, BitPay co-founder, noted at the recent Distributed: Markets fireside chat that the company’s transaction count more than doubled in the last year. Much of the growth was in digital goods and video games.

Gallippi said the Steam digital distribution platform’s acceptance of bitcoin was a source of growth for BitPay, and that there is much overlap between the bitcoin and gamer communities.

Pair said BitPay is also witnessing growth in bitcoin’s use for B2B money transfers. He said bitcoin is a fantastic solution for such transfers, particularly for global payments where bank transfers are inefficient and slow.

Also read: BitPay CEO on safe bitcoin scaling: soft fork first, hard fork next

B2B Payments Embrace Bitcoin

B2B companies are using the BitPay platform for billing settling international payments with a lot of suppliers, Pair said during the fireside chat.

Gallippi noted there has been an increase in bitcoin’s use for payment disbursements.

He said it is not easy to pay people on a regular basis in the majority of countries. It is hard to pay people in places where a lot of apps are being developed, such as India, Africa, the Middle East and Eastern Europe.

For app stores or digital marketing companies, Gallippi said BitPay can receive one payment from the business and then disburse payments in bitcoin to all of the endpoints.

BitPay built the product for its need to pay its employees in bitcoin, Pair said. There are now a lot of Fortune 500 companies asking BitPay to solve similar payment issues.

Featured image from Shutterstock.

Roger Ver Agrees To Sell BTC For BTU At 1:1 Ratio

Roger Ver, the bitcoin broker/asset manager and Bitcoin Unlimited supporter, has agreed to a one-to-one trade of Bitcoin Unlimited (BU) for bitcoin, signaling his confidence in Bitcoin Unlimited. The offer is for at least 60,000 bitcoins and as much as 130,000 bitcoins. with a bitcoin split pending.

Someone has apparently offered to exchange his BTU for Ver’s BTC at a one-to-one rate. The bitcoin address on blockchain.info associated with the offer holds 40,000 BTC.

The person also made the offer to another party, Jihan Wu: “Consider it primarily as a vote of no confidence in the Bitcoin Unlimited software and development team as it currently stands,” the post read. “I’ll add the contingency that the deal is null and void if there ar major changes to either.”

Ver responded: “This sounds like a great deal for both of us. I look forward to ironing out the exact details and terms. I’m super busy for the next 48 hours, but would love to connect after that.”

“I will sell my coins on the slow, expensive Core chain and use the proceeds from that… I would sell those coins and use the proceeds to buy more BU useful,” Ver said in a recent Youtube video posted by MadBitcoins. “Bitcoin Unlimited coins will be so much more useful because you’ll actually be able to sit and receive them with people, unlike the Bitcoin Core coins on this congested network that will be congested and last forever.”

‘Speechless’ Over Offer

The post drew significant comment on Reddit.

“I am speechless to see the account holding 40k bitcoin, who owns those kind of money!!!” a Reddit post noted. “If there is a split which is highly likely with the uncertain things going on with the rumors and things regarding it, i am not sure how things will go and the price is recovering even at this level. Good luck making the deal.”

One post noted that Ver is putting his money where his mouth is, providing the offer is not a bluff.

Another post said Ver will find an excuse not to make the public deal since he is only bluffing.

Still another post questioned why Ver would do a one-for-one trade when the market rate on Bitfinex for BTU (Bitcoin Unlimited) is 0.2102 and the rate for BCC (Bitcoin Core) is 0.758. To be a fair trade, one would need to offer Ver 3.6 BTU for every 1 BCC.

The offer naturally drew comment on the chances of success for Bitcoin Unlimited. Ver has been a proponent of a block size increase and supports Bitcoin Unlimited as a solution.

Another post said for Bitcoin Unlimited to exist, it requires more proof-of-work than BTC.

Also read: Bitcoin Core developers attack Bitcoin Unlimited

Bitcoin Unlimited Still Controversial

The Ver offer demonstrates that Bitcoin Unlimited remains controversial. Those in favor of it argue that it would quickly increase transaction capacity, addressing delays and lowering fees. Those against it state that the Segregated Witness solution would increase capacity far higher through layer two protocols.

Both sides say the other’s solution will centralize bitcoin. Those against Bitcoin Unlimited say an increased blocksize would increase costs, lowering the number of nodes. In response, BU supporters say that sharding would address these concerns and lead to centralized hubs due to the economies of scale. To which Segregated Witness supporters say the protocol is designed to be decentralized.

Featured image from YouTube/Torsten Hoffmann.

possible Bitcoin hard fork and Bitcoin Unlimited arrival

What’s been happening?

The Bitcoin network has been experiencing issues lately. One of critical network restrictions (1 Mb block size limit) has turned out to be insufficient for current user requirements. Transaction speed has decreased, transactions are getting stuck, time is being wasted.

People aren’t happy, and a new project called Bitcoin Unlimited has arrived, aiming to remove the only centralized point of control in the Bitcoin economy – the block size limit. Some network parties (nodes) aren’t showing any interest in Bitcoin Unlimited. But more and more nodes are beginning to support it and getting ready to operate according to its new rules. They can become the majority.

Is it something like Ethereum Classic?

The situation is not clear, but it could become something similar to Ethereum and Ethereum Classic. It means that in all likelihood, major changes are coming up. Here’s one of the possible outcomes: the BTC network may split into two separate networks: “usual” Bitcoin (BTC) and Bitcoin Unlimited (BTU). Two independent coins, sharing the same past. That is called a hard fork.

How does it affect me?

If you possess bitcoins, in case of a hard fork followed by a split you are entitled to the same amount of Bitcoin Unlimited.

What does HitBTC do?

HitBTC cares about the safety of your funds and aims to provide you with the tools for avoiding any risk. Here’s our plan:

• We credit all our respective Bitcoin holders with the same amount of Bitcoin Unlimited. If you deposit bitcoins to your account, you receive both BTC and BTU at the same time.
• We introduce a BTU/BTC trading pair, so it’ll be possible not only to store new coins on your account, but trade them as well.
• We block BTC withdrawals temporarily. Why? Splitting one coin in two contains the risk of so-called replay attacks. In a nutshell, an attacker is able to carry off BTU coins while withdrawing BTC. It takes time to protect the network from replay attacks: 48 hours max from the start of the hard fork, but probably less. As soon as we make sure that your funds are safe, withdrawals will be unlocked.
• We keep dialog open with our community. Should the hard fork not take place before the established deadline, a survey will be arranged. We will let our users decide what to do next.

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Short summary

Any number of bitcoins deposited or already in your possession will be augmented by the same amount of BTU. This is effective from now until the hard fork, if it happens.

BTC and BTU withdrawals are locked. This is in effect from now until 48 hours after the hard fork. We care about the safety of your funds.

The BTU/BTC trading pair is at your disposal.

Show me how it works

You initiate a BTC deposit, and BTU deposit is created at the same time:

Done!

The Latest transactions section:

From : HitBTC Blog

Bitpay CEO on Safe Bitcoin Scaling: Soft Fork First, Hard Fork Next

Over the past few months, Bitpay co-founder and CEO Stephen Pair has been advocating for a safe and non-contentious method to scale the Bitcoin network. In an informative blog post, Pair revealed his perception of a cautious approach to bitcoin scaling.

Basically, Pair believes that a soft fork-based scalability solution is the most beneficial for the network and community. It eliminates the possibility of a hard fork, which will inevitably lead to a chain split at this phase of bitcoin development. While some hard forks such as the Ethereum forks executed in late 2016 allowed the network to facilitate changes in a safe manner, with the current tension between Segregated Witness (Segwit) and Bitcoin Unlimited communities, a split chain is inevitable if a hard fork breaks out.

He wrote:

“One very important challenge we must resolve is how to successfully upgrade Bitcoin in a safe, deliberate and non-contentious manner. And we must be able to upgrade Bitcoin because no organism can live in its own waste products.”`

For Pair, the optimal scaling method is to start with the activation of a soft fork to enforce new rules into the network. Then, the developers can initiate another soft fork to deprecate the use of the old block and lastly, execute a non-contentious hard fork to drop the old block and adopt the secondary block as the primary block structure.

The standard threshold for a soft fork implementation is a 95% acceptance from node operators and from the network. For Segwit to pass the network adoption phase of activation, 95% of the network apart from the miners must upgrade their nodes to support Segwit.

Although Pair didn’t specify which scaling solution he is in favor of–Copay, bitcoin wallet platform of Bitpay, does support Segwit–Pair clarified that the most secure and viable approach to scaling the bitcoin network is to adopt a soft fork first, i.e. Segwit, and move on from there.

If Segwit is substituted into Pair’s safe and non-contentious upgrade progress, the roadmap for development will be as follows:

1. Segwit will be implemented and accepted by the network or node operators
2. Miners will adopt Segwit, rejecting blocks that aren’t valid or applicable to Segwit
3. Second soft fork is executed to deprecate use of the old block
4. A hard fork is executed to drop the old block

On March 19, major global bitcoin exchange Bitfinex announced the launch of prediction market for “chain split tokens,” enabling traders to place bets on the probability of the Bitcoin Unlimited hard fork from being executed. The announcement from Bitfinex signalled the likelihood of Bitcoin Unlimited on being forked.

Bitfinex stated:

“Today, Bitfinex proudly introduces trading on Chain Split Tokens (CST). The first such product of its kind, CSTs will allow Bitfinex customers to speculate on future fork events of the Bitcoin blockchain, specifically, the potential fork between Bitcoin Core and Bitcoin Unlimited. We are designating these CSTs as BCC (Bitcoin Core) and BCU (Bitcoin Unlimited).”

However, the vast majority of the industry’s leading exchanges including Bitstamp, Bitfinex and BTCC are planning to consider Bitcoin Unlimited as an alt-asset, not as bitcoin. Therefore, even in the event of a Bitcoin Unlimited hard fork, the Bitcoin Core development team as well as the community can still pursue the scalability roadmap presented by Pair.

Featured image from Shutterstock.

Vinny Lingham Says Bitcoin Hard Fork Should be Avoided, Buterin Argues

Bitcoin Unlimited has been a controversial topic within the bitcoin community mostly because of the recent exploitation of the software’s internal bugs. On March 15, several developers outside of the Bitcoin Unlimited development team found several bugs in its software which led to a 6-hour downtime for miners and shut down 500 nodes within minutes.

Technical Issues With Hard Fork Solutions

When bugs emerge, developers can provide appropriate fixes and solutions to address them, similar to how the Ethereum development team released various patches in late 2016 to build resilience toward similar types of bugs and attacks. Therefore, the presence of bugs isn’t necessarily an issue. However, the big issue with Bitcoin Unlimited is that the bugs weren’t prevented beforehand and had to be discovered by independent developers. This is because Bitcoin Unlimited as a closed group of developers, unlike Bitcoin Core which has a lead development group and an open source community of developers.

While the actual Bitcoin Unlimited bug didn’t pose a significant impact toward the Bitcoin Network, if Bitcoin Unlimited was being forked when the bug was discovered, Bitcoin and security expert Andreas Antonopoulos explained that the damage “would have been in the millions.”

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15 Mar

Andreas 

✔

 @aantonop

Ironically, some are outraged that exploit code was used to attack BU nodes. Consider if this code was held back until 20 blocks into a fork

 Follow

Andreas 

✔

@aantonop

This time there was little economic impact. During a fork, the damage would have been in the millions. QA matters. It matters $millions

10:31 AM - 15 Mar 2017

 
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If Bitcoin Unlimited is hard-forked and the execution of it leads to a split chain, two networks will co-exist. Bitcoin Unlimited network will operate with its own digital currency like Ethereum Classic and the original bitcoin network will continue to develop independently.

Economic Issues With Hard Forks

Vinny Lingham argues that the possibility of a split chain should be considered as a major economic threat, on top of a potential security issue.

When Bitcoin Unlimited is executed as a hard fork, it will result in the creation of two digital currencies or two bitcoins. However, bitcoin exchanges aren’t willing to list Bitcoin Unlimited as bitcoin. Instead, with the symbol BTU, exchanges plan on listing Bitcoin Unlimited as an altcoin.

“Exchanges today have just confirmed they will be listing BTU as an altcoin if there is a Hard Fork — this scares me because although the industry person knows what an altcoin is — the average person outside the industry doesn’t,” explained Lingham.

The real issue with a split chain and the introduction of two bitcoins is that it will make it significantly more difficult for the general public to understand what bitcoin is and to develop awareness of it. Mainstream adoption of bitcoin will slow down and as a result, it wil take a much longer period of time for bitcoin to transform itself as a true global digital currency.

Lingham further noted that the brand power of bitcoin is heavily involved in bitcoin’s security or hash power. He wrote:

“The security of the Bitcoin network comes from the computational hash power that the miners bring. This is driven by the price of Bitcoin — higher the price, more hashing power. High prices are in turn driven by market demand. Market demand is driven by PR & media and the long term narrative that Bitcoin is the first and only true cryptocurrency which is a long term store of value. If we mess with this, I believe we can expect negative consequence.”

He also explained that major bitcoin companies such as Coinbase and Blockchain’s efforts will be undermined if a hard fork execution leads to two bitcoins. For years, bitcoin companies collaborated with investors in developing bitcoin’s brand around its efficiency of facilitating peer to peer payments. Lingham argued that the presence of two bitcoins will make bitcoin’s identity ambiguous.

There exists some experts such as Ethereum creator Vitalik Buterin and ZCash CEO Zooko Wilcox who favor hard forks due to their clean fixes to complex issues. Buterin stated that hard forks are more efficient in addressing large-scale technical issues than soft forks. He wrote:

“I feel like I should also write a post soon about why hard forks are (i) cleaner, (ii) more freedom-preserving than soft forks.”

 Follow

Vitalik Buterin 

✔

@VitalikButerin

I feel like I should also write a post soon about why hard forks are (i) cleaner, (ii) more freedom-preserving than soft forks.

7:06 AM - 16 Mar 2017

 
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Wilcox also emphasized in his blog post entitled “A Future Friendly Fork” that if executed properly, without community schism and split chain, hard forks can be perceived as efficient solutions to difficult problems. However, Wilcox noted that a hard fork shouldn’t be executed if it leads to a split chain.

Featured image from Shutterstock.