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Litecoin Creator: "I think there’s a General Confusion that SegWit Signaling is a Vote."

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Like in Bitcoin, Litecoin miners bristle to signal support for the protocol upgrade SegWit. An AMA with Litecoin chief developer Charlie Lee demonstrates how much of the political conflicts of Bitcoin has spilled over into Litecoin - and how far Lee would go to enforce SegWit.

After nearly one year of developing and testing the long-awaited upgrade, early November saw the SegWit release for Bitcoin. Since then the miners have been free to signal their support for the activation of the soft fork. However, even three months later, the support stagnates at 20 to 25 percent. A long stretch is required to reach the activation threshold of 95 percent.

For Litecoin’s chief developer Charlie Lee this stagnation is a chance. An opportunity to demonstrate that his coin can do better. Without further ado, Lee implemented SegWit in Litecoin, the altcoin branded as “the silver to the digital gold Bitcoin,” and reduced the activation threshold to 75 percent. With this, Lee can present Litecoin as more versatile and enjoy the many benefits before Bitcoin can. Also, he can use his coin as a test field for Bitcoin.

However, even in Litecoin, SegWit does not kick at an open door. During the first activation period, which has come to an end, around 20 percent of the miners signaled their support.

But why? What can be said against a soft fork that does nothing else than offering a new transaction format? Other than with Bitcoin, where SegWit is controversial because it is sold as a scaling solution, the upgrade should be uncontroversial with Litecoin. But, of course, it is not.

The reason why manifested itself clearly during an AMA (Ask me Anything) Lee gave to the Chinese Litecoin community. There can be no doubt; all this political bickering that bothers the Bitcoin community for years, has spilled over into Litecoin with SegWit. It’s not just that the same miners, that block SegWit on Bitcoin, block it for the same political reasons on Litecoin - it’s also that Lee’s implementation of SegWit in Litecoin itself has been a political act.

Less than about the SegWit upgrade itself - which is not important or necessary for Litecoin at this stage - the conflict is a more general question of who is king in the house? Miners or developers? Nothing made this more clear than the AMA of Lee.

SegWit Politics

In the AMA Lee said that the activation of SegWit is his most important development goal for 2017:

“The most important goal of Litecoin is to get SegWit activated. Once SegWit is activated, there are a lot more things we can start adding to Litecoin. I really want to work with the Lightning team to get LN up and running on Litecoin. I have talked to Joseph Poon, and he is extremely excited about this being possible on Litecoin.”

But, why is this so complicated? A member of the community hinted on the politics of the upgrade, “Since SegWit was announced for Litecoin, the support for it has appeared to be much less than when it was announced for Bitcoin, and some large LTC mining pools have expressed their opposition to SegWit. SegWit adoption is clearly no longer a technical argument, but more of a political argument, stemming off from Bitcoin. Whether or not Litecoin developers admit it, as soon as they have announced SegWit plans, they are already engaged in this political battle.”

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Lee agreed that SegWit is not rejected for technical reasons, but rather political ones. However, he dismissed the idea that he started the politics with the implementation in Litecoin:

“Yes, it’s unfortunate that SegWit on Litecoin became political too. One of the reasons I’m doing this AMA is to try to pull the politics out of SegWit on Litecoin. Let’s not let Bitcoin politics pollute Litecoin for no reason.”

One of the most prominent examples of the political games around SegWit is that some demand that it is made as a hard fork or accompanied by a hard fork. After being asked about this Lee firmly rejected it:

“There’s absolutely no need for Litecoin to hard fork today. We are not adopting SegWit to solve the block size limit. So, anyone that tells me why don’t we hard fork to 2MB on Litecoin, I know that they bring Bitcoin politics to Litecoin. I’m not going to engage in that conversation. We are soft-forking SegWit into Litecoin so that we can fix transaction malleability and add future improvements like Lightning networks, Confidential Transactions, Schnorr signatures, MAST, etc. Period."

Lee confirmed rumors that some pools want to use the signaling on SegWit to force the developers to do a hard fork:

“Yes, there’s truth to that. Some pools are bringing Bitcoin politics into Litecoin and wants to have Litecoin set an example for Bitcoin. I am not playing that game. Leave Bitcoin politics out of Litecoin. If you don’t have Litecoin’s best interest in mind, I have no interest in talking to you.”

The core of all these political questions is; who fulfills which roles in deciding how you upgrade a protocol of a cryptocurrency?

The Role of the Miners in a Soft Fork

Who decides on the activation of a soft fork? The developers - or the miners? And can the miners demand a compromise from the developers for signaling support, as they try in Bitcoin?

Such question took a significant part of the AMA with Lee. Asked about the role of miners in a soft fork, Lee gave an interesting answer which might scratch at the self-conception of some miners: Their role is to process transactions and to secure the network - and not to decide anything.

"I think there’s a general confusion that SegWit signaling is a vote. It’s more of a signal that Litecoin miners are ready to support new things added to the protocol. In the end, it’s the users or the economic nodes that decide if Litecoin should upgrade it’s protocol."

"If the miners do not have the power to vote and effect changes in Litecoin’s protocol, then the miners should not even be asked to vote whether or not to activate SegWit."

"Miners are not asked to vote. They are asked to signal for when they are ready to support a new feature. Signaling is a way to coordinate between the miners. The users decide whether or not to accept this new feature."

After this Lee was asked, what would happen when the miners resist signaling support; would the developers follow the miners and wave SegWit? Or would they try to find a compromise with the miners?

Lee’s answer might not be suited to comfort miners and investors, again. He compares the miners with the famous Byzantine generals which need to signal readiness to attack. If the miners reject to signal support, it is like if the generals didn’t send readiness signals,

"The commander has a few options. He can get new generals, or he can just tell the signaling generals to go ahead and attack. This makes the battle a bit more risky, but it may have to be done."

"In this example, the developers are not the commander. The users are. So as developers, we need to see if the economic majority of Litecoin users want SegWit. From what I am seeing today, the support is overwhelmingly in favor. So if it comes to that, we will have to decide what drastic measures to take to add SegWit to the protocol."

Obviously, this is an ill-concealed threat to “fire” the miners by changing the proof of work algorithm and hence make their special hardware worthless. With this threat, Lee finally makes clear that the political tug of war arrived at Litecoin. And maybe, like in a laboratory, it will help to catch a view of Bitcoin’s future.