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Money at risk? Mobile Wallets Become a Battleground in the Bitcoin Forks Debate

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Bitcoin mobile wallet users may not realize it, but their money may be at higher risk in November.

Although they are advertised as a tool that Bitcoin users can leverage to get an experience closer to a conventional financial product, mobile Bitcoin portfolios today send chain-to-chain transactions bitcoin blocks, but different from the default options. But in November, this construction could cause turbulence, because it is at that time that the bitcoin protocol aims to undergo another major change in its software.

Following the activation of the SegWit code update this summer, a group of companies is now looking to trigger a difficult range to increase the size of Bitcoin blocks and further expand its trading capacity . The code, which is part of a larger update called Segwit2x, could allow bitcoin to split into two (again), that is, if not everyone decides to take support the upgrade.

Still, the difference is that unlike bitcoin money, Segwit2x developers do everything they can to keep all the bitcoin users on the same blockchain.

Segwit2x lead developer Jeff Garzik told CoinDesk:

"The design goal of Segwit2x – just like [the latest] Ethereal fork – is to update bitcoin, not to create a new currency."

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To do this, developers supporting the project also made some key (if controversial) design decisions regarding maintaining compatibility with Simplified Payment Audit Portfolios, the technical term for bitcoin wallet applications.

But the developers say that there are advantages and disadvantages of the way they try to accomplish that.

First, it may not be safe for mobile wallet users to trade immediately after the adoption of the hard range.

Resistance to attack or convenience?

The first design decision omits what is called "protection against repetition".

A bit of a political term, it is intended to describe what happens when a blockchain splits in two because users suddenly have equal value on both blockchains. This means that when users move tokens on a blockchain, the tokens also move (or "replay") to each other.

But this is not visible for people who do not know that they have money on two networks during a network split. Worst case: Users could lose some of their money without even noticing it.

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"It becomes unpredictable what is the money you spend and when," says Aaron Lasher, head of bread distribution, in a conversation with CoinDesk.

As everyone does not agree with the strict Segwit2x range – some even go as far as writing manifestos in opposition – it's likely that it splits into two competing networks, which could be confusing for general users.

However, the developers of Segwit2x have a reason to abandon the protection against repetition: keep Segwit2x compatible with SPV mobile wallets.

"The" protection against repetition ", as you call it, divides the chain, which simply does not make sense: you would suddenly break SPV clients [more than 10 million] that would normally work very Well, help us avoid that, "BitGo CEO Mike Belshe wrote in an email discussion between the developers of the project.

In other words, the protection against replay would cause inconvenience to users of mobile wallets who wish to switch to the Segwit2x blockchain, so the developers of Segwit2x do not plan to add it.

Decisions on the hard fork

Mobile wallets are also the subject of debate in another area.

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Many providers of this portfolio option, such as Electrum and Pain Wallet, rely on SPV. This eliminates the need to keep a complete copy of the blockchain, which makes the data much easier to store on battery-powered mobile phones.

But, they have some disadvantages. (Coinkite's co-founder's CEO, Rodolfo Novak, went so far as to say that "the" V "in SPV means Victim.")

As implemented today, SPV portfolios will automatically follow the most supported bitcoin version by minors. So, if bitcoin splits in two, and Segwit2x draws more computational power than the inherited bitcoin chain, then all SPV portfolios will follow. It's by design.

But some mobile wallet providers are not very happy about this because it's hard to explain to users what's going on.

"It's really hard for us because we're so affected," Lasher said.

This can also lead to technical problems. If there are two bitcoins, the mobile wallet software could be confused as to which channel to follow, especially if the miners switch between the block chains over time (as happened as a result of the bitcoin range).

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"This could confuse SPV customers and cause customers to go from one channel to the other, causing them to lose money depending on the channel. who has the most work, "says Matt Corallo.

Novak painted another scenario.

"With SVP you do not know if the node to which you are connected is lying to you.For example, a Segwit2x node can be spoofed as [bitcoin] node [on the other chain] it means that without replay protection your wallet can spend the funds in the wrong channel and lose them on the right channel, "Novak told CoinDesk.

Overall, developers paint an assortment of "if-then" scenarios. Lasher has admitted so much, noting that it is unclear exactly who will be playing.

"It's really that decision tree of many, many things that can happen, and all of them are embarrassing enough to be downright dangerous," he said, adding that Bread Wallet has been the only one ever to make it happen. intend to encourage users to stop their transactions. the fork lasts, "if they can handle."

A solution?

But with the helplessness of the application layer, the protocol developers have been arguing about the best way to handle what might happen.

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James Hilliard, a Bitcoin contributor, well known for helping to avoid a bitcoin split early in the year, suggested changing the Segwit2x code which he said would give more control over the bitcoin mobile wallets on which they will land.

Again, however, Segwit2x developers argue that this change would make it harder to transition to a blockchain with an increase in block size – something that they believe a lot of users want to do so that they can make transactions cheaper. (Garzik argued that it is the most "neutral" metric to determine which chain SPV portfolios should follow.)

But, again, others believe that it will disrupt users and perhaps even get those who are not aware of the situation to lose money.

Some developers agree that there must be an increase in block size settings, but simply do not agree with some Segwit2x design decisions.

As such, the statements point out that although often represented in black and white, the scaling argument still has its shades of gray.

Lasher concluded:

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"There might be some merits to an increase in the size of a block, but we do not agree with the current way it is pushed through."

Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which helped to organize the Segwit2x proposal and has a stake in BitGo.

Image of fishing net via Shutterstock


Leader in blockchain information, CoinDesk is an independent media company that strives to achieve the highest journalistic standards and adheres to a strict set of editorial policies. Do you want to offer your expertise or ideas for our reporting? Contact us at [email protected]

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