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Prominent Bitcoin Investor: SegWit2x Will Never Replace Bitcoin and its Legacy Chain

Prominent Bitcoin Investor: SegWit2x Will Never Replace Bitcoin and its Legacy Chain

Prominent Bitcoin Investor: SegWit2x Will Never Replace Bitcoin and its Legacy Chain

Alistair Milne, a prominent Bitcoin investor and a partner at the Atlanta Digital Currency Fund, has provided several compelling arguments as to why SegWit2x will not be able to replace Bitcoin and the legacy blockchain in the long-term.

In November, SegWit2x, a proposal created by the Digital Currency Group, and the majority of businesses and mining firms in the Bitcoin industry, is set to activate as a hard fork solution. Because of its contentious nature, SegWit2x will lead to the emergence of a separate blockchain network or a fork of Bitcoin, which major Bitcoin exchanges like Bitstamp will refer to as B2X.

Most Bitcoin exchanges and trading platforms such as Coinbase and Bitfinex that control the overwhelming majority of trading volumes in the global Bitcoin exchange market have revealed their strategies to maintain the “BTC” and “Bitcoin” monikers for the legacy chain and name the new SegWit2x fork as B2X. As the Bitfinex development team wrote:

“As the proposed consensus protocol Segwit2x project appears likely to activate, we have elected to designate the Segwit2x fork as B2X, for now. The incumbent implementation will continue to trade as BTC even if the B2X chain has more hashing power. We are doing this for practical and operational reasons. Political considerations are irrelevant here. While we cannot change or re-assign ticker symbols, we can change the label or description associated with that ticker symbol. For the time being, BTC will continue to be labeled as ‘Bitcoin,’ and B2X will be labeled as ‘B2X.’ This will remain the case unless and until such time that market forces suggest an alternative, more appropriate, labeling scheme for one or both chains.”

The labeling of the new SegWit2x Bitcoin fork as “B2X” is a serious disadvantage for the SegWit2x community if its intention is to compete with Bitcoin because with the “BTC” and “Bitcoin” monikers, the legacy chain or the original Bitcoin blockchain will have the network effect. In addition to that, as Milne explained in an analytical blog post entitled “Advantages of the Legacy Chain,” the depth of the Bitcoin exchange market and the network effect of Bitcoin will prevent SegWit2x and its B2X coin from overtaking Bitcoin in any aspect, including market cap, user base, developer activity, and hash rate.

“Bitcoin is the reserve currency of the ‘crypto’ world. In the past 24hrs over half a billion USD of (non-fiat) tokens were traded vs BTC. Bitcoin’s market is deeper than any other by a country mile. No new token can compete with that,” wrote Milne.

While miners have openly stated that they intend to migrate to the SegWit2x blockchain upon the completion of the fork, if users and investors remain on the original Bitcoin blockchain, the opportunity costs for moving to a shallow and unused blockchain network will inevitably force miners to return back to the profile blockchain network in Bitcoin.

Milne further emphasized:

“Miners follow the money, they do not lead the money. This has never been illustrated more clearly than by Bcash and the joke that is their difficulty adjustment algo. A rational miner fears the market negatively valuing the tokens they are trying to mine. They are extremely sensitive to profit & loss (no matter how rich they pretend to be). The richest people in Bitcoin are the Bitcoin holders and they have no overheads.”

Author : Joseph Young

Joseph Young is a finance and tech journalist based in Hong Kong. He has worked with leading media and news agencies in the technology and finance industries, offering exclusive content, interviews, insights and analysis of cryptocurrencies, innovative and futuristic technologies.

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