As of right now, there is a lot of discussion among Litecoin enthusiasts regarding SegWit and the UASF. Even though the activating of SegWit has been achieved successfully, certain mining pool operators continue to do everything they can to block it. It seems they are bringing mining hardware online that will effectively disrupt SegWit activation as a whole. A rather dubious turn of events, although it is not hard to find the culprit.

Jihan Wu Strikes Again

In the bitcoin world, everyone is well aware of how Jihan Wu is by far the largest opponent of Segregated Witness. He joined forces with Roger Ver to push Bitcoin Unlimited to users and companies, even though there is no economic support whatsoever. Now that they can’t have their solution succeed, it is evident all they want is to prevent bitcoin from scaling altogether. As a result, there is a standstill on the bitcoin network, with no scaling solution even close to activation.

Litecoin seemingly had avoided all of these problems, as various mining pools supported SegWit signaling from day one. With more hashpower supporting SegWit compared to opposing it, the activation threshold was met a few days ago. Unfortunately, there is no reason to celebrate just yet, as it looks like the war is only just beginning. In fact, it appears the hashrate in favor of Segregated Witness is starting to fall behind the curve, thanks to a few mining pools.

It is anything but surprising to learn the pools opposing SegWit on Litecoin are controlled by the same people who block Segwit for Bitcoin. Considering how one of these pools is owned by a hardware manufacturer, they can easily bring more mining power online to stall activation of this scaling solution. As of right now, that is exactly what is happening, thanks to Jihan Wu and a few of his buddies.

So far, there is no major cause for concern just yet, as the threshold is still being met. 76.77% of blocks found during this activation period have been signaling SegWit, which is above the required 75% threshold. However, it is evident someone is willingly pushing down the hashrate in support of this solution and it is not hard to look where the opposition is coming from. Jihan Wu has no interest in doing what is best for the cryptocurrency, he only wants to make a lot of money by preventing scaling solutions from activating.

One silver lining is how, even if SegWit activation fails, Litecoin can still implement the user-activated soft fork as well. Similarly to how Bitcoin, there is plenty of support for SegWit, but not enough to rely on just the miners for activation. A UASF may be coming to Litecoin a lot sooner than people think, as this remains the only viable course of action if the activation threshold is no longer met. It will be interesting to see what happens in the Litecoin ecosystem moving forward, as it will give insights as to how the bitcoin scaling debate may evolve as well.  

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Segwit will allow exchanges to charge layer two fees and reverse transactions at will. If that’s the case then why not use banks? Why even bother with using a blockchain?

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Perhaps we could go back to using matresses as fiat storage then. The reason BTC was rejected by the SEC for the ETFs is that its ungoverernable. Whoever gets a governable coin to the market with mass adoption is going to be a major player. If its not LTC then it will be something else… but its going to happen… even if the banks create it themselves… which seems the worst idea of them all.

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This is a politically motivated opinion piece designed to obfuscate the issues and build support for SegWit by those who are struggling to understand what all this is really about. Off-chain scaling neither depends on SegWit, nor is it a solution to increasing on-chain transaction capacity, something that is critical to many important applications of the world’s strongest public blockchain; things like identity, voting and anchoring scientific data to make it immutable and less susceptible to manipulation by political forces.

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I am struggling to understand what this is all about. Got some links?

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He doesn’t know what he is talking about either. SegWit doesn’t make the blockchain susceptible to manipulation, and Off-chain scaling is far from being a reality. For now, SegWit might be solution to the mempool (45mb) issues, increasing transaction speed and bringing down transaction costs.

Oh yeah, and it will presumably slow down the monopolization (and thus centralization) of mining.

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Bitcoin Unlimited (BU) allows the blockchain size to be increased or decreased based on miner consensus. Although the main proponent for BU (Roger Ver) is pushing it for pragmatic philosophical reasons, the miners that are backing it are likely only doing so because it would increase their significant power even further.

Over the years large mining pools have consistently acted to maximize the profits of their members above everything else. This even led to an accidental hard-fork because of the use of SPV mining. No conspiracy is needed to see that, in a post BU world, the size of the Bitcoin block-size would be manipulated to increase miner profits above all else. It would be made as small as possible to increase transaction costs, but not too much that Bitcoin’s value diminished, or this would reduce the value of the newly mined coins given to the miners.

So for me, given that I want Bitcoin to provide fast cheap payments for the globe, BU is a no no.

The alternative is the Lightning Network (LN), which depends on Segregated Witness (SegWit) to make it work. SegWit happens to increase the transaction throughput by ~3 times without increasing the block size, but this is only a temporary improvement that would quickly be exhausted. LN is the real prize!

Something like LN is the only way Bitcoin will ever be able to replace something like the VISA or MasterCard networks that can process the worlds transactions, and in the case of MasterCard can confirm transactions in near real-time.

However, as this excellent article explains:

LN could be dangerous because:

1. It may reduce the size of the mining pool, weakening Bitcoin’s security.
2. It may lead to the creation of very large central bodies (just like the banks we have today) to reduce hops, and therefore network fees.
3. It could lead to runs on Bitcoin if it became popular and large numbers of LN channels closed at the same time, creating load that could not be satisfied by the underlying network.

It actually seems even scarier than BU, which only strengthens the miners, in that it cedes power to new entities that are quite likely to become even more centralized. So for me, given that I want Bitcoin to remain a decentralized, safe, unhackable global system, LN is also a no no.

However, much like the way in which modern democracy is supported by fiercely independent pillars (i.e. the executive, the legislative, and the judiciary), I wonder if combining LN & BU might provide similar benefits?

For example, this would encourage the miners to grow the block chain size to reduce the number of transactions going via LN, and would prevent LN from becoming too powerful by having it used for all transactions. This would also keep the miners healthier, and would reduce the chance of there ever being a run on the system, since the underlying network would try scale up with the overlay network as much as it was able to.

Maybe if a new proposal was created that combined these two (e.g. SegWit+BU) then miners would be happy to signal for it too?

Disclaimer: I hadn’t even heard of SegWit, LN or BU until about 4 days ago, so I may very well be missing an important point, but I’m confident somebody will now tell me if that’s the case 😀

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How can you say BU has no economic support? Bitmain and are two of the most profitable businesses in the entire Bitcoin ecosystem. This is just another politically motivated opinion piece.

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