>The Risks of Segregated Witness: Opening the Door to Mining

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>The Risks of Segregated Witness: Opening the Door to Mining Cartels Which Could Undermine the Bitcoin Network
>If implemented, SegWit would change this for the worse. It opens the door to an economic incentive model that would encourage mining cartels to form. As the bitcoin network currently operates, there is no incentive for miners to form cartels. Mining pools are not cartels; they are a firm. But SegWit introduces a fundamental change to bitcoin: the “AnyOneCanSpend address”, or essentially a blank signature for transactions. SegWit uses an “AnyOneCanSpend” address so that transactions will be validated and recorded into blocks, even though the sender/receiver signature data is separated. Normally, an “AnyOneCanSpend” output (as its name implies) would allow any miner to spend the funds associated with that transaction; therefore, SegWit would introduce new rules for interpreting “AnyOneCanSpend”. This means that miners could not take advantage of that output address to inappropriately spend the funds associated with all SegWit transactions.
>But with “AnyOneCanSpend” addressing, the system is only secure while all participants agree it is secure. Proponents of SegWit assume that once its protocol change is activated, all miners will agree to play nicely, never steal funds, and funds will be locked up safely. But the major flaw in their thinking is that it ignores economic incentives for nefarious miners to do the following after SegWit activates:
>1. Form a cartel to take over the network
>2. Switch off SegWit and revert back to the current bitcoin protocol
>3. Take advantage of the “AnyoneCanSpend” address to instantly steal funds associated with all SegWit transactions in blocks they mined.