Category: Bitcoin

The problem with Segwit2X for BTC owners

On By mehranmuslimiblogIn Bitcoin, BlockchainLeave a comment

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Somebody asked me the other day why there was so much heated debate over the upcoming Bitcoin fork. The other day I wrote about what might happen after the fork, but I’d like to clear up some of the confusion over why the fork is happening and why there is something of a turf war in the Bitcoin camp.

However, as I started to write this, a ‘breaking news’ item flashed across my screen from one of the crypto exchanges that I use. It announced that the leaders of the Segwit2X have suspended their plans indefinitely. As a result, Bitcoin shot up in value just after the announcement to touch $7,800, although it has since decreased in value to around $7,300. It seems to have boosted other coins as well, with Dash and Ethereum both showing some impressive gains; ETH has finally gone past the $300 mark.

But, back to the Segwit2X hard fork war. If a truce hadn’t been reached, what might have happened?  The first issue is that there would have been two types of BTC and who would decide which was the ‘real’ one and which one would be allowed to use the well-known BTC ticker symbol. It’s a bit like kings fighting for a crown and one claims they are the real king and the other is the usurper. We’ve seen what happens in history when this situation arises. There is always a war and supporters decide which side they are taking. This is what we’ve been watching within the BTC community.

But, it would have meant a payout to existing BTC holders. For example, Coinbase, one of the biggest exchanges announced that it would give every user BTC2x coins to match the amount in their BTC wallet. It sounds like ‘free money’, but, there is a downside.

In the past there have been other forks for Bitcoin Cash and Bitcoin Gold, but nobody considered those as replacements for the original Bitcoin. However, many thought the Segwit2X fork would pitch the new coin against the original and therefore damage the value of the original BTC. That doesn’t sound so good for people who are holding BTC.

Thankfully, this has now become hypothetical again and the original Bitcoin remains the only one. Perhaps Segwit2X will never happen, although in the world of crypto currencies, you can never be sure what is coming next.

 

 

What will happen after the Bitcoin fork?

On By mehranmuslimiblogIn Bitcoin, Tech2 Comments

 

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We are only days away from one of the biggest events in Bitcoin’s history – the Segwit2x fork that will happen around 16th November. Needless to say there is a lot of discussion in the crypto press about what this will mean for the leading digital currency.

In the last week we have seen Bitcoin’s value shoot up to a new record high and then correct itself; a series of movements that is typical of the various crypto coins. We have also seen a number of companies in the financial mainstream talking up the use of cryptocurrencies and blockchain, which has energised the market, but the introductions of Segwit2x is a step that for many is one into the unknown.

So far this new technical roadmap for Bitcoin seems to have support from its miners, but nobody is sure whether this November fork will change the code for existing Bitcoin, or whether it will lead to a new coin. Some are already talking about Bitcoin 2x, indicating that this is the route they think it will take.

It is of course one of the largest changes to the platform that has ever taken place, so it is uncharted territory and there are commentators who point out that previous forks have created unforeseen changes for users and investors. Consequently, there is some apprehension about the fallout after Segwit2x.

What is Segwit2x?

What is Segwit2x? Coindesk describes it as, “ both a proposal that seeks to change Bitcoin’s technology and a formal written agreement reached between certain parties interested in that change.” It also represents something that we haven’t seen on the blockchain before and it has its supporters and dissenters.

For or against Segwit2x?

Because Bitcoin is an open-source protocol, it relies on a group of volunteer and startup-sponsored developers to fix bugs, propose changes and maintain operations. This group are not in favour of Segwit2x and have been saying they have nothing to do with it for months. The miners – these are the people who solve the algorithms and approve transactions haven’t said very much. Originally they supported the fork, but now they appear to have less confidence in it. If they don’t support it, this could contribute to the outcomes of the fork.

Startups are the ones who are giving it the strongest support, because they use the Bitcoin protocol to offer services to their customers. They have the most ‘real life’ interaction with the technology and they are optimistic about how changes to the blockchain will correct any concerns users have about scalability. However, even they are preparing for worst-case scenario.

 

It seems that we will have to wait until the fork actually happens, because it’s impossible to make a prediction. Some say it is doomed to fail, others that it makes no sense: I say wait and see. We’ll know the truth before the end of November.