Two and a half week have passed since the Battle of the branches took place.

You would imagine that the dust has started to settle by now.

It certainly has not.

The calm before the storm, just before the roads started fighting each other

What is clear now is that there are two versions of Bitcoin which seem to be permanent. Unless some major turn of events occur. The Bitcoin network is also facing more risks of splits in the time to come. Possibilities if you are the optimistic kind.

There is no fork

If you are engaging in discussions on evolution of Bitcoin you will soon encounter the terms soft fork and hard fork. These are highly politicised words. Fork used to refer to the actual event of a blockchain diverging in two different directions, having a common history. A Y-shaped division where the base of the letter represents the history, each arm being the new direction that the respective branch is taking.

It’s pretty obvious that there is no fork. That’s a spoon. Stupid kid

Here’s a little secret some people don’t want you to hear. There are no such things as hard forks and soft forks. There are rule changes that keep the network intact, and then there are changes that have the potential to split it. If you redefine a rule, say for example the anyone-can-spend rule, you are not forking. You are just redefining a rule. If the network as a whole agrees with you, you have just upgraded. If it doesn’t, you are exposing it to the risk of a split. People can actively oppose you. Or subversively if they want to fight in that way. A disagreement can also live in the network for a long time as a virtual branch. Even if the network divide hasn’t occurred yet.

What is currently happening in the Bitcoin network isn’t forks. It is suggested rule changes that may or may not result in network splits.

And split means exactly that. The network physically separates into two disconnected sections that cannot be put together again.

How do I split thee? Let me count the ways

In the Bitcoin world, there are three main directions right now, with different supporters for each direction.

Beautiful city of Split, Croatia. Contrary to popular belief, the city has always only been a single unit

The first and simplest one to describe is Bitcoin Cash (BCC). It is a clean split in the Bitcoin network. BCC only shares a common history and distribution of coins with the rest of Bitcoin. Apart from that it is a completely separate network. It manifested as a defensive measure. Partly as a response to the suggested inclusion of a new set or rules, segwit, but also as a response to an ultimatum put forth by a group that intended to force implementation of segwit onto the network. It was above this also a response to the multi year long struggle to remove the artificial transaction limit of the network.

The second direction is what is now the main branch (BTC). This is what came out of the so called New York Agreement (NYA). It aims to implement segwit followed by a one time upgrade of the block size to 2MB. These changes were activated on the BTC branch on the 1st of August. None of the changes are actually truly active yet, but within the branch lies an implicit promise to activate them within the coming months. Segwit is in a sense already active, but segwit transactions will first be allowed the 21st of August.

The third direction is a branch that hasn’t manifested yet. Here segwit is implemented, but no changes to the block size cap will be done. This hypothetical direction currently lives within the BTC branch as well. If it would manifest, this branch would be the same as what the so called User Activated Soft Fork (UASF) was aiming to achieve. This could happen by subverting the current main branch but it could also happen as another network split.

Timing is everything

Was it the right decision for BCC to split on the 1st of August? Maybe November would have been better, if the 2MB block size cap that were promised in the NYA wouldn’t appear?

The BCC split happened mainly due to two reasons. The first was that a large part of the network demanded to remove the block size cap. The details of the NYA were vague and couldn’t persuade investors that the block size cap really would be raised. It was also perceived as too late, too little. The other and probably more important reason was that if the split would have occurred only a month later, segwit would have been implemented in the network. Thereby bringing those changes into the new branch. By forking beforehand, the branch stayed clear of unwanted network changes. All in all, the split was probably inevitable, and the 1st of August was the natural timing.

Will the real Slim Shady please stand up?

An odd decision was made when the NYA was agreed upon. It was decided that the two changes wouldn’t happen simultaneously. Instead segwit would be activated first, with larger blocks being added approximately three months later.

It’s hard to tell the reasoning behind this decision. Since there are two fractions that inherently distrust each other, the natural thing to do would be to apply both changes at the same time and make them dependent on each other. The agreement thereby paved the way for a bitter infighting on what really was agreed upon.

This decision has now lead to a great divide regarding the evolution of the BTC branch, with two sides claiming their right of way.

Big city of dreams. Agreements too, sometimes

The inherent problems with the separate deployments of the two features were pointed out as soon as the NYA was announced. The common belief was that as soon as segwit was deployed, those opposing a block size increase would start propaganda campaigns to subvert the agreement. And lo and behold, that did happen right after the point of no return for segwit activation. This is not a healthy situation and it is massively destroying network value.

So the BTC branch has turned into a mess. Who is right, and what is actually deployed?

Fortunately, there is a clear way to distinguish whose voice is actually heard on the BTC branch right now. Before the NYA the support for segwit was distinctively weak. It had also been so for the better part of a year. Soon after the NYA though, signalling started to appear that was inline with it. This signalling is what has lead to the activation of segwit. From this follows that what is deployed on the network is actually the NYA. Opposers can struggle all they want. If the miners won’t follow through on what they have promised, it will be a glaring red flag that the guardians of the network cannot be trusted.

Agree to disagree

The NYA was implemented in such a way that it imitates the deployment of segwit. This has been an open invitation to the small block crowd to still take part in the game. And taking part they are.

What is happening now is a continuation of the UASF movement, both in theoretical and practical terms. This time spearheaded by Blockstream and the development group Core. They took the backseat the last time around, surely realising that loss was inevitable. The UASF was never going to work out. This time around though there is nothing to loose, it really is do or die.

Consequentially, they took their stance and did it through an ultimatum that will guarantee victory or irrelevance. Just a few days ago they added changes to the Core client that will make it actively disconnect from any other party they consider to not run the correct rule set. This is just about any client that isn’t Core by the way.

So you’re not planning to use our network client, eh? Well, in that case Ernest here is going to disconnect you for good

It may seem like a surprise move at first, putting ourself at collision course with the rest of the network. And throwing out the steering wheel while you’re at it. But if your only important goal is preserving the artificial transactional limit and that very thing is currently being taken away from you, you might as well throw caution to the wind.

Will this heads on approach succeed? Probably not. You would have to convince the miners, who have already taken their stance. It’s a bit easier to convince exchanges and other central economic actors though. If Core could make them fear a change enough, they just might be able to wrestle control back. Thereby getting segwit in place, which the NYA so kindly handed to them. While also steering clear of the dangerous and frightening block size upgrade.

Clone wars

This time around we are really coming to a final standoff and the outcome is anything but certain. But the train is surely moving faster on the track.

Ok, we’re here now. You might as well get used to us

It’s pretty certain that the BCC branch is around to stay. The miner difficulty adjustment will in a few days make it compete with Bitcoin on equal terms, if not the price rise gets it there beforehand. The long term value of it is a different matter. It is still unproven to a large extent. But its value proposition is for reasons listed here far better than the alternatives. If it stays that way, and the stalemate on the competing branch or branches continues, then BCC is probably destined to completely absorb all the other branches.

Can the BTC branch manage to emerge somehow from the infighting? Right now it looks that way. As it seems, the NYA will be fully implemented in a few months. Then the Core branch wouldn’t come to life. There for sure won’t be mining power prepared to sink enough resources into realising a branch with segwit only.

The only chance that the Core branch has to manifest is by instigating fear. They have traditionally had great success in this. This time around things are a bit different though. Their grip on the network is substantially weakened and alternatives for things that traditionally have been considered their domain have appeared. If no unexpected change happens, it is difficult to see that the path taken by Core will have any more chance of success than what the UASF had.

A very big and looming question rests unanswered though. Recent events indicate that miners might have realised that they can take a more active role in network evolution. They could for example deem a shift to BCC favourable, maybe as an opportunity to purge the network from burdensome technological choices and bad influencers. There are of course a lot of other factors that could sway their allegiance one way or the other.

If the kings sleeping under the mountain finally are awake, then truly all bets are off.