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Forks of the free market? Bitcoin startups love the idea but are attached to reality

You have probably heard the phrase "let the free market decide".

It is the concept that consumers and businesses determine the prices of services and products and they gain ground; an expression of the idea that the economic system should be a system in which supply and demand are not hindered by any government, authority or monopolistic intervention.

More than just an ideal, it's also the very real goal by which bitcoin startups are turning to Segwit2x, a proposed change to bitcoin software that is just weeks away from it. introduction to the network.

Some users, namely many Bitcoin Core developers (and miners and companies that ideologically support their work) do not plan to track changes, and so it seems more and more likely that the November pitchfork to creating a new bitcoin cryptocurrency (yes, another).

That being said, the Segwit2x group has managed to secure two large groups of supporters: miners and bitcoin companies, and they continue to claim that these entities are broadly representative of users.

Those claiming to follow the upgrades include mining pools (accounting for about 80 percent of Bitcoin's computing power, although this figure is a bit misleading) and many Bitcoin companies, including two of the most popular wallet providers – Blockchain and Coinbase

Segwit2x's opponents tend to demonize the companies involved in Segwit2x, arguing that they are trying to "corporatize" or "take control" of bitcoin by trying to pass a bitcoin rule change with which all users do not agree. But, as one might expect, many startups do not see it like that.

First and foremost, startups believe that they only advocate a change at least for a subset of their users. And on the other hand, startups do not consider themselves as powerful.

"The truth is that it is a material event that can show where is the center of gravity" consensus "between the miners and the development community: all the actors of the ecosystem are not as influential as these two groups ". CTO of ANX bitcoin exchange.

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"Most users and businesses can not do much beyond a point of view, backing up and waiting for the dust to settle down."

Planning a split

This view is also reflected in policy updates updated by Bitcoin before Segwit2x.

Again, although the goal of Segwit2x is to update bitcoin, not to divide it – it's a controversial proposition, and it seems entirely possible that not all users will switch to the new blockchain.

With this in mind, bitcoin companies that support Segwit2x are preparing for this possibility.

"There is a significant possibility that the predicted hard range will result in two bitcoin blockchains," reads a message from bitcoin-holding provider Blockchain, pointing out later how it will treat user funds in the event of a split.

In the post, the startup explains that it will follow the chain with the most accumulated difficulty (a metric intended to indicate the number of computers securing the blockchain) and will refer to this as "bitcoin" . If cryptocurrency on the so-called "minority" channel has a significant value, it will be made available to customers for holding or trading.

The message goes on to explain that outbound bitcoin transactions could be temporarily suspended for a period of time during any network instability that would result from the hard band.

Updates from other bitcoin companies describe similar steps to be taken in case of a split.

By email, Ripio's founder and CEO, Sebastian Serrano, has said much the same: his portfolio will follow the chain with "the most accumulated difficulty".

And BitPay, the network 's largest transaction processor, announced on Wednesday that it "would suspend acceptance of payments, disbursements and debit card refills about 24 hours before it' s. activation of Segwit2x. "

Opportunity hits

While startups seem on the same page about how to handle a split, they have mixed opinions on whether a split will actually occur.

Your co-founder Ryan X. Charles, an ardent supporter of Segwit2x believes that Segwit2x will carry it through with the involvement of miners and companies.

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But, other startups (and even some minors) do not share the same perspective.

"At the present time, it seems relatively unlikely that Segwit2x will appear as the major chip," said Crypto Facilities co-founder and CEO Timo Schlaefer, citing prediction markets and nodes.

But this is not a problem for all startups. Some see a split induced by Segwit2x as a way to expand their business amidst what could be an unstable period for the network. The founder of GoCoin, Steve Beauregard, for example, said the payment processor would "probably" accept the tokens of both channels "provided the liquidity is satisfactory" for each of them.

Other companies, even the first signers of the Segwit2x agreement, plan to adopt a wait-and-see approach.

Madden of ANX tells CoinDesk:

"It's a mess, we are planning a major outage and are carefully watching the situation before deciding which channels, if not both, will be supported."

Devotees of the Free Market

But apart from pragmatism, ideology is also at stake.

For companies that have signed the Segwit2x agreement, bitcoin should be considered a payment mechanism, which should thrive with greater capacity of blocks that would allow more block transactions and lower fees for them. users.

"I am convinced that we need a greater capacity to reach the next 100 million Bitcoin users, and by the time the New York Accord took place, most from among us were sure that Segwit2x was the best way to break the development of bitcoin projects, "said Serrano de Ripio


In this way, Shapeshift's CEO, Erik Voorhees, also thinks that the agreement has already helped move the network forward, evoking the original intention to overtake SegWit and increase the size of the block.

"We remain faithful to our agreement to upgrade the bitcoin protocol to SegWit and a base block size of 2 MB. We believe that SegWit has been activated because of this agreement (after failing to reach 40 % of mine support), and we will honor our part to bring it to fruition, "he said.

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But Voorhees also tries to be diplomatic towards potential customers, suggesting – as well as Beauregard – that companies are keen that their decisions do not hinder their future growth.

"We understand that some people disagree with this approach, but it is an open and decentralized protocol, and we will work to help move it in the direction we believe to be in the best interest of the development and long-term growth of Bitcoin. "he continued.

Yet in the end, many industry startups remain true to the idea that the market should decide.

Voorhees continued:

"If the market prefers the status quo, we will accept that, and we will happily continue to build with the consensus If the market prefers the Segwit2x upgrade, our favorite result, again we will happily continue to build with consensus. "

Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which participated in the organization of the Segwit2x proposal and holds an interest in Blockchain, Coinbase, Crypto Facilities and Shapeshift .

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