Bitcoin developers and miners have divided over user-activated soft forks. For previous soft forks, miners vetted changes via BIP 9 signaling. SegWit triggered disagreement. Bitcoin Core contributors
Bitcoin developers and miners have divided over user-activated soft forks. For previous soft forks, miners vetted changes via BIP 9 signaling. SegWit triggered disagreement. Bitcoin Core contributors can't agree on whether users should bypass miners, and opinions split across the ecosystem.
The core risk is chain splits. Soft forks usually avoid them—developers prefer this over hard forks, which require a new blockchain and split by design. UASFs eliminate that safety.
Here's how it works: Soft forks maintain backward compatibility. Users running old nodes can still validate new blocks, even without upgrading. But if miners allow blocks that violate new rules, the network forks. Users with old nodes follow what they believe is the longest valid chain. Users with upgraded nodes reject those invalid blocks and follow a separate chain. The result is two Bitcoins, as long as miners keep mining on the invalid chain.
Economic support prevents splits. If most users back the soft fork, miners chase the higher-value chain—the one tied to a higher bitcoin price. Once miners representing more than half the network hashrate reject invalid blocks, one chain emerges.
Miners don't need to code or run the software. They need to refuse blocks that violate the new rules.
Judging Support for a User-Activated Soft Fork
Predicting economic consensus is hard. Ethereum's DAO bailout hard fork showed the problem. Insiders dismissed predictions of a split. Instead of unifying, Ethereum and Ethereum Classic both survived as separate blockchains.
UASF risks stem from uncertainty. Clear economic signal would defuse them.
A futures market could solve this. Miners and traders could see the outcome before activation.
How a UASF Futures Market Would Work
Imagine SegWit activates on January 1, 2018. Bitfinex could let users split their bitcoin into two tokens today: one for SegWit Bitcoin, one for Bitcoin without SegWit. Bitfinex would settle based on the actual outcome. Users could trade both tokens on an open market, pricing each version months before activation.
High prices for SegWit tokens signal success. Miners chase profit. If SegWit trades above non-SegWit, miners earn more by mining the SegWit chain and rejecting invalid blocks. Once half the hashrate follows that logic, one network emerges.
Low SegWit prices signal trouble. Miners would reject the soft fork. The result could be a contentious hard fork, leaving Bitcoin fragmented or spawning fresh altcoins with SegWit. At worst, two equal chains coexist—Bitcoin loses brand power, network strength, everything that made it dominant.
Still Not Useful for Contentious Changes
This framework has limits. No one activates a soft fork if opposition runs deep.
Extreme opposition creates a different split. Dissidents hard fork away to build their own altcoin.
Soft forks have an advantage here. Critics don't have to use new features. They can ignore SegWit and keep running old Bitcoin. If the fork doesn't harm them, they stay on the same chain.
Users control adoption. If demand rises for new features, miners mine them. One chain emerges, avoiding a split.
The catch: contentious forks birth altcoins. Developers want to avoid that.
Reliability of the Futures Contracts
The futures market fails if contracts aren't built right. One problem: centralized exchanges carry risk. Hackers have breached Bitfinex before. Not everyone trusts a single exchange to hold their coins.
Multiple exchanges spread the risk. A decentralized option like Bitcoin Hivemind would work better.
Contracts must track the actual outcome of the split. Current Bitcoin vs. Bitcoin-with-SegWit pricing needs to reflect reality.
Volume matters. Low volume suggests weak interest in the fork.
What if Miners Don't Follow Users?
Suppose the futures market screams SegWit, but miners split the chain anyway. That breaks Bitcoin's incentive structure.
One Bitcoin beats two. Civic and Gyft Co-Founder Vinny Lingham has argued miners hate splits for this reason.
Miners should chase user preference. If they mine against users, they destroy their hashpower's usefulness. All that hardware only protects Bitcoin if it serves user interests.
Users would view a split against overwhelming economic consensus as a miner attack. They might respond by changing Bitcoin's proof-of-work algorithm. That move would destroy the specialized hardware miners depend on.
