During the last couple of months, Bitcoin has gone through a two different hard forks, and the creation of two additional and separate digital currencies – bitcoin cash and bitcoin gold. Now, the deadline is quickly approaching for another hard fork, and this will likely have larger implications for the network.
The plan to introduce SegWit2x has been around since May, and has quickly gained favour with numerous mining pools and bitcoin start-ups. While the number of those supporting the hard fork has changed over the last few months, we’ll attempt to explain what this protocol change wishes to achieve, and the means of doing so.
To kick things off, the SegWit2x update wishes to change two main aspects about the digital currency. Firstly, it will introduce the code optimization known as Segregated Witness, hence changing the way that certain data is stored on the network. Apart from this, it will also set a clear time line meant to change the block size to 2 MB, up from the limit of 1 MB available today.
The main reasons behind this network split are: the fact that bitcoin is currently limited in terms of the number of transaction that the network can process due to the small block size. An increase would provide quicker transactions. It is also expected that the newer version of the digital currency will require users to pay lower fees for their transactions. However, the main downside of this consists in the fact that owning and operating a network node would be a bit more expensive, as owners would have to store the entire copy of the blockchain on their computers (basically all bitcoin transactions that ever took place).
The plan is currently being supported by a couple of large mining pools, but also by a few bitcoin exchanges and notable bitcoin core developers, such as Gavin Andersen. On the other side of the spectrum, the plan is opposed by numerous bitcoin users and node operators, but also the current bitcoin core operators, who are against this change.
So far, numerous mining pools, exchanges and wallet providers have publicly disclosed their plans once the hard fork happens. Most have said that they will follow the natural choice of the network, and side with the part which has the most fans once the split occurs.
Analysts believe that the SegWit2x hard fork will affect the bitcoin network, and lead to a decrease in the price of the currency.
While there are numerous other things to take into consideration, from what you have heard, what are your thoughts about the upcoming hard fork? Let us know in the comment section below.