Author: Chris Belcher 2017-03-05 14:33:06
Published on: 2017-03-05T14:33:06+00:00
The concept of User Activated Soft Fork (UASF) is viewed as a positive step for Bitcoin, as it aligns with the balance of powers within the cryptocurrency. It also provides an opt-in feature, making it more appealing to users who are interested in participating in the fork. While some compare UASF with hard forks, there are differences between the two types of forks. In a fork between segwit-invalid and segwit-valid after a UASF, the segwit-valid chain will be favored if it has more work, leading to the annihilation of the segwit-invalid chain. Only miners who recode their software can initiate such a fork, as segwit transactions are non-standard and won't be relayed by default. The accidental fork created after BIP66 was short-lived, lasting only a few blocks and mining no transactions except the coinbase. The writer argues that a rational self-interested miner would not create or let a chain fork last long, assuming the economic majority enforces UASF. Since segwit-invalid coins are more risky to hold as an asset, they have a lower price than segwit-valid coins. Investors demand higher risk premiums for holding them, and short sellers may sell down the price if the value goes to zero. In cryptocurrencies like Bitcoin, hashpower follows price. Therefore, the segwit-invalid chain will eventually be overtaken in work by a higher-hashrate chain and be annihilated. The writer suggests that UASF should only proceed if a significant portion of the economic majority ensures its enforcement. This will reduce the value and liquidity of the segwit-invalid chain, which leads to a rapid re-organization, and the hash power follows the price, ensuring the segwit-valid chain's survival. As a user-activated fork, it must be done by the users of Bitcoin.
Updated on: 2023-06-11T21:55:20.559523+00:00