Bitcoin

Everything You Need to Know about SegWit2x and impact it could have on Bitcoin

The Segwit2x was a new upgrade proposed by a union of developers to further update the entire network after the famous first SegWit update that led to the forking of bitcoin and emergence of Bitcoin Cash (BCH).

Everything You Need to Know about SegWit2x and impact it could have on Bitcoin 21.11.2017Leave a comment
Everything You Need to Know about Segwit2x and impact it could have on Bitcoin

Segwit2x is right now not being adapted around the bitcoin network because the development team has stopped working on it because of a lack of general consensus around the network. Some miners were actually waiting for the new fork to happen because it would give them a chance to dole out yet another significant fork and get airdropped forked tokens.

But, most miners withdrew their support to the Segwit2x update and subsequently the update has been put off until further notice. Some miners are however, resorting to going with the fork on their own but they are probably going to leave it be. There is also the case of another fork called Bitcoin Gold that is already being realized and aims to shift away from the influence of big miners with complex hardware.

Bitcoin Gold price
Bitcoin Gold price

Now why is a new update needed for the bitcoin network? It is already the most valuable cryptocurrency in the world and carries command, respect and universal acceptance. So, what is it regarding the bitcoin network that needs updating and how is it implemented.

First thing you need to do is what is a hard fork and why is it done?

The answer is that the bitcoin’s system is notoriously slow for transactions. Average transaction times took thirty minutes and even after September 1’s upgrade and resulting Bitcoin Cash, they have still been slow and the fee is increasing with miners prioritizing high fees.

So, a plan was laid out by a bitcoin advocacy group to implement much needed changes on the bitcoin blockchain by gradually updating the underlying protocol which technically creates a fork in itself but these changes are necessary for the future of the coin as a major alternative cryptocurrency.

The plan was to first implement BIP 91, an upgrade to the bitcoin network and it was widely accepted as a necessary measure for the currency’s future. Based on consensus, the update was successfully done and it was all part of the first Segwit upgrade. But, the Bitcoin Cash instead of changing the protocol like BIP 91, instead increased the block size to 8 MB instead and thus the first hard fork of the bitcoin was realized.

The new currency was called Bitcoin Cash and it had the same transactional history as bitcoin but the future was different and it was now up to the market to accept it. But, Bitcoin Cash wasn’t readily accepted by the crypto community even though it basically meant free coins for everyone who owned bitcoin before September 1.

Major coin exchanges like Coinbase and Bittrex didn’t even allow their uses to access their bitcoin forks for a long time and still many don’t trade in cash at the moment despite it getting a healthy bump every now and then. Now there was the possibility of two forks being separated from the bitcoin network and they included Bitcoin Gold and Segwit2x fork.

Now forks are usually bad for a cryptocurrency’s future but in some cases they are needed as the segwit and the SegWit2x upgrade were forks themselves. Satoshi Nakamoto left this ability to update the system as we know it or probably even as a far sighted approach to allow bitcoin to fork and ease the load on the main bitcoin network that gets crowded and crowded every day and also as a means to start a new bitcoin currency without actually starting a new cryptocurrency. I know this is all confusing but that’s actually an easy way to understand it.

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So counting on the semi-success of Bitcoin Cash, we were expecting more of these forks and thus airdropped tokens resulting from these forks. Both the Segwit2x fork and Bitcoin Gold were forks that deviated from the original bitcoin protocol but their purpose was different.

Bitcoin Gold is a fork who mining protocol was changed and in such a way that mining cartels and other powerful groups won’t be able to dominate on the mining platform no matter how big their mining setup is. It is designed to give power back to the people by allowing everybody to mine for the new coins and everybody gets a fair share of the new blocks.

Now this may seem like a good prospect but we know that rationing coins is not going to be the solution to the problem as it is unnatural. Bitcoin was never intended to act as a rationing platform. It was decided to reward people who contributed more to the security of the system and miners do add more security to the decentralization efforts and more security.

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If all people start getting the same number of bitcoin regardless of their hardware setup than part of the worth of that bitcoin’s fork will be lost due to the effects of the free market economics. That is what Bitcoin Gold is claiming to do and it is my opinion that it may not end well for it.

Regarding Segwit2x I have to say that it is not likely to be revived in the recent future as a different update with a different name will come along and the fork will the be based on that. It is a good thing perhaps that the Segwit2x is unlikely to be adopted. It is because it has some serious misgivings on its part and people didn’t just buy it because of them.

segwit2x
SegWit2x

This stubbornness and slow update of bitcoin is actually an asset in itself. It is the reason why it is so stable and never fails your transaction even if it slows it a lot. There was a worst case scenario if the segwit2x was adopted and it failed causing irreparable damage to the bitcoin ecosystem and costing the trust of the investors, miners and general users. It would have even damaged the credibility of the Bitcoin forks as well so nobody was in the favor of a major upgrade that was volatile.

Bitcoin definitely needs a new update but it is not going to be Segwit2x and resultantly, there is going to be no fork named Segwit2x. Incase you are waiting for these airdropped forks, you need to take certain steps. In anticipation of this fork, take a major portion of your bitcoin earnings and save it on a private wallet instead of an online exchange because in that case it will be up to the exchange to give you your coin and they can take forever to do so just like Coinbase did with Bitcoin Cash.

They waited very long to release the new fork to the users. So, if you are looking forward to the next bitcoin fork, no matter what its name is gonna be, download a private wallet and transfer your non-trading bitcoins to this address.

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So, while it is raining forked tokens here, lets take a look at how the future of bitcoin is going to be. Since it is the most popular and value cryptocurrency in the world, it is certain that people will be interested in getting more airdropped tokens so that they have free money basically but there is also a purpose of increased liquidity and slowing down of pressure on bitcoin to perform if its hard forks continue to do well enough.

But, too many forks would ofcourse be detrimental to the entire system not to mention extremely confusing for the newbies as I have heard things like isn’t bitcoin cash bitcoin in the form of cash? These names are extremely confusing including that of Bitcoin Gold. I mean why Gold and why would anybody name their fork after the upgrade they didn’t do; Segwit2x.

So, these are certain aspects of the bitcoin forks that the crypto community needs to be mindful about. While it is absolutely part and parcel of an open source cryptocurrency that the threat of forks is there, it is not without benefits for the long-term. So, one bitcoin fork i.e Bitcoin Gold (BTG) is likely to be added to the ever-growing list. It is probably going to be the last fork of bitcoin for this year but I can’t predict how many hard forks we will have of bitcoin in the next year alone! The very unique nature of bitcoin invites forks.

Ethereum has like a thousand tokens launched on it and even got a hard fork of Ethereum Classic itself. Nobody is interested in doing a fork of Ethereum right now. Ripple is well, Ripple and Litecoin and Dash are already soft forks of bitcoin. So, Bitcoin’s hard forks can survive all this because all of these coins are directly related to the development of bitcoin itself.

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