The poster child of cryptocurrency has been facing scalability issues. The current blockchain infrastructure cannot handle the increasing transactions and will eventually come to a grinding halt.
Two solutions were proposed – are BIP148 and SegWit2x.
Unfortunately both solutions are pointing in different directions making a workable compromise highly challenging.
Without getting into the technicalities of it, what this means is that we might see Bitcoin split. This doesn’t bode well for Bitcoin holders, miners, and businesses. Staying status quo isn’t going to work either. So what do we do? You might have heard this word being used with relations to Bitcoin in the recent months. Fork.
There’s a hard fork and soft fork. What?!
Forking happens when a coin gets an upgrade and experience compatibility issues.
In a soft fork, there is a new path created that is compatible to the old *nodes. The Blockchain now contains new nodes and old nodes.
The goal for soft fork is that in time to come, the new nodes will be the majority and then it can take over the chain as the defacto standard and force a chain wide implementation, causing the old nodes to be redundant.
Hard fork can’t be arsed with backward compatibility. They just say, “fu(k you” and start their own new chain. They run parallel but under different rules and are incompatible. So now you’ve two sets of coins with different value, one under the old name, and then one with the new one. In time, it’s a race to see which is the more dominant coin. Effectively, it’s a new coin but it starts off with the pool from the old coin. You can see why it’s troubling.
This is why people are getting worried about Bitcoin and why some people see this recent dip in BTC value as the end of cryptocurrency.
Last week, the Bitcoin community has reached an 80% consensus to go with Segwit2x, which is a hard fork. BIP 148 is going to enforce their soft fork come 1st August. This will cause all ready nodes, which is about 80% as well, to begin enforcing the new rule. Then in the third corner, we also have a Craig Wright, the so-called Bitcoin creator that no one takes seriously, who says that he and the 20% of Bitcoin community are going to stick to the old non-segwit protocol.
That’s what’s causing miners to stop mining because they don’t know if the coins they mine will have any value after the fork, whichever way it takes. Which is why investors have been pulling out to wait and see what happen.
For me, I’m going to go in while the market is low and capitalize on the confusion. I do not believe that Bitcoin’s time is up.
There’s shit loads of technical papers to read online. You can go check out if you like, or if you don’t have the time, then subscribe to my channel where you can get the condensed version of cryptocurrency topics in 3 minutes. If you found this article useful, please like and share this. Don’t leave your friends behind.
*A node is anyone who possess the blockchain ledger which consists of miners, wallet owners, or anyone else providing the service to allow the ledger to be store on their system.