For many observers, the coming SegWit2x fork is just the latest in a growing number of splits from the Bitcoin blockchain. These splits often result in a flurry of activity as investors pour funds into Bitcoin hoping to obtain a derivative coin with little regard for the severity of the incident. However, this fork may actually be different.

The New York Agreement

The 2x fork is the result of the continued fallout regarding block sizes and transaction fees that led to the creation of Bitcoin Cash in August. Earlier this year, a group made up of industry heavyweights including miners, wallets, exchanges and payment processors came together under the "New York Agreement". The group convened to confirm support for proposals that would seemingly guarantee the activation of Segregated Witness at an 80% threshold, the signaling at bit 4 and the activation of a 2 MB hard fork within six months.

The agreement claimed to involve 58 companies from as many as 22 countries and most importantly about 83.28% of miner hashing power. As a result, the agreement represented the most significant potential for network wide disruption up until this point.

Network Implications

The 2x fork has the potential to cause havoc across the Bitcoin network, with nodes, users and developers, attempting to co-exist across the two chains. In addition to this, the aggressive nature of the fork will result in a 2x coin that is not equipped with replay protection, which paves the way for a significant loss of funds for network users due to accidental replay spending, replay attacks and the sudden, widespread incompatibility between various software and services.

This would cause severe damage to the reputation and goodwill that Bitcoin has built up to this point and the damage would be long lasting. It is clear that such an occurrence would be immensely detrimental to the ecosystem and all its stakeholders, and it is becoming evident that some 2xers are beginning to get cold feet.

Fatal Flaws

The groups that made up the agreement are essentially profit-oriented organizations that cannot survive if the network is terminally affected. These stakeholders are risking their own existence over a simple block size increase and the 2x fork is no longer the safe and straightforward commitment it once appeared to be.

In addition, the proposed increase of the block size to 2MB that is central to the Segwit2x movement has been rejected by the vast majority of the open-source development community on technical grounds, and is not being merged into Bitcoin Core. In addition to this, a number of original signers of the agreement have dropped their support with the mining pools Slush and F2Pool, who account for nearly 13% of hash power backing out completely.

The New York Agreement was an agreement among a number of private stakeholders who believed that they represented a critical mass of the Bitcoin ecosystem and were able to change the Bitcoin protocol.

The group placed a heavy emphasis on the importance of hash power in measuring consensus and the ability to pull off a successful fork. Ultimately, the desires of the entire ecosystem are aggregated and reflected in market prices, which miners are tied to and cannot ignore for very long.

The 2xers also felt that industry stalwarts such as Coinbase and BitPay actually spoke for their users, and could also decide for them what the best position to take was. This centralized way of thinking and behaving is completely at odds with the ethos that supports Bitcoin and was guaranteed to result in a backlash from the community.