Clarification on forks

News updates about the Prohashing pool
User avatar
Steve Sokolowski
Posts: 2124
Joined: Wed Aug 27, 2014 3:27 pm
Location: State College, PA
Contact:

Clarification on forks

Postby Steve Sokolowski » Tue Nov 07, 2017 8:00 am

Several customers have submitted support tickets requesting clarification about our plans for the fork of Bitcoin Gold and the Segwit2x split.

In regards to Bitcoin Gold, the snapshot for Gold occurred several weeks ago. Most exchanges did not credit us with Bitcoin Gold, most do not support it, and as a result their withdrawals caused any Gold they had to be lost to replay protection. Chris did attempt to set up Bitcoin Gold, but he discovered that the source code for their own client has syntax errors and doesn't even compile. It isn't known if Bitcoin Gold will ever have a working client, or if any exchanges will support it, so we do not plan to credit Bitcoin Gold to customers. However, if the coin does become widely supported in the future, we may offer it for payouts then, without any retroactive credits.

The concern with the upcoming fork to Segwit2x is the likely panic on the legacy Core network. Since Bitcoin has a two-week difficulty adjustment window, the only way that both forks would actually be usable is if they both had approximately equal hashrate to process blocks until the next difficulty adjustment (which would be an entire month.)

Current promises indicate that 3/4 of the miners plan to start with mining the larger block network. If the figure holds, then Segwit2x will start with 6 times the capacity as the legacy chain, resulting in (at minimum) a two-month period where the legacy chain's blocktimes exceed 40 minutes. While some SHA-256 miners use profit-switching pools like ours, history has shown that the network hashrate of Bitcoin does not fall radically when Bitcoin Cash becomes more profitable to mine. Therefore, the starting value of the coin networks is likely to be determined by the amount of hashrate that initially mines each network, since the other will be immediately unusable.

Between the slow blocks, restricted blocksize, and panic selling, we don't see it as likely that we'll be able to get our replay-protection transaction, and then our payout transaction, out to customers before the legacy network loses almost all of its value. If the pool operators renege on their "agreement," or switch to mine the legacy network after the split, then the same problem will be true but to a lesser extent of the 2x network, where there would be half as much congestion.

Our policy in regards to the Segwit2x fork will be that we will first send a replay protection transaction to protect our money. Customers will be double-credited. Then, on the days after the fork, the payout threshold for both coins will be raised to infinity. You can be paid immediately by setting a custom payout threshold, and accepting the transaction fees. We expect the transaction fees on the legacy Core chain to rise to hundreds of dollars as people struggle to get out before it loses value. We will resume normal payouts when transaction fees subside to reasonable levels, or when one of the chains is worthless.

Finally, there will be no bitcoin payouts at all, on either fork, the day of the fork. That's simply because Bittrex, Poloniex, the GDAX, and other exchanges are disabling withdrawals.

Here's what you can do:

  • If you simply want to earn the same amount of value as any other day, change your payout proportions to 100% litecoins and ignore the situation.
  • If you believe that both forks will retain value indefinitely, do nothing and wait to be paid once the transaction fees on the networks return to reasonable levels. That could take several days. At that time, you'll either be paid both coins, or if miners stop mining one of them due to market conditions, the coins you are owed in the network that is still processing blocks.
  • If you want to actively trade the markets and exchange your coins, lower the payout threshold and your debts will be paid as soon as we can get our replay-protection transaction confirmed by the networks. You are likely to incur massive transaction fees, possibly as high as $20 or $50.
Jakeg5280
Posts: 32
Joined: Sun Sep 24, 2017 1:09 am

Re: Clarification on forks

Postby Jakeg5280 » Tue Nov 07, 2017 9:08 am

Interesting thoughts on BTC. You dont like core much do you? lol
is this the big anouncement that we were waiting for?
centar
Posts: 27
Joined: Tue Sep 05, 2017 12:47 pm

Re: Clarification on forks

Postby centar » Tue Nov 07, 2017 11:47 am

Steve, have you looked at the price of B2X futures vs 1X? It's pretty obvious what the market's thoughts are on the matter.

Prices don't follow miners, it just doesn't work like that. Any remaining miners that haven't dropped out of the NYA MIGHT mine the 2X chain at a loss for a short period, but they won't stick around for long. Miners go where the money is, that's just economics 101.

Personally, I don't understand how anyone can have faith in a hard fork which has no active devs, no consensus, and no replay protection. It's irresponsible at best and downright evil at worst. If it were to succeed, it would mean that Bitcoin is susceptible to corporate takeovers and attacks by nation-states. It would cause absolute chaos in the markets and I honestly don't know if Bitcoin would survive at that point, it certainly wouldn't be anywhere near where it is today.

It's kind of a sad day really when the BitCoin community is so fragmented something like this is even being considered. I personally wish that Core would have just agreed to implement the 2MB increase just to help bring everyone back together. Who knows, maybe if they had been present at during the NYA talks it would be done already. All I know is if they don't find a way to agree soon it WILL have very significant consequences down the road.
User avatar
Steve Sokolowski
Posts: 2124
Joined: Wed Aug 27, 2014 3:27 pm
Location: State College, PA
Contact:

Re: Clarification on forks

Postby Steve Sokolowski » Tue Nov 07, 2017 2:51 pm

centar wrote:Steve, have you looked at the price of B2X futures vs 1X? It's pretty obvious what the market's thoughts are on the matter.

Prices don't follow miners, it just doesn't work like that. Any remaining miners that haven't dropped out of the NYA MIGHT mine the 2X chain at a loss for a short period, but they won't stick around for long. Miners go where the money is, that's just economics 101.

Personally, I don't understand how anyone can have faith in a hard fork which has no active devs, no consensus, and no replay protection. It's irresponsible at best and downright evil at worst. If it were to succeed, it would mean that Bitcoin is susceptible to corporate takeovers and attacks by nation-states. It would cause absolute chaos in the markets and I honestly don't know if Bitcoin would survive at that point, it certainly wouldn't be anywhere near where it is today.

It's kind of a sad day really when the BitCoin community is so fragmented something like this is even being considered. I personally wish that Core would have just agreed to implement the 2MB increase just to help bring everyone back together. Who knows, maybe if they had been present at during the NYA talks it would be done already. All I know is if they don't find a way to agree soon it WILL have very significant consequences down the road.


I personally don't care which of these forks wins, because I feel no sympathy for either the closed door signatories or the unethical Core developers. The best part about the fork, just like the last election, is that someone has to lose.

As to those prediction markets, I hope that nobody takes what the Core is publicizing about them and loses money. First, the volume of all of them combined is less than $5m/day, while volume in bitcoin in total is hundreds of times that, leaving plenty of room for volatility and manipulation (as occurred two days ago.) The markets also usually call the 1MB fork "BTC" and the 2MB fork some other ticker symbol, biasing investors' viewpoints.

But the bigger problem is that the settlement conditions are purposely rigged in favor of the Core developers. In Bitfinex's market (the most widely traded), the token represents the condition where the fork both occurs at all and becomes the majority chain. They did this earlier when offering Bitcoin Unlimited futures to also produce a biased market.

Adding the requirement that the fork occur at all means that splitting these tokens is not the same as keeping coins in a wallet through the split. When one keeps coins in a wallet, the "value" of Segwit2x is retained both in the case that you spend your Segwit2x coins, or if the fork never occurs at all and the total value remains in the single Bitcoin network. At Bitfinex, their deceptive market places significant downward pressure on their Segwit2x token price because if no fork occurs at all, there is a risk of losing the value of the Segwit2x tokens that isn't present for wallet holders. Thus, these "prediction" markets won't rise to the true value of a Segwit2x coin until after the fork occurs and their contract's "no fork" risk is eliminated.

Then, there is a group of Core supporters who are trying to publicize the 2MB fork prices by saying that they are "falling," when in reality just two days ago the prices rose to the point where even the rigged markets regarded success as more likely than not. There are posts on some of the biased news sites like Coindesk that claim that futures are falling despite their actually rising in value from three days ago.

Finally, there are people who are hawking the S2X/current BTC ratio, which hovers around 0.3, and claiming that the ratio indicates that there is just a 30% chance of Segwit2x succeeding. That statement is simply false and means nothing. A S2X value of $2500, for example, could simply mean that people believe it will succeed and that the total value of Bitcoin will fall to $2500, a likely scenario if Segwit2x is adopted and the Core makes a last ditch effort to scare naive investors by making it seem like "the only possible developers" are quitting.

Again, I really hope that people are carefully reading the terms of these markets if they are buying into them. They are not predicting what they claim to predict.
centar
Posts: 27
Joined: Tue Sep 05, 2017 12:47 pm

Re: Clarification on forks

Postby centar » Tue Nov 07, 2017 3:49 pm

Yeah, I would never personally trade in those futures, but I think they can be used as a very approximate gauge of market sentiment. Yes they are not exactly reliable, but honestly that isn't what concerns me. I'm more concerned that 2X has no active developers (Garzik is all but MIA and is launching his own token at the same time), there is no replay protection in place, and there doesn't appear to be anyone steering the ship. If there is a serious exodus to the S2X chain, there will be hell to pay for everyone.

Return to “News”

Who is online

Users browsing this forum: No registered users and 3 guests