BitGo engineer Jameson Lopp jubilantly posted to Twitter this morning that Bitcoin mining pool F2Pool has stopped signalling for SegWit2x.
Why does it matter?
According to CoinDance, F2Pool currently mines 10% of the blocks on the Bitcoin network. As of yesterday, 95% of Bitcoin miners were signalling their support of the controversial fork, so with the loss of F2Pool’s 10%, Lopp’s numbers add up.
SegWit2x was (or is) going to be a contentious hard fork, supported by near-unanimously by miners but opposed vehemently by Bitcoin’s Core development team and a number of users, exchanges, and businesses. With the loss of F2Pool, 85% of miners are still signalling their support to SegWit2x, but F2Pool’s defection triples the hash power of the “NO2X” miners.
While it was likely that with 95% mining consensus the hard fork would have been successful, it would have caused enormous confusion in the community over which Bitcoin was the real Bitcoin. The loss of F2Pool’s support makes the SegWit2x hard fork much less likely to occur.
What is SegWit2x?
SegWit2x is a compromise to end the scalability crisis, and was agreed upon at the Consensus conference in New York back in May. Spearheaded by Barry Silbert’s Digital Currency Group, the attendees signed the “New York Agreement” which paved the way for the August activation of Segregated Witness (SegWit) and a follow-on November hard fork to double the block size.
Bitcoin’s Core development team came out strongly against the “2x” part of the plan, and at a recent Bitcoin conference, many attendees wore “NO2X” buttons. A hard fork to double the block size would be of minimal value in terms of scaling, and the risk of a chain split is unacceptably high when trying to upgrade such a massive network as Bitcoin’s. Core and many others did not believe it was worth the risk.
The SegWit2x hard fork may still happen; 85% support from miners is likely enough to push it through. However, the tide seems to be turning. Not long ago, one of the New York Agreement signatories, Bitwala, backed out of the agreement. They were followed shortly thereafter by Vaultoro, another signatory. F2Pool also signed the New York Agreement, and their withdrawal today is the biggest defection by far.
Exchanges have also been stepping up and discussing plans for handling the fork, should it occur. Bitfinex recently made headlines by announcing it would continue to call the legacy chain “BTC,” indicating support for Core’s side of any fork that might happen.
Further defections will almost certainly kill the SegWit2x plan, which is probably good for Bitcoin in the short term as it removes a sword of Damocles dangling over the head of the community. Nonetheless, it has been speculated that over the long term, so many companies going back on their word could be bad for the Bitcoin ecosystem as it reduces trust between the network’s participants.