After all, what was going on with Bitcoin in the last few months?
It looks like, in the last few months, Bitcoin has made friends with forking. When I wrote about Bitcoin forking the last time, I didn’t expect there would be this many so soon. But hey, here we are, trying to make sense of what the hell is happening in the crypto world.
With this article, I try to put everything that has happened since Bitcoin Cash in a proper order that would become anyone’s go-to article for learning about Bitcoin forks between August 2017 and November 2017.
🍴 But first, what is a fork?
“You don’t need a silver fork to eat good food.” — Paul Prudhomme
You can think of blockchain ledger as a stack of pages. Every full node in the network keep a copy of this stack of pages with themselves. Everyone’s copy of the ledger is exactly the same because everyone followed the same set of rules to build it.
So, if there are ten people in the network, each of them will have a copy of the ledger that would look something like this:
They say a bad penny always turns up. While the saying may refer to an unwelcome guest, the same could be said for Bitcoin, according to recent analysis by CNBC. Based on chart evaluations, Bitcoin price has always increased substantially after dips greater than 20 percent.
The rise in Bitcoin prices for the four previous dips over 20 percent were substantial. On average, the cryptocurrency posted 61.5 percent gains in each cycle after substantial sell-offs. This astounding number has lead to an increased desire among insiders to ‘buy the dips’ – to purchase Bitcoin during the lows and realize the substantial gains as the price continues to rise.
Bulls and bears and Bitcoin, oh my!
The most recent drop over the weekend spurred on by the death of the SegWit2x hard fork proposal from the New York Agreement, appears to be no different. After more than 20 percent declines, the price has already recovered peaking in recent trading over $6,500. This response seems to indicate that the fundamentals underlying the recent increases in price are real.
Bitcoin has reached a new all-time high of $7,888 as participants of the SegWit2x hard fork announce they have “suspended” it.
A circular sent to the mailing list by major proponent Mike Belshe says that it was “clear” the project “had not built sufficient consensus for a clean blocksize upgrade at this time.”
SegWit2x will therefore not activate Nov. 16 as planned, Belshe not naming a possible future date.
The message reads:
“Our goal has always been a smooth upgrade for Bitcoin. Although we strongly believe in the need for a larger blocksize, there is something we believe is even more important: keeping the community together. Unfortunately, it is clear that we have not built sufficient consensus for a clean blocksize upgrade at this time. Continuing on the current path could divide the community and be a setback to Bitcoin’s growth. This was never the goal of SegWit2x.”
The hard fork part of the New York Agreement is scheduled to take place within about two weeks.
This incompatible protocol rule change is set to increase Bitcoin’s block weight limit, to allow for more transactions on the network — if everyone adopts the change. Otherwise, it will create a new blockchain and currency that may or may not be considered to be “Bitcoin.”
The list of signatories of this agreement includes several of the largest Bitcoin startups and mining pools that, together, claim to represent a majority of users and hash power. Yet, it is far from clear that this 2x part of SegWit2x proposal really has much support outside of these signatories. Most of Bitcoin’s development community, a significant number of other companies, some mining pools, user polls as well as futures markets suggest otherwise.
And now, a growing list of international Bitcoin communities is putting out public statements against the SegWit2x hard fork as well.
Despite its steadily increasing price, not to mention a growing acknowledgment from the financial mainstream, the technical roadmap for the cryptocurrency has never been so hotly contested.
After years of debate on the best path forward, a new code proposal called Segwit2x is set to put the cryptocurrency – the world’s largest by value – to the test. And while it boasts significant support from miners and businesses, it remains unclear whether the new code will change bitcoins’ rules, or if another new cryptocurrency will be created (one already being branded bitcoin2x by some).
Quite simply, there’s never been a larger change to the platform, nor one that has been the subject of such criticism and scrutiny.
And it might not be all free money. As developers are keen to note, this is bleeding-edge science; in short, we’re in uncharted territory, and if past forks are any indication, decisions could lead to consequences – for users, investors and the market at large.
It looks as if Bitcoin will experience at least two more “coin-splits” soon, which (more accurately) will result in the creation of new coins.
On October 25, Bitcoin Gold (Bgold) will split off from Bitcoin to create an ASIC-resistant cryptocurrency. A few weeks later, a significant group of Bitcoin companies wants to hard fork according to the SegWit2x plan as defined in the “New York Agreement” (NYA), which will probably result in yet another new coin.
If this all plays out, there could be three distinct blockchains and three types of coins within about a month of publication of this article. One blockchain would follow the current Bitcoin protocol; for the purpose of this article, that coin will be referred to as “BTC.” The second blockchain will follow the Bgold protocol; in this article, that coin will be referred to as “BTG.” The third blockchain will follow the SegWit2x protocol; that coin will be referred to as “B2X.”
The good news is that each BTC will effectively be copied onto both the Bgold and the SegWit2x blockchains. If you hold Bitcoin private keys at the time of the forks, you should be able to access your BTG and B2X coins as well.
The bad news is that such forks can be somewhat messy and risky. If you’re not careful, it’s easy to lose your BTC or B2X, and maybe your BTG.
A group of Bitcoin companies plans to deploy a hard fork to double Bitcoin’s block weight limit to eight megabytes this November. Known as “SegWit2x,” this incompatible protocol change follows from the New York Agreement (NYA) and is embedded in the BTC1 software client.
SegWit2x is highly controversial. Most of Bitcoin’s development community, a number of other companies, some mining pools and — if public polls and futures markets are representative — a majority of users and the market are not on board with this hard fork. Some of them are even engaged in a sort of protest movement, under the banner “NO2X.”
For those who have not kept up with the debate, here’s an overview of the main arguments for and against the 2x hard fork part of SegWit2x.