Jargon on one end, but necessary if you’re following crypto. The Bitcoin community has been fixated on the ever controversial Great Scaling Debate. Which is fancy words to imply that Bitcoin is becoming slower and more expensive to use. And there’s so much heat on whether to implement a new transfer system or merely increase the block size.
My oh my, look at the date. It’s the 1st of August and the SPOON IS COMING. I mean fork, yes, I tried to be funny there. If that made you giggle, stop right now and upvote this.
“ITS DOOMSDAY”, “BITCOIN IS GOING DOWN” , “BITCOIN CASH, NO THANKS”, “BIP148 VS BIP91”, “Segwit2X ftw!”
Stakeholders and their influence
For there to be consensus, there NEEDS to be agreement amongst the following stakeholders in the Bitcoin Ecosystem. These guys have some level of authority on the matter:
- Bitcoin Miners
- Bitcoin Developers
- Bitcoin Platforms (Exchanges and Wallets)
- Bitcoin Users (Yes, including you down there in ISIS, Russian Mafia, Chinese gangsters, and Ted the Pedo who pays for his hard candy with crypto)
Though this causes clashes because one group may want faster transactions, so developers code it and propose it. But if another group, say, miners disagree, it won’t be implemented! Each group has its interest and share in the decision making. But it makes it a challenge, right Democracy?
But without the Democracy, Bitcoin and its consensus model wouldn’t have any value. It’s the trust and belief in it that has a big impact on its stance today.
Proposals for Improvement, and Forks
Bitcoin improvements fall under BIP. Bitcoin Improvement Proposal. Check This our to see a list of proposals. Miners VOTE on these proposals. Seeing if they will support them or not.
But when this happens, it signals a significant proposal. This results in a software change requiring miners to upgrade their version as the original version becomes incompatible. This is known as a FORK. Whereby the software branches off from the original rules and is operated by the newly implemented rules. Miners and platforms then may have to make updates to handle the new software.
Stakeholders may arrive to a consensus that the previous “Original” Version of the software may have been flawed (Outdated) and the newer version gets uniformly adopted. Bitcoin had a fork like this back in 2013, and support for the previous branch fell away.
Ethereum too had a fork as we all know, with support for the original and new version of the software after the DAO hack. But after that we saw that there was significant support for the original software. Which either way brought us Ethereum and Ethereum Classic.
A hard fork creates 2 distinct currencies, you will, in theory, hold an equal amount of the original currency as you have of the new one.
During March, there was potential for a Hardfork with a Bitcoin Unlimited’s proposal, which calls for larger and more flexible block sizes, but that was turned down.
Then came “SegWit” (Segregated Witness), which removes some information from a block, changing the way that transactions fit in a block, increasing the transaction throughput capacity.
But what happens on 1st August?
Even though Segwit solves for increasing transaction throughput, not all the stakeholders are happy. After BIP 91 was locked in, a group of developers, miners, and users suddenly announce that an altcoin called Bitcoin Cash AKA “BCC” will be created. A fork from the current Bitcoin branch and it will (among other things) not support Segwit.
An article from Coindesk on the 26th of July 2017 detailed this:
Today, SegWit is just a couple of steps away from activating on Bitcoin, but some Bitcoin users are unhappy about the outcome. Others who originally backed the Segwit2x proposal appear to be losing confidence in an eventual block size increase and are now taking matters into their own hands by making their own version of Bitcoin – and they’re doing so on a short timeline. On August 1, at precisely 12:20 UTC, the group claims that they will split off from bitcoin, creating a new cryptocurrency called Bitcoin Cash.
What is Bitcoin Cash?
2 main features
-It increases the block size to 8MB
-It removes SegWit, a code change that might activate on the blockchain by the end of August.
Some say it’s the new Altcoin, currently worth $280 at the time of writing in an open futures market. About 10% worth of Bitcoins price which is @ $2780.
All Bitcoin holders will automatically own Bitcoin Cash, amounting to their original Bitcoin amount. The existing ledger at the time of the split is preserved.
These are the supported Exchanges and wallets:
In a PSA statement, Bitcoin.com said that it will allow miners in its pool to choose if they want to mine the Bitcoin Cash token BCC.
For now, though, it will mine on Segwit2x chain, though it said it “will immediately shift all company resources to supporting Bitcoin Cash exclusively” if the block size increase part of SegWit, scheduled for roughly three months from now, falls through.
This raises a lot of concern regardless
The implications for the stakeholders if a new cryptocurrency splits off from the main Bitcoin network will smell volatile markets. Just look at the price of Bitcoin as of writing since the past 12 hours.
Regardless, by the time you have read this, the fork has already begun. An 8MB block space is an attractive selling point for Bitcoin Cash. But speculators, get ready for a wild ride.