PocketBits Stance on UASF
The Bitcoin User Activated Soft Fork (UASF) is scheduled to activate on August 1st. There is a chance Bitcoin will experience a chain-split. UASF is intended to address scaling issues faced by the Bitcoin network by accelerating the adoption of Segregated Witness, Specifically, they will reject any Bitcoin blocks that do not signal support for SegWit.
Over the course of the last week approximately $25 B has vanished from the market-cap of all CryptoCurrencies combined. Why you may ask? An impending fork or possibilities of it. Some believe, that if an agreement between the miners and stalwarts of the industry’s development, cannot be attained, it is highly likely that will soon see different versions of Bitcoin. There have been multiple candidates in this arms race- Bitcoin Unlimited, Segwit, Segwit 2x, the list goes on and on. While it would be ideal to touch upon them in a separate, more technically inclined post, the purpose of this article is to clarify the stance PocketBits would take in the event of a soft fork.
If a majority of miners (by hash power) do not signal support for SegWit through BIP148 or BIP 91 on or before August 1st, but at least some do, Bitcoin’s Blockchain will split in two. In that case, there would be two types of Bitcoin’s, “UASF BTC” for coins on the soft forked chain, and “Legacy BTC” for coins on the chain that did not activate the soft fork.
The activation of UASF may create two Blockchain’s, each bitcoin would effectively be copied to both chains. Should this occur, there are two likely outcomes:
- One Blockchain becomes dominant, resulting in the other Blockchain having low community adoption and value.
- Both Blockchain’s are adopted, co-existing and operating independently of one another with roughly equal community adoption and value. e.g. ETH and ETC
If a majority of hash power signals support for Segregated Witness through BIP148 (or BIP91) on or before August 1st, the protocol upgrade will activate smoothly. In that case, there will be no chain split and effectively scaling bitcoin for the good. Our goal is to ensure the safety of user funds. If a chain split does take place, there is a chance that PocketBits along with most Bitcoin Exchanges globally will need to suspend all Deposits/Withdrawals and may pause the trading of bitcoin as well on the platform for a short period of time, this decision will be based on our assessment of the technical risks posed by the fork, such as replay attacks and other factors that could create network instability.
If the split persists, there should be third party wallets for both (or all) coins soon enough. You may need to upgrade your existing wallet or download a new wallet if and when this happens. This outcome also remains to be seen.
Do not accept any transactions on your wallet after the split and before the scenario is clear. Note that the situation could remain uncertain for weeks! If you hold Bitcoins with us and are adept enough to handle private keys in a secure fashion, you may withdraw them from PocketBits and utilize a secure, hardware based or cold wallet to store the coins safely. In the unlikely event that a split occurs, you will be able to redeem both variants of Bitcoin using these keys. However, given the best interests of our users, and our respect for consumer choices, if the users choose to store bitcoin with us, it is likely that PocketBits will allow the withdrawal of both versions of Bitcoin after the Bitcoin ecosystem is working perfectly and there are no chances of a replay attack. However, this cannot be confirmed at the time of writing, due to uncertainties in the Bitcoin ecosystem.
PocketBits supports the growth and scaling of the Bitcoin network, and look forward to working with others in the community to safely handle this event. As an exchange PocketBits is impartial to these debates, it’s up to the users/miners to decide the outcome and we will follow consensus.
PocketBits would also like to remind our users that these delays in decision making in regards to Bitcoin is a sign of how decentralized the system it is. No “benevolent” dictator runs the show here. It is almost a democratic means to decision making in regards to a global monetary system. If anything, these delays do not show where Bitcoin is weak, but rather its strength and resilience against corporate and government interests. As stressful as it is to sit on the sidelines and watch, we ought to remember, this might just about be the first time individuals from multiple nations, around the world are making a decision on a store of value. And there, lies the beauty of decentralized currencies like Bitcoin. No overnight demonetization here :)
We at PocketBits aim to keep you, our valued Users, updated as soon as we have more information.
*Names of the coins are just for reference and are speculative