What’s
gonna happen?
Just around 16th Nov, Bitcoin would hard fork to another
blockchain using the Segwit2x protocol, or S2X. Segwit stands for seggregated
witness, whereby in a bitcoin transaction, the transaction and the witness
signatures would be stored separately, thereby increasing the number of
transactions that can be packed in a single block to be mined by some
percentage. In addition, the block size would be increased to 2MB from the
existing 1MB, and therefore the term Segwit2x.
Some may remember that Bitcoin implemented Segwit as an option on
1st Aug, 2017 and the differing miners forked out to another blockchain, the
‘Bitcoin Cash’. Subsequently, another fork on 25th Oct caused the creation of
‘
Bitcoin Gold’.
How will
it happen?
This article focuses on the most important point that will impact
all bitcoin holders on 16th Nov, when block number 494784 is reached and a fork
takes place. To be precise the fork will take place as soon the block number
494784 is reached, and the date of 16th Nov, 2017 is not cast in stone. At the
time of writing this piece, block number 492194 has been mined. Bitcoin holders
will do well to ensure that they keep the live block count in mind, as this
fork on16th Nov is unlike the previous two forks.
The last two forks were caused by relatively smaller groups of
developers breaking away from the core Bitcoin group, which did not create any
disruptions in the value of the original Bitcoin. They have not, as yet,
managed to bring the new forked blockchain to any significant miner, exchange
or user attention, and are generally seen as altcoins, like several other coins
based on the Bitcoin protocol, wih different names.
Why is
this fork different? And how are you affected
Bitcoin.org has posted a white paper on their website, the renowed bitcoin.org which claims to publicly denounce companies who support Segwit2x in
detriment to the original Bitcoin (read the original paper here-
https://bitcoin.org/en/posts/denounce-segwit2x).
The reason why developers, who used to be ahead in the value
chain, are getting shaken, because miners are now ahead in the game with their
hashing power and corporate backing, and it is increasingly becoming apparent
that miners might call shots on which blockchain gets the maximum support on
and after 16th Nov.
And herein lies the paradox for us investors and users of
bitcoins. The whole argument is, which blockchain after the split will classify
as the original blockchain, i.e., the original Bitcoin as developers and miners
are both divided this time. So, wherever the majority leans to, that blockchain
might be the more prominent of the two. I would consider this unlikely, but
would still not like to bet upon it not happening, and would certainly not take
a bet against this if I hold any significant number of bitcoins.
What
should you do?
Have patience! We expect that some exchanges will issue us
Bitcoin Cash and Bitcoin Gold, but then they did not support the forked block chains
before. The stakeholders have been tolerant and that is in the best interest of
cryptocurrencies as too many forks are detrimental to the Satoshi Nakamoto’s
concept. The Bitcoin is still hovering around $6k, while Bitcoin Cash and Gold
are around $600 cumulative.
However, on 16th Nov, if you are not careful enough to claim your
bitcoin, and if the original Bitcoin is denounced as the lower block chain,
then you would likely lose a large portion of your investments, overnight.
Neither of the block chains would sink into oblivion, and both would continue
as there is good support for both in the miner and exchange community, but
still one would be valued lower than the other.
The best way to combat this potential disruption to your savings
would be to keep your private keys or Bitcoins to yourself if you have the
knowledge to extract the coins after the spilt or entrust to an exchange which
confirms they would support bitcoin 2x, and would hand over your bonus bitcoins
as soon as they can be distributed.
