Bitcoin seems to have more forks than an Italian restaurant at the moment, each one spurring another blockchain and another version of the digital currency. Last week was the Bitcoin Gold fork, before that there was Bitcoin Cash, and next month an even bigger fork awaits the world’s most popular cryptocurrency.
Segwit2x calls for a specific change to Bitcoin’s rules and protocols which would make some rules valid that were not previously. Essentially the fork will change the size of the blocks on the network and blockchain, doubling them from 1Mb to 2Mb.
With previous forks users have been enticed by the lure of free equivalent coins to their BTC holdings when the blockchain splits. This has boosted the price of Bitcoin in recent months despite regulatory clampdowns on crypto exchanges from China and Russia. This may not be the case with Segwit2x, traders will not be able to just sit back and reap new coins in Cash or Gold.
It is different to previous Bitcoin forks in that the intention is to keep all current Bitcoin users on the existing blockchain. With Bitcoin Cash the developers were happy to create a new blockchain, this time around it is the miners that could influence the outcome.
Miners may need to update their software to handle the bigger block size, those that do will be on the Segwit2x chain, those that refuse may still be on a previous version of Bitcoin which could create two versions of the same thing, the 1Mb version being ‘legacy’ Bitcoin.
Support is split and while most miners and exchanges are for Segwit2x as it represents an improvement to the system, some are against it. Miners and startups providing services to customers based on Bitcoin believe capacity increases are necessary and Bitcoin should remain a digital currency.
Against it are developers that maintain Bitcoin’s code and current protocols and node operators who store copies of the digital ledger. Their view is that costs could increase due to space allocations and Bitcoin shouldn’t be considered as a payment network as it goes against the decentralization ethos and gives too much control to miners and businesses.
The outcome is yet unknown but the rule change will be governed by the percentage of miners supporting and running the new code. If it quickly accumulates the majority of mining power any legacy blockchain will rapidly become unmanageable and lose value.
The fork will occur around November 16, or at block number 494,784, Bitcoin is about to have a few more bounces.
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