After the Bitcoin Cash split in August, the model of a full-history fork that gives existing Bitcoin holders free coins has shown its appeal. And so we have Bitcoin Gold.
The key change is that Bitcoin Gold is mined fastest by GPUs — they’ve changed the hash to Equihash, a memory-bound hashing algorithm taken from Zcash. The idea is to make GPU mining feasible once more: “When we find asic is created, we will change to another PoW.” To avoid the problems Bitcoin Cash has had with long delays between blocks, Bitcoin Gold plans to adjust the mining difficulty each block.
The effort is being led by Jack Liao of LightningASIC, which makes GPU mining rigs. LightningASIC advocates this fork as necessary competition for Bitmain, the biggest manufacturer of ASIC-based Bitcoin mining rigs (who are also one of the backers of Bitcoin Cash) — though they claim that “Bitcoin Gold is not a competitor of Bitcoin.”
There’s also all those Ethereum rigs that overenthusiastic home miners bought in June and July that are currently grossing a few dollars a day (before electricity) from NiceHash, and which will suddenly be obsolete if Ethereum succeeds in moving to Proof of Stake — that’s a miner base just waiting for a chance.
Bitcoin Gold was announced on 26 July 2017 and the plan is to fork as of 25 October, with the full network launch being 1 November.
Why do a Bitcoin fork instead of an altcoin? The hook is, of course, the promise of free money for existing Bitcoin holders. (A “dividend fork.”) As I note in chapter 9 of the book, altcoins “have a much simpler value proposition: you might get rich too if you start your own magical Internet money!”
SegWit2x and the backlash
There’s no reason there can’t be endless Bitcoin “dividend forks,” just as there are endless altcoins and ICOs. SegWit2x still plans, per the New York Agreement, to fork in November. It will likely become a fourth full-history Bitcoin fork — but there’s a non-negligible possibility that it could take over as the main Bitcoin, given it has substantial miner support, even if the rest of the Bitcoin ecosystem doesn’t seem to be all that thrilled.
Bitcoin core developers and supporters have objected strenuously — supporters making claims such as:
- “If 2X proponents try to take the BTC ticker, they will get sued to oblivion” — I would love to see the legal theory behind that one.
- the Bitcoin price will go over $5000 if everyone just ignores 2x — for vague handwaving reasons that assume Bitcoin works like a normal commodity market and the price isn’t ridiculously and obviously manipulated.
- SegWit2x would constitute a “terroristic attack on a financial network,” and maybe someone could report SegWit2x lead developer Jeff Garzik to “the Japanese police and Interpol.”
The developers have left such hyperbole to the fans, but are not at all pleased with the 2x proposal:
- Greg Maxwell has said that if SegWit2x takes over, the current Bitcoin core development team may quit. (2x has far fewer developers involved.)
- They have mooted changing the open source licence for future changes to the Bitcoin software (presently under the ultra-permissive MIT License) such that derivatives could not use the names “Bitcoin” or “BTC” unless they had protocol compatibility with the Bitcoin code. This is entirely legal, but does appear a somewhat disconcerting assertion of trademark-like rights on a term that wasn’t trademarked by its creator, nor any time in the eight years since. (Greg disagrees with me on this characterisation.)
- The bitcoin.org site will be running a denunciation (archive) of companies supporting SegWit2x, placing “a banner on every page of the site warning users about the risks of using services that will default to the so-called Segwit2x.”
Bitfinex are dealing with the potential split by offering Chain Split Tokens that will allow traders to bet on the “potential activation and mining of the Segwit2x protocol.”
I predicted before that Bitcoin would likely end up going whichever way the miners go. The other complicating factor right now, though, is that we don’t know what’s going to happen with the Chinese miners, who are much of the support for 2x — whether the local authorities will allow them to continue mining bitcoins and selling them for dollars (perhaps they can advocate this to the government as export income), or will just shut them down like they did the exchanges.
As Hunting4Downvotes on Reddit /r/buttcoin explains:
Satoshi’s plan for 21 million coins was the perfect amount. Because when there’s only 42 million coins, the value of your coin continues to increase with time. And when the entire world is forced to use bitcoin, the scarcity of only 63 million coins ensures wealth and prestige for early adopters. And because there are only 84 million coins, it is the perfect libertarian money.
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“I would love to see the legal theory behind that one.”
I suspect people that claim to have lost money from the confusion of the ticker switch could possibly rely on this? https://en.wikipedia.org/wiki/Passing_off Since Bitcoin Core has always been Bitcoin (BTC) on the exchanges, wallets, they might have a good shot.
“Greg Maxwell has said that if SegWit2x takes over, the current Bitcoin core development team may quit. (2x has far fewer developers involved.)”
If this doesn’t tell us that Bitcoin (BTC) is treated like a propietary brand in which the owner of the ticker symbol is the administrator of the network I don’t know what does. Greg would have considered his Bitcoin Core project dead if Core lost the BTC ticker symbol.
“This is entirely legal, but does appear a somewhat disconcerting assertion of trademark-like rights on a term that wasn’t trademarked by its creator, nor any time in the eight years since. (Greg disagrees with me on this characterisation.)”
I suspect they couldn’t do this with “Bitcoin” as they have allowed others use it up until now but they possibly could with “BTC”. It’s BTC what matters in any event. Trademarking BTC would merely make official what they’ve done by getting the exchanges to bow to their wishes through claims of fraudulent misrepresentation IMO. Bitfinex’s announcement essentially said that they’d never be changing the BTC ticker from Core.
What I wonder is, does this mean Core are administering some sort of exotic money services business as a result? Someone would have to own the trademark. Existing regulations surely wouldn’t apply to networks like Bitcoin but states might just have their hook.
Note I’m speaking of restrictions on rights of reuse that I’m characterising as trademark-like – I’d be very surprised if they could successfully get an actual trademark at this late stage, even on “BTC,” let alone “Bitcoin.” But the restrictions are IMO trademark-like.
I think it’s unlikely that even if they gain some degree of effective control over “Bitcoin” or “BTC”, they’ll therefore have liability for anything anyone does with the software in question. Financial compliance issues are usually the responsibility of those using the software in a financial business, not the maintainers of open source software that said business happens to use.
Yep I got you said Trademark-like I am assuming (possibly incorrectly you’ll know more about software licences than I) that one couldn’t simply change the licence to preclude people from using the name Bitcoin in the future since others with completely incompatible clients have already done so. In terms of getting an actual trademark you may be right but as I said, they don’t have to. They can claim goodwill in the name Bitcoin (BTC) and may have a very good shot considering the project began in the Github repo they control and pretty much all the development has occurred there. Every single exchange and web wallet uses Bitcoin Core. Bitcoin Core has always been Bitcoin. People just haven’t known or admitted it.
In terms of financial compliance I agree with you for legacy systems but Bitcoin is a completely different kettle of fish. If you create a OSS for financial institutions to use in the fiat network, the responsibility for using it is most definitely on them as you said. The software dev has nothing to do with the maintenance of the fiat network, he/she just wrote software that plugs into it. In the case of Bitcoin however, the development teams are not just creating software, they’re bootstrapping a monetary system. Yes once rules are implemented they’re enforced in a decentralised fashion but as we’ve seen over and over, the rules need updating and the brand needs protecting for the system to keep functioning. The system therefore only works if everyone a) in agreement about what the rules are and b) in agreement about where the rules come from. Basically it only works if there are administrators. The recent political spat and plethora of legal threats you’ve highlighted here have shown me that the rules for Bitcoin (BTC) come from Bitcoin Core. They backdoor enforced naming rights in order to maintain their grip on protocol governance.
Under the Patriot Act, the definition of a money transmitter is as broad as “any system that facilitates the transfer of value”. It’s safe to say that Bitcoin is a system that permits the transfer of value. According to FinCen a person must have the powers to redeem currency but in order to be determined an administrator. It’s clear Bitcoin Core doesn’t have the powers to do this but since Bitcoin Core have clearly put their hands up to say that they are in charge of the Bitcoin (BTC) brand, they may have just put themselves in the crosshairs of the government. There’s now a clear central point (if it wasn’t obvious already) regulators can sink their fingers into without coming up against free speech protections for those developing software if-you-will. When E-Gold came along at first the regulators struggled to accommodate it under their regime but they adapted it and regulated it out of existence (https://en.wikipedia.org/wiki/E-gold#Criminal_prosecution). As a result of Core clearly assuming command of the Bitcoin brand (and therefore the policy-making process) I think there might be a very similar account on the Bitcoin wikipedia page as the one I’ve linked to E-Gold here in the future.
PS. I just checked that discussion you had with Greg. He’s delusional if he can’t see that changing the licence to include naming restrictions isn’t a version of trademark enforcement as you argued.
> I am assuming (possibly incorrectly you’ll know more about software licences than I) that one couldn’t simply change the licence to preclude people from using the name Bitcoin in the future since others with completely incompatible clients have already done so.
yeah, the way it works is: the code released under the old licence is still under that licence; the new licence would apply only to new code changes. Or that’s the way this sort of licence change usually goes.
> In terms of getting an actual trademark you may be right but as I said, they don’t have to. They can claim goodwill in the name Bitcoin (BTC) and may have a very good shot considering the project began in the Github repo they control and pretty much all the development has occurred there. Every single exchange and web wallet uses Bitcoin Core. Bitcoin Core has always been Bitcoin. People just haven’t known or admitted it.
Maybe. I’m not sure who’d have clear standing to sue, though.
Of course, the law isn’t computer code. It would be a sufficiently murky issue that I suspect the actual answer would be “who has the most money to spend on lawyers?” And “what other groups from the software world would suddenly take a strong interest in the case?” I was in the thick of Open Source vs Microsoft in the last decade – as Greg Maxwell was – and this would have a ton of fallout in all directions. Definitely interesting times.
> The system therefore only works if everyone a) in agreement about what the rules are and b) in agreement about where the rules come from. Basically it only works if there are administrators. The recent political spat and plethora of legal threats you’ve highlighted here have shown me that the rules for Bitcoin (BTC) come from Bitcoin Core. They backdoor enforced naming rights in order to maintain their grip on protocol governance.
> since Bitcoin Core have clearly put their hands up to say that they are in charge of the Bitcoin (BTC) brand, they may have just put themselves in the crosshairs of the government.
> When E-Gold came along at first the regulators struggled to accommodate it under their regime but they adapted it and regulated it out of existence
I think in practice, this would require a regulator being particularly interested in pursuing this interpretation. Remember that if necessary, the current dev team could abandon the software and the network would keep going.
I think if they did want to come down on Bitcoin, they’d do what they do now and make the Bitcoin/ActualMoney interface even tighter. This doesn’t require any new legal theories.
So far the US regulators have been light-touch, to an extent that’s surprised me. The SEC’s had plenty of opportunities to come down on the whole crypto game like a ton of bricks, but they’ve stuck to doing so with really clear scams, and making polite phone calls to a couple they think are on the edge.
> Remember that if necessary, the current dev team could abandon the software and the network would keep going.
I argue in my recent blog post that this is in fact highly unlikely to be the case. The choice of what money is has to be forced on us. Bitcoin is a man-made political construct. Without a central authority forcing its rules on everyone it’ll collapse.
> I think if they did want to come down on Bitcoin, they’d do what they do now and make the Bitcoin/ActualMoney interface even tighter. This doesn’t require any new legal theories.
I had an interesting meeting with FCA intelligence and enforcement people about this last week. They can send informal messages to banks to cut off supply (already happening in some places as you know) but are quite limited in what they can do if it’s completely decentralised. I’d say the US government is similarly constrained given the constitution and common law precedent on software development as speech.
> Without a central authority forcing its rules on everyone it’ll collapse.
yep, as we see with Ethereum, which is only held together by community faith in the core developers being handy with the gaffer tape. (And even then we got ETC.)
Bitcoin has kept it together to an extent that’s surprised me – it’s spent much of its history, and certainly since 2013, lurching from crisis to crisis. Mostly it holds itself together from self-interest in maintaining the value of their holding. I think it’s likely that something called “Bitcoin” with a history per the present blockchain will linger for ages; what shape that will take and how it will work in practice is another question.