- Nov. 1, 2018, Two:27 PM
- Fresh “fork”, or switch to bitcoin’s software, proposed called Segwit2x.
- The switches, set to take place on or around November 16, are aimed at speeding up bitcoin payments overheen the blockchain network.
- Not everyone te the bitcoin community agrees with the switches and fork has the potential to split the bitcoin network ter two.
Bitcoin is gearing up for what could be the largest (and least understood) switch to its software to date.
Often called simply a “digital currency,” bitcoin is best viewed spil a protocol (a set of code) that produces gegevens (te this case bitcoins) ter defined quantities (called blocks) that are then stored ter a sequence (called a blockchain) on a distributed set of global computers. Bitcoin is decentralized – te that many people help make the network function, and ter choosing to run its software, users all agree to abide by the same rules to keep it operational.
It’s thesis qualities that make the proposed switch particularly divisive.
Called Segwit2x, the project calls for a very specific fork (or a switch to bitcoin’s rules), one that would make certain rules valid that weren’t valid before. Specifically, Segwit2x would switch the size of the blocks passed regularly around the network and stored ter the blockchain from 1 MB to Two MB.
Some users think this is a good idea, others don’t.
But to start, it’s significant to note how this fork differs from others. Coming on the high-heeled slippers of the bitcoin metselspecie and bitcoin gold forks, bitcoin users might be acquainted to certain outcomes – ones that might not be assured ter the case of Segwit2x.
With bitcoin contant and bitcoin gold, for example, bitcoin users could have paid little to no attention and it wouldn’t have impacted their transactions. If you held bitcoin on certain exchanges (or your own wallet), you received fresh cryptocurrency.
This slick outcome, however, isn’t ensured with Segwit2x. Complicating matters is that te many ways, Segwit2x sounds (and is) similar to other bitcoin forks.
Like other latest forks, Segwit2x is:
- An alternative software – A modification of the bitcoin software run by network participants and that enforces the protocol rules. Ter this case, Segwit2x’s code is called BTC1.
- An attempt to increase the block size – Most forks concentrate on one specific rule of the network (block size), despite other possible optimizations that could lead to capacity boosts.
- A hard fork – Anyone whose software is not upgraded to the fresh rules will no longer be a part of the network.
It’s the differences, however, that stand out this time around.
Very first and foremost, whereas bitcoin specie developers appeared content to create a fresh blockchain (with fresh rules), Segwit2x’s aim is to keep all bitcoin’s existing users on one blockchain.
Ter this way, Segwit2x could have different outcomes.
- Bitcoin’s rules switch – Most (or all) miners upgrade their software. The bitcoin blockchain proceeds to function but features larger blocks. Segwit2x’s rules become the rules of bitcoin.
- Two bitcoins are created – Only some miners upgrade their software. This creates two blockchains – a so-called “legacy” bitcoin, and a “Segwit2x” bitcoin, both with different rules and unique cryptocurrencies.
- Bitcoin’s rules do not switch – No significant miners run the fresh software, and the network resumes to run the current rules.
For or against?
A sign is seen ter a restaurant where a Bitcoin ATM is located te Toronto. Thomson Reuters
However, it’s the 2nd outcome that might be of most concern to users, given it emerges possible.
The reason is that those who support the switch, and those who do not, both emerge to have support from different parts of the community. Ter brief, while Segwit2x claims to have a super-majority of miners and exchanges, it can’t be said that 100% of network users support just one side.
Segwit2x draws the most support from:
- Miners – The network users who run hardware necessary to secure the blockchain and profit from bitcoin’s block prizes.
- Startups – The businesses that profit by providing a service to bitcoin users, permitting them to spend, store or purchase cryptocurrencies.
- Bitcoin should be digital money – It should challenge with the U.S. dollar or other fiat currencies, and thus, a priority should be waterput on its use spil a means of exchange.
- Competitors are gaining because of bitcoin’s inaction – They believe protocols other than bitcoin have continued to build up traction because they’re useful for payments, those protocols are presently capturing value that otherwise would have bot bitcoin’s.
- Existing upgrades aren’t enough – They say the addition of code to the blockchain ter August hasn’t brought about the capacity increases promised.
Other groups oppose this thinking. They include:
- Developers – The voluntary group that maintains bitcoin’s code, this group includes a number of people that have arguably worked on the bitcoin protocol the longest.
- Knot operators – The bitcoin users who store copies of the blockchain’s utter transaction history (with fatter blocks, they will see rising storage costs).
- Bitcoin is a store of value, not a payment network – Tho’, they seem to think the latter is possible ter the future spil the technology advances.
- Segwit2x is risky – Should bitcoin pauze or fail to produce transactions, they believe this could undermine the project spil a entire.
- Segwit2x gives miners and business too much power – They argue that this effectively centralizes decision-making for a decentralized network, undermining bitcoin’s strongest value proposition.
How likely is a split?
Bitcoin’s blockchain could split ter two. Reuters/EH/AA
For now, it’s perhaps too early to say for sure. But with that te mind, wij do have some indications given the mechanics of how Segwit2x has bot coded.
This is because:
- Segwit2x uses BIP 9 activation – This means that the rule switch is governed by the percentage of miners running the fresh code.
- Miners mostly support Segwit2x – 1Hash, Bitfury, Bitmain, Bixin, BTC.com, BTCC, BTC.Top and ViaBTC all signed the original agreement, reached te May.
On paper, the project boasts toughly 80% of the network’s miners spil signatories, a group some believe is big enough to switch the majority the network overheen to the Segwit2x chain, and quickly (for fear of being left on an unprofitable software).
The reasoning here goes like this – the Segwit2x chain will quickly accumulate the most mining power, making the original bitcoin unprofitable (or unmanageable) to mine, and ensuring a total migration.
Yet, that’s not to say all thesis miners will eventually run the code.
While more ingewikkeld, the reasons why include:
- Many back bitcoin metselspecie – Bitcoin’s China-based community tends to be more invested ter this bitcoin alternative, which already increases block size to 8 MB.
- Miners aren’t likely to act unilaterally – Signatories like ViaBTC and BTC.Top are mining pools that primarily sell software subscriptions to other miners. This means that they will likely give users the option to mine Segwit2x, but all of their users aren’t ensured to switch overheen.
- Some miners aren’t supporting – This includes F2pool (which governs Five.6 procent of the network) and Slushpool (responsible for 7.Trio procent), both of whom have said (with varying degrees of certainty) that they won’t run the code.
Also of importance here will be the perceived value of a Segwit2x cryptocurrency.
Already, exchanges are experimenting by listing a version of the coin – one that lives only on their order books – spil a way to test the value.
At press time, the value of the fresh version of bitcoin wasgoed estimated at just overheen $1,000, dual the price of bitcoin metselspecie ($450) and much higher than bitcoin gold ($130).
When will all this occur?
But while there remain many ifs, one thing wij do know is the fork will occur on or around November 16.
However, an precies date can’t be pinned down. This is because the switch will be enacted at a specific block (number 494,784), at which time miners will be able to run the fresh software.
Still, those involved with the project are adamant that it is moving forward, with the project’s lead developer stating just last week that the updated code will be released based on the mid-November project.