Why the Brazilian and Argentinian Bitcoin communities oppose SegWit2x

In light of the recent initiatives to implement changes to Bitcoin’s protocol, the present signatories — representing the main exchanges, companies, service providers, and hundreds of thousands of users in the region, hereby collectively denominated as the “Brazilian and Argentinian communities” — wish to voice their deepest concerns over the upcoming November hardfork as mandated by the so-called New York Agreement (“NYA”), also known as SegWit2x (“S2X”).

As enthusiasts, entrepreneurs, developers, businessmen, it is our belief we all share the same goal of making Bitcoin succeed and fulfill its huge potential as a disruptive technology, allowing for greater financial freedom, monetary sovereignty and empowerment to each and every individual around the world. We also value Bitcoin’s technological breakthrough for applications well beyond money and borderless payments. But regardless of the use cases, a secure and reliable blockchain is paramount.

We do believe the NYA signatories have the best of intentions in attempting to improve Bitcoin’s protocol, and we also recognize the invaluable service historically provided by the companies and the talented individuals associated with S2X. We profoundly disagree, however, with the means chosen to carry out such a plan. And therein lie all the discord, controversy, feverish debates, and even resentment for some actors.

What follows is a non-exhaustive list of the main reasons why the Brazilian and Argentinian communities deem SegWit2x an ill-advised and unwarranted pursuit:

1) An agreement, instead of a proposal: the NYA narrative framed the situation as a scaling gridlock that needed be solved, thus an agreement between relevant actors (developers, miners, exchanges, payment processors) was sought after. But the very nature of an “agreement” between a few parties in a decentralized consensus protocol can be interpreted as an aggression against the network. Bitcoin’s governance model is certainly not perfect, nonetheless it is far from dysfunctional. If a proposed change lacks adherence, status quo remains. That is a strength. Difficulty in changing the protocol — especially when affecting the consensus layer — really is a feature to be commended. BIP stands for Bitcoin Improvement Proposal, there is no Bitcoin Improvement Agreement for the simple reason that users cannot and should not be coerced into adopting unwanted changes to the protocol. As a community, we should strive to propose, educate, and convince. Overriding the governance mechanisms through closed agreements does not foster unity.

2) Lack of development and objective transparency: from the onset, there was a clear deficiency of transparency and clarity from the leading S2X’s developers. Countless cases of interested parties being barred from freely subscribing to the mailing list, or accessing the slack channel, were verified. That cannot be considered open participation. Although this has somewhat been resolved, it contributed to confusion and suspicion**,** resulting in many parties simply distrusting or not believing SegWit2x true intentions. In the end, we are left wondering if NYA is genuinely about Bitcoin scaling or simply a subterfuge for a “governance takeover”, if the latter was even possible. Moreover, participation was encouraged only on the basis of obedience to a pre-agreed upon decision. If the technical and security merits of a “2mb hardfork in 3 months” are not permitted to be discussed, participating seems a sterile exercise.

3) Political compromise, instead of technical upgrade: it has been frequently stated that SegWit2x represented a compromise. Immediate activation of SegWit (BIP141), as many users desired (by conservative measures over 70% of full nodes were already running SegWit ready software by then), and an increase in base blocksize limit to 2mb, as desired by miners and in accordance with an alleged agreement made during the Hong Kong Scaling Conference — though such an agreement was nothing more than a few developers promising to do research and make an open code proposal. A compromise in a decentralized consensus protocol poses a grave problem as it shows little regard for the technical consequences on the whole network. Changes impacting the consensus layer should not be adopted based on accords simply because some participants (be it miners, or merchants, or developers) are insisting on them. It is immensely difficult to make the case this isn’t a politically motivated change, one which has little to do with technological enhancements of the network. If Bitcoin’s protocol can be altered by the sheer pressure of select participants, it means decentralized consensus has failed. It means Bitcoin cannot and will not withstand even greater attacks in the future. To assert that S2X, if successful, sets a bad precedent is a gross understatement.

4) Consensus imposition, instead of consensus building: as a decentralized free open-source software, changes to bitcoin’s protocol cannot be forced upon users of the network. As previously argued, had the proponents of S2X merely proposed a change, engaged in open and truthful debate, the divisive situation could have been avoided in its entirety. If upgrades are in fact needed, let us build consensus around them.

5) Replay protection and unnecessary disruption: this was perhaps one of the most controversial stances by the S2X developing team. The outright refusal, followed by persistent reluctance, to implement strong replay protection gave a sense of recklessness to the entire community. It seems, at times, that S2X aims at deliberately causing disruption in the expectation users will capitulate and end up upgrading to its incompatible implementation. This posture undermines S2X’s own credibility as a legitimate attempt to improve the protocol.

6) Emphasis on mining to the detriment of users: trust is an emergent property where multiple parties must act in strict conformity to the rules or risk consensus failure. Consensus is achieved by: i) full nodes independently validating transactions, ii) miners aggregating transactions into a block and producing a proof of work, iii) full nodes verifying miners’ blocks, and iv) full nodes selecting the longest valid chain. Seeking majority hashpower as a means to demonstrate consensus is pointless. Miners provide an essential service to the network, but they do not determine consensus. Mining does not define what the rules are. Full nodes enforce rules and defend the network against arbitrary changes by rejecting invalid transactions or blocks. If miners did have the sole power of affecting protocol changes at their own discretion, Bitcoin wouldn’t be a robust and secure network.

7) Impatience over prudence: hardforking, by definition, means breaking backwards compatibility. Hardforking without consensus guarantees a chain split. For a network worth billions of dollars being used by millions of users, allowing for sufficient planning, testing, and preparation should be a self-imposed best practice. Unfortunately, S2X’s implementation (btc1 core) adopted a hasty timeline for activating a hardfork, risking leaving a significant portion of users adrift. Additionally, the so-called “quiet period” before the date of activation makes S2X all the more worrying. We would have preferred to see the risk of a chain split being mitigated by open and intensive testing instead. Downplaying backwards compatibility and security issues makes us extremely uneasy about running btc1 core software.

8) A non-solution to a perceived problem: we obviously prefer low fees to high fees, faster confirmations than longer confirmations, but simply raising base blocksize limit to 2mb now is a partial solution at best. As acknowledged by the very proponents of S2X, even 2mb is considered already insufficient and further increases should be implemented soon. If that is the case, does S2X plan on hardforking every 3 or 6 or 12 months? Congestion in the network is not a fundamentally technical problem to Bitcoin’s protocol. It certainly prevents some use cases in the short term, but does not imperil the network’s functionality and utility. We believe preserving Bitcoin’s censorship-resistant properties should be a top priority in protocol development.

9) Externalizing risks, network and market turmoil and potential liabilities: the chances of a chain split overburden exchanges, payment processors, and wallet services that must plan, prepare, and support a new coin in the event of a permanent split, encumbering these third-parties with potential liabilities should they refrain from doing so. Furthermore, it causes network turmoil by requiring participants to take extra precautions prior to the fork to safeguard wallets and by exposing users to possible loss of funds. Averting disorder in the network should be a prime concern in protocol upgrades, it is unfortunate to realize S2X might accomplish the very opposite. Lastly, uncertainty originated from S2X tends to reverberate negatively in the markets affecting asset prices across cryptocurrencies in general.

10) Misleading miners: it seems that miners have been misled into signing to a promise that overwhelming agreement in the network would be achieved. But since this is clearly not the case, if miners do run btc1 core, they endanger their operations by mining a chain the majority of users will invalidate. A more prudent approach would have been to recommend miners to “execute a hardfork if the signs of consensus in the network are unequivocal”, but never “do hardfork at all costs”.

11) Misleading statements by some proponents: unfortunately, companies we do admire and have business with have released misleading statements regarding S2X inadvertently withholding crucial information from its users about what is really at play in the network. Everyone is free to choose the software they want to run, but customers should be rightfully informed if its service provider is adopting an incompatible implementation and what the risks are.

We believe sooner or later upgrades to the protocol will necessitate a hardfork. With due planning and preparation the network can smoothly coordinate to effectuate such changes with minimal chances of chain split and disruption. That, however, requires time, education and testing.

Governance in a free open-source software is a complex business and some parties become frustrated by the lack of agility or ability to upgrade the protocol. Roadmaps, promises, and compromises are innocuous in a decentralized consensus network where no entity or group of actors can unilaterally dictate and enforce rules at will. We are all part of consensus.

For all the reasons above, the Brazilian and Argentinian Bitcoin communities stand in opposition to SegWit2x. We consider any potential benefit arising from a hardfork as per the NYA is not worth the risks. Therefore, we urge its proponents to discontinue this endeavor and reengage the community towards a healthy and collaborative process for improving Bitcoin’s protocol.

Signatories

From Brazil:

Bitcoin Brasil (Facebook group with 65K members, public poll shows results of more than 97% support in 720 respondents)

Bit.One

Bitsendal (Bitwage in Brazil)

Blinktrade

Blockchain Hub

Braziliex

CoinBR

Coinkite, Opendime

Criptomoedasfacil.com

FoxBit

ITS Rio

MercadoBitcoin

NegocieCoins

OriginalMy

Star Labs

SuM Law

TradeBit

Walltime

From Argentina:

laBITconf (Latin American Bitcoin & Blockchain Conference)

ONG Bitcoin Argentina

Bitcoin Argentina Meetup group

Bitcoin Argentina forum (public poll shows results of more than 99% support in ~350 respondents)

EspacioBitcoin

From Spain:

Meetup Bitcoin Madrid

Individual Signatories (many more to be included soon):

Alex Bráz

Alexandre Ferraz

Alexandre Leite

André Baptista

André Ramos

Arthur Campos

Edilson Osorio Jr.

Fabiano Dias

Fabro Steibel (Diretor Executivo do ITS Rio)

Felipe D’avila

Felipe Micaroni Lalli

Fernando Cesar

Fernando Ulrich

Gabriel Aleixo

Geraldo Bastos

Helena Margarido

Hygoor Jorge Cruz Freire

Jéssica Lima

Jhonatas Wesly

Joana Santos

João Dias

João Paulo Mayall

Joeldo Holanda

José Wilker

Marco Agner

Marcelo Henrique Sáez Quiñónez

Marcelo Zola Zanotim

Mathias Negrão Kux

Murilo Valadares

Nelson Lowenhaupt Junior

Paulo Aragão

Rafael Motta

Rafael Nogueirol

Renan Kruger

Renato Nunes

Renato Oliveira Santos

Rocelo Lopes

Rodini Netto

Rodolfo Novak

Rodrigo Cassio

Rodrigo Saraiva Marinho

Rodrigo Souza

Rubens Neistein

Safiri Felix

Thiago Cesar

Úrsula Vergilio

Victor Hugo Guimarães Costa

Vitor Augusto Pedrozo Dias

Wendel Smith