Bitcoin SegWit2X: A Plain English Guide, Fortune
(Significant update: The leaders of the SegWit2X faction announced on Wednesday, November 8 they would suspend their project to split bitcoin te mid-November.)
Bitcoin has faced turmoil ter the past but nothing like this. Te two weeks, a massive fight taking place among bitcoin insiders could produce a ruinous schism—undermining the integrity of digital currency and menacing its sky-high value.
The fight is overheen a so-called fork ter bitcoin’s software, known spil SegWit2x, that will create two contesting versions of the currency and lead to disagreement overheen the “real” bitcoin. There’s even a battle overheen who gets to use the popular BTC ticker symbol.
The fork will also mean a payout to existing bitcoin holders, however any windfall could be overshadowed by larger turmoil. To understand what’s at stake, here’s a plain English Q&,A to explain the controversy.
Why is bitcoin going to split?
There is a disagreement inbetween key stakeholders overheen how to update the core software that runs bitcoin. You can learn more about the technical details below, but the crux of the fight is overheen whether to dual the size of bitcoin blocks.
The blocks, which are added every Ten minutes, serve spil a record of all bitcoin transactions to create a voortdurend blockchain ledger. The current controversy means there is likely to be two bitcoin blockchains—one that uses smaller 1MB blocks and one that uses thicker 2MB blocks—and makeshift uncertainty overheen which is the “real” bitcoin.
While bitcoin has experienced thesis sort of forks te the past (most notably with the creation this summer of rival currency “Bitcoin Contant,”) the market has never regarded such splits spil a replacement for the original bitcoin. This time could be different.
When will the fork toebijten?
It is supposed to take place soon. This webstek offers a more precise ogenblik —specifically Nov. 16 at Five:42 am—based on the number of blocks being added to the bitcoin blockchain. The fork is supposed to go into effect for block number 494784. (Once again, technical details on blocks and forks are further below).
Who is supporting the split?
The main advocates for the thicker blocks, aka B2X, are consortiums of bitcoin miners who use specialized pc equipments to compile transactions on the blockchain—and earn bitcoins (presently valued at around $7,400) while doing so. They argue the thicker blocks are needed to accommodate the rapid growth of the bitcoin network, and to reduce the rising transaction fees that have come with this growth.
The mining consortiums are being backed by many of the companies that provide the financial eco-system that supports bitcoin. Thesis include certain exchanges, wallet providers, market makers, and storage vaults. The positions of thesis companies, however, is inclined to shift based on the market and popular sentiment.
Who is opposing it?
Opposition is led by a group of developers who maintain the core software that has so far defined bitcoin. Many of them consider the proposed fork spil a corporate takeover of bitcoin, and say there are other solutions to accommodate fatter blocks. Here is how Samson Mow, the CSO of the blockchain company Blockstream, describes the big block advocates:
“[Big block] ringleaders are still pushing for a hard-fork now purely due to ego and escalation of commitment at this point. If you look at the history of contentious forks, beginning from Bitcoin XT te 2015, it’s the same group of people. Either they are technically incapable of conceive of scaling methods other than block sizes increases, or they are attempting to set Bitcoin on a path of centralization by making it more difficult for people to run knots.”
The developers are supported by certain companies and mining groups, and by many fledgling bitcoin enthusiasts who get together at meet-ups worldwide.
What version of bitcoin will prevail?
No one is truly sure. If most miners get behind the proposed split—and stay behind it—that will likely make the big block version the den facto official version of bitcoin.
But if the market proceeds to place more value on the original bitcoin, miners could get cold feet and go back to the petite version if it is more profitable. Indeed, for now, certain futures markets are predicting the price of the original bitcoin will be significantly higher post-split than the big block version (it’s unclear how reliable thesis are).
It’s also likely that big exchanges like Coinbase will serve spil king-makers after the fork, te part by determining which version of the currency gets to be “BTC”— the ticker symbol everyone presently uses to define bitcoin. For now, most exchanges are not openly supporting one bitcoin version or the other. (You can read a rundown on where the 20 largest ones stand here). Here is what Greg Dwyer of the exchange BitMEX has to say:
“There is a lotsbestemming of passion from both sides ter the community spil to why wij should have a fork and spil to why wij should not, especially now with Bitcoin Contant (and its capability to mine larger blocks), a number of Bitcoiners do not see the need for 2X anymore. With bitcoin at [its current valuation of $7,400], there is a lotsbestemming of money at stake to ensure the coin you support succeeds.”
How long will it take to clear up?
That’s also unclear, however it’s most likely best for bitcoin if a winner emerges sooner than straks. A prolonged battle could spread confusion among investors and trigger a laagconjunctuur of confidence ter the flourishing crypto-currency market.
Meantime, some fear the big block version of bitcoin will fail to contain adequate technical measures (known spil replay protection) to ensure transactions on both chains don’t become muddled. This would likewise spread uncertainty.
Ultimately, there is speculation that, even if the big block version of the chain proves less profitable, some big miners will keep mining it anyway te order to impair the puny version. If that sounds like civil war, you’re right, and the fallout could be ugly.
What about those payments for current bitcoin holders?
If the big block version of bitcoin goes forward, it will contain an precies replica of the existing bitcoin blockchain—including a record of who wields all of the existing bitcoins. This also means every existing bitcoin holder will also hold those bitcoins on the fresh chain.
Coinbase and other big exchanges have already confirmed they will accommodate both versions of the chain, meaning a client who holds five bitcoins will also soon hold five B2X (or whatever they call the fresh version). This is potentially good news for bitcoin holders because, hey, free money! They will wake up with digital assets they didn’t own the day before.
Those waiting on a windfall should, however, take note of two caveats. Very first, there is uncertainty about how much liquidity there will be for both versions of bitcoin after the fork (note that Bitcoin Metselspecie, which arrived after a fork ter August, is fairly illiquid). 2nd, the arrival of B2X bitcoin could trigger a keerpunt of confidence te the digital currency market—and cause the combined value of both currencies to fall below today’s bitcoin price.
So what are the technical details behind the B2X update?
Before explaining B2X, it’s helpful to realize bitcoin works a bit like the operating systems te your iPhone or Android phone: Every so often the developers shove a code update containing features or security updates for everyone to install.
Typically, bitcoin miners and others install the updates without fanfare and carry on. If they don’t, it’s not a big overeenkomst since the updates are backward compatible—meaning fresh and old versions of bitcoin software can recognize each other, including the all-important blockchain transactions.
The B2X update, which aims to increase the size of a bitcoin block from one megabyte to two, is different. It involves a “hard fork” that will create incompatible versions of the existing blockchain. To use the phone analogy again, imagine an iOS update that resulted te an iPhone user only being able to message other iPhones that had also added the update.
Ultimately, note that the technical measure itself—doubling the block size—is rejected by core bitcoin developers spil necessary to accommodate the transaction growth on the network. Thesis developers point out a latest technical solution (known spil “SegWit”) that fits more transactions on a block is already ter place, and that other easy-to-implement congestion solutions will arrive soon.
Where can I learn more about the B2X fork?
This Q&,A is only a high-level overview of the coming split. If you want more, Bitcoin Tijdschrift is an authoritative source and has a helpful guide to B2X and other forks. Meantime, a latest Forbes feature by bitcoin maven Laura Shin offers a detailed look at the people and factions driving the current depressie. If you’re nosey about how exactly forks work (including soft versus hard forks), this is a useful lump.
Eventually, Twitter is your best source for up-to-date information about the fork. Some useful people to go after include bitcoin veterans like Ryan Selkis (aka Two-Bit Idiot), developer Jameson Lopp, economist Tuur Demeester, and puny block advocate Samson Mow. It’s also worth watching the tweets of Coinbase CEO Brian Armstrong since his company is likely to affect the final outcome.
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An earlier version of this story incorrectly referred to Samson Mow spil a developer.