If you are into bitcoins or cryptocurrencies, chances are that the term ‘SegWit2x’ rings a bell. The upcoming hard fork SegWit2x is probably the most controversial term running in the Blockchain world right now. In a nutshell, SegWit2X hard fork is aimed to make bitcoin transactions much more easy and efficient by increasing the block size.
Previously, another fork, the SegWit was initiated which led to forking of the blockchain into multiple independently operating chains- Bitcoin Segwit and Bitcoin Cash. But before we move ahead with that, let’s dive a little bit into what exactly is the point of forks such as SegWit and SegWit2X.
The forking journey
Originally the Bitcoin had a transaction block size of 1 MB which turned out to be ideal until the masses decide to adapt this cryptocurrency. More investors led to even more transactions and as a result, the problem of scalability kindled. The most interesting part about the Bitcoin is that it allows all the miners using the system to change the rules or create a new set of rules by forking the Bitcoin. And that’s how the SegWit fork came into existence.
As the name suggest segregate witness, that means separate the witness (Digital signatures). Each Bitcoin transaction consists of three components namely, sender details, receiver details and a digital signature which ensures the validity of the transaction. This digital signature is considered as ‘the witness’ in case of a transaction. SegWit or Segregated Witness separates the digital signature from the transaction block and transmits it exclusively. This process, in turn, reduces the volume of block and makes the transaction lighter.
Representation of a simple transaction in Blockchain
What made SegWit appealing is that it’s a soft fork i.e. the consensus of the overall network wasn’t required to implement it. However, this fails when it comes to SegWit2X- the hard fork.
SegWit2X: Concept & Predictions
The concept of implementing SegWit2X came into existence as a part of NewYork agreement. At Consensus 2017, when SegWit was decided upon, it was also stipulated that within six months of SegWit activation, SegWit2X will take place and the block size would be doubled.
This agreement was signed by fifty-eight major bitcoin companies and industry players along with miners, wallets, exchanges and payment processors etc. that hold about 80% power in the network. Later on, some big names retracted their support by growing skeptical about the outcomes of this hard fork.
SegWit2X would specifically modify the size of the blocks circulating in the network to double. While SegWit2X hard fork is similar to the previous forks in terms of being a new software that would increase the block size, it holds certain differences too.
As SegWit2X aims to keep bitcoin’s existing users on one blockchain, it could probably result in either making all miners to upgrade their software and operate on new big blocks or two different cryptocurrencies are created apparently, ‘legacy bitcoin’ and ‘SegWit2X bitcoin.’
If’s, but’s and what not?
Major chunk of the supporters for the SegWit2X comes from miners and startups whereas the other group that constitutes developers and node operators oppose the split with their own arguments. Moreover, a higher percentage of people are inclined towards stating that the hard fork will fail due one of the following reasons:
No guarantee of the upcoming system: The idea of SegWit2X hard fork is to scale bitcoins in a way that’ll allow the network to process more transactions within each bigger block resulting in higher TPS (Transactions per second). However, on the contrary, argument states that even if this fork is enabled, we cannot guarantee anything and it may even lead to more power consumption due to bigger blocks.
Lack of replay protection: Another more strong argument against SegWit2X hard fork is that it lacks replay protection which was implemented in Bitcoin Cash. Replay protection allows both the sides to operate independently without having the fear of getting transactions replayed on other chains after already being played on one chain. Denying the adoption of this phenomenon, the SegWit2X (BTC1) just increases vulnerability by trying to replace bitcoins rather than simply existing as a split-off fork of Bitcoin.
While people are placing their bets on both the sides of the seesaw, the outcome of SegWit2X is still in fog. The mid of November awaits implementation of SegWit2X and then and only then its effect will be decided. Till then, if you have any bitcoins invested in the cryptocurrency market, you might want to follow the cautionary steps below and not put your money in jeopardy.
Tips for striving successfully through the SegWit2X hard fork:
- While the fork gets implemented, do not move/invest/transact with your bitcoins
- Get a catch of your private keys and control of your cryptocurrency by getting them off the exchanges and storing them in a wallet
- Observe and analyze the markets after the SegWit2X hard fork
- Out of the splits, choose the one that you’d want to support and go ahead to invest in it
- Make sure that if the replay protection is not enabled on these chains, you are susceptible to attacks. Therefore, stay cautious.
While there are many unanswered questions rising with each passing day, we’d advise you to hang in there. Soon the markets will change with the biggest change in Bitcoin’s history.