Last updated on February 23rd, 2018 at Ten:05 am
There’s bot a lotsbestemming of talk te the Bitcoin community lately about stuff like a “fork”, “segwit” and “Bitcoin Unlimited”. Many people don’t understand what all of this is about but it’s creating a lotsbestemming of stress due to misleading or partial information that is being spread.
Te this postbode I will aim to clarify the uncertainty and give a better view of what’s going on mainly for beginners and non technical people. Hopefully, once you finish reading this postbode you will know what’s going on te the Bitcoin community thesis days and will be able to better prepare yourself for the different outcomes.
A brief disclaimer before I start – I’m not a technical person and I have little technical background. The information I bring here today is what I’ve managed to collect after weeks of research from around the web. I may sometimes oversimplify technical issues te order to lightly explain them.
I believe there are only a handful of people who understand this punt and its technical aspects totally. If you do find a mistake ter this postbode I encourage you to let mij know ter the comment section below and I will look into it. Let’s begin…
What the hell is a fork?
A fork is a technical word used by developers working on open source projects. It basically means a “software update”. Every time you update a program on your phone or rekentuig you have forked from the older version.
Bitcoin has introduced two fresh fork concepts:
1. Hard fork – A mandatory software update that conflicts with the older version. Your program won’t run if you don’t update it. An example can be finding a critical bug that permits people to exploit the software therefor everyone is required to update their program ter order to proceed using it.
If you don’t update – you can’t use the program. Also, there is no way to switch sides a hard fork once created te case some unexpected bugs or issues comes along. If that’s the case you’ll just have to do yet another hard fork and revert back to the old version. (source)
Two. Soft fork – A software update that doesn’t conflict with the existing software, isn’t mandatory and permits the network to adjust to the fresh features implemented on the go. While a soft fork is ter place even computers running the old program will still be able to use the program.
After a while when most of the computers running the program have updated to the fresh software a hard fork is implemented for the remaining minority if needed. If the soft fork doesn’t work out, has bugs or people don’t adopt it – it’s downright reversible and you can go back to the older version. (source)
Most programs you use today are managed by a single entity. So whenever they want to “fork” from their original program they kwestie an update te the form of a soft fork. For example, when Apple issues an update to iTunes – you most likely won’t have to update, but it’s advised that you do. After a certain period of time however you won’t be able to proceed to use iTunes if you toevluchthaven’t updated it.
Bitcoin on the other forearm is decentalized and has no central authority. That’s why when you have some controversial punt that requires an update, like wij will discuss shortly, people can argue on how the update should be carried out. Spil long spil Bitcoin users don’t reach a broad overeenstemming on what’s the right way to go, no update (or fork) will occur.
What’s this Block size debate everyone is talking about?
Transactions ter the Bitcoin network are added to the Blockchain via blocks. Each block holds a finite number of transactions. Let’s say a block can be only 1mb (1,000,000 bytes) ter size, and the average transaction is 500 bytes, then on average each block will be able to hold
This can create an kwestie since blocks are created on average every Ten minutes. This means that te one hour you’ll confirm an average of 12,000 transactions. If you compare this to credit card companies that confirm Two,000 every 2nd then you can understand why the Bitcoin network is considered to be slow on confirmations.
It’s significant to note however – that if a credit card transaction goes through there are still 6 months ter which that transaction can be reversed while ter Bitcoin, once a transaction is confirmed 6 times (takes an hour on average) it is irreversible.
Whether or not Bitcoin should process more transactions ter a given period of time isn’t the question here – everybody wants that. The question is how to go about that. Two camps have formed around this kwestie with two different solutions:
Camp A (aka Bitcoin Core) – Wants to keep the 1mb Block size limit. They propose to optimize the code ter a way that will make transactions smaller and use other various technics ter order to increase Bitcoin transaction volume through the use of a soft fork.
The main solution proposed by this camp is called “Segregated Witness” or Segwit ter brief. It’s an upgrade that fixes a lotsbestemming of Bitcoin bugs and also opens the chance for future scaling via the lightning network (which I won’t go into te this postbode). Here’s a brief movie wij made about Segwit a while ago – however it only concentrates on lowering the transaction size and not on many other significant issues Segwit solves:
Camp B (Bitcoin Unlimited) – Wants fatter blocks. They propose to increase the block size limit to whatever is needed (originally 2mb) te order to expedite confirmations on the network. However, if you determine to increase the block size to more than 1mb you are causing a hard fork by definition (since you are switching Bitcoin’s rules).
This means that if you you need to get everybody who want to proceed to use Bitcoin to update their software – and spil you can tell from the number of “update-required apps” you have on your phone – that doesn’t always toebijten.
To sum things up:
- Fixes an significant punt called Malleability bug ter the Bitcoin protocol
- Shrinks transaction size ter way that is equals to having a 2-3mb block size
- Extra security and efficiency gains for the Bitcoin protocol
- Initiates through a soft fork
- Not a long term solution (eventually wij will need fatter blocks)
- Increases the capacity of Bitcoin transactions
- Long term solution – the block size te basically unlimited
- Requires a hard fork = irreversible
- Puts more control into the arms of miners (who get the determine on the block size)
- Petite development team with questionable track record
- Hasn’t bot tested yet
Even however I’ll attempt to state the facts spil objectively spil possible you may notice that it seems spil if Segwit has the upper forearm. I’ll address that personally te the end of this postbode but ter the meantime if any Bitcoin Unlimited volgers feel that anything that’s written here doesn’t reflect the truth please let mij know.
It’s also significant to note that this debate is not fresh and it has bot going on ter the Bitcoin community almost since its inception. Even Satoshi referred to it te his previous writings on the Bitcointalk forum ter 2010.
Segwit is represented by the Bitcoin Core team – the team that has bot ter charge of maintaining and updating Bitcoin’s protocol since it began. This team consists of 25 total time developers and overheen 100 contributors, it is partially funded by a company called Blockstream. Of course this team has switched overheen time and some of the early developers have even left the team due to this debate and other issues (e.g. Mike Hearn and Gavin Andresen).
Bitcoin Unlimited is represented by Roger Verafgelegen. Roger is an early Bitcoin investor and has bot said to have around 300,000 Bitcoins (this has never bot confirmed). He invested ter companies such spil Blockchain.informatie, Bitpay, Losbreken and more.
What will the community choose – Segwit or Bitcoin Unlimited?
That’s a very good question. It’s so good that wij can’t indeed reaction it because the community is split te half. Some think wij should go with Bitcoin Core’s Segwit (BTC) and others with Bitcoin Unlimited (BTU). But while no decision is made Bitcoin blocks are running out of capacity and today you have to wait hours and sometimes days for your transaction to get confirmed.
Another “side effect” is that transaction fees are getting higher and higher since people are willing to pay more to get their transactions confirmed swifter. This is causing less people to adopt or use Bitcoin on a daily fundament, and that’s something that is needed ter order to get Bitcoin to become mainstream.
Even however the debate has bot going on for several years now, it seems that for the very first time wij have reached a boiling point. Bitcoin unlimited has gained notable support and might just say “we’re activating Bitcoin Unlimited and creating our own version of the Blockchain” and that is what everyone is afraid of (the dreaded fork).
Ter order to better understand how and when this fork will toebijten I want to very first address the different players wij have ter the Bitcoin ecosystem:
Miners – The people who operate expensive computers that confirm Bitcoin transactions. Without them no transaction would everzwijn be inserted into the Blockchain (i.e. no blocks would be mined). When switching the Bitcoin protocol the developers usually wait for 95% of the miners to reach an agreement on protocol switches and only then the switches are waterput into effect. At the uur Segwit and Bitcoin Unlimited are both far away from that milestone.
Spil you can see, at the time of writing 37.2% of miners are supporting (aka signalling) Bitcoin unlimited and 31.2% are supporting Segwit.
If thesis 37.2% that support Bitcoin Unlimited all of a sudden determine to embark mining Bitcoin unlimited blocks a hard fork will occur and two Blockchains will now be available – the Bitcoin Core blockchain (BTC) and the Bitcoin Unlimited blockchain (BTU).
Wallets, exchanges and utter knots – Miners are only validating transactions that knots on the network create. When I say knots, I mean computers running fully independent Bitcoin wallets that are sending, receiving and broadcasting Bitcoin transactions.
Thesis knots belong to Bitcoin wallets, exchanges and individuals who want to independently verify and broadcast their Bitcoins without any reliance on a 3rd party. While the miners confirm transactions, knots create transactions – so one can’t live without the other.
Legitimate Major exchanges have signed a document stating that they will label Bitcoin Unlimited spil BTU and Bitcoin Core spil BTC or XBT if a fork happens. The two coins will be treated separately but I think the most interesting part of the one pagina document is this:
Today 82.84% of the knots on the network are Bitcoin Core knots, out of thesis knots 71.11% support Segwit. On the other forearm only 11.17% of the knots support Bitcoin Unlimited.
Knots determine for themselves what software to run regardless of miners. So theoretically there could be a situation where a majority of the miners begin mining Bitcoin Unlimited but a majority of the knots proceed to use BTC. If this were to toebijten for example an exchange (i.e. knot) that runs only BTC will not accept coins created from the alternate chain.
On the other palm, if a large percentage of miners druppel out of the network, the difficulty to mine BTC will increase dramatically spil a lotsbestemming of miners have all of a sudden disappeared. This will create even slower confirmation times and higher fees until the mining difficulty adjusts.
Every 2016 blocks that are mined the protocol adjusts the difficulty so that blocks will be mined every Ten minutes on average. This means that te time the network will revert to the “normal” Ten minute block time but it can take weeks or even months to achieve that.
To sum things up – at the current status quo a fork is indeed bad for Bitcoin and will create a lotsbestemming of confusion.
If a fork occurs, what will toebijten to:
Depending on where you hold your Bitcoins one out of three things can toebijten:
- All of your Bitcoins will become BTC only
- All of your Bitcoin will become BTU only
- You will have doubled your coins and get an equal amount of BTC and BTU
The reason I can’t say for sure what will toebijten to your specific coins is because it depends on which wallet you hold them on. If you don’t hold the private keys to your wallet and permit some other wallet to hold your keys for you – you are basically letting them choose what will toebijten with your coins.
For example, Coinbase recently announced that they will only support BTC primarily. On the other mitt Breadwallet announced that they will proceed to connect to the chain that is the most popular amongst miners. You will not see your balance on the less-popular chain, and your bitcoin balance spil shown ter the breadwallet app will not switch. TREZOR announced that they will vertoning both BTC and BTU.
Every wallet has a different policy, if you want to make sure you have both BTC and BTU available you should keep your coins te a local wallet that permits you control overheen the private keys. I will elaborate a bit more on this zometeen.
Exchanges are similar to wallets te the sense that you don’t have control overheen your private keys – so it’s most likely best to get your money out of the exchange if you don’t need it for day to day trading.
One thing worth mentioning albeit I won’t go into it ter detail is something called a “reply attack”. Ter case a fork does occur and you get both BTC and BTU a hacker can use information from one of your coins to steal the other.
For example – You have Four Bitcoins, you hold them ter an independent wallet, the fork occurs and now you have Four BTC and Four BTU. You determine to sell you BTC, but then detect that your BTU is also gone. This can be the result of a reply attack. The way to avoid it is to:
- Make sure the wallet you are using has implemented replay attack toonbank measures
- Don’t spend any Bitcoins until you’ve verified point #1
Assuming Bitcoin forks and splits into two coins, BTC and BTU, then the price of each of thesis coins will most likely be worth a loterijlot less than the current price. How low can it go? Nobody knows. But imagine that you’ve just doubled the supply of Bitcoins everyone has.
One assumption is that a lotsbestemming of people will begin selling the coins that they don’t support, which will ter turn drive the price down. Roger Verafgelegen for example, agreed to trade up to 130K BTUs for BTCs from an anonymous Bitcointalk user.
To sum it up, no one truly knows what the price will be after a fork for BTC or BTU but there seems to be an overall agreement that the price will druppel substantially (at least at very first).
Another question everyone is asking is what will toebijten to the price of Altcoins like Ethereum, Dash or Monero if a fork occurs. Some people think it’s better to get their money out of Bitcoin and into an altcoin that doesn’t pose all of this schouwspel and potential risk.
I’m sorry to disappoint you, but I don’t think I can reaction that question. Ter the past few weeks altcoins have bot gaining a lotsbestemming of traction spil the option of forking Bitcoin seems realer than everzwijn, but that’s not to say they will proceed to rise and that they are decently valued at the uur.
Aahhhhh I’m confused! What should I do with my coins?
No matter who you support (BTC or BTU) you should make sure your coins are on a self hosted wallet (one that you control the private keys to). Examples of such wallets are Electrum and Leegloop.
If you have a substantial amount of Bitcoins use TREZOR or Ledger for maximum security. This way if a fork does toebijten you will own both currencies and won’t need to give way to any exchange or wallet desires.
Now that your Bitcoins are safe here are you options:
- Do nothing – If you believe that the fork isn’t going to toebijten or that ter the long run things will straighten themselves out through market coerces you can just rail out the storm. Once the dust lodges you’ll still have all of your coins (assuming you moved them to a self hosted wallet).
- Convert your Bitcoins into altcoins – If you don’t want to be part of the schouwspel but still need to use cryptocurrencies you can convert your Bitcoins into reputable altcoin like Ethereum, Monero or Litecoin.
- Sell all of your Bitcoins – If you are holding an amount ter Bitcoin that you can not afford to risk at any cost perhaps it would be best to sell all of them right now and not take any part te this. Once the stuk is overheen you’ll be able to buy Bitcoins again. However, no one indeed knows when the schouwspel will end or what will be the price when that happens.
Personally I’m going for option #1. This is my own opinion and please do not take it spil investment advice, form your own opinion by educating yourself. I am making sure to get all of Bitcoins out of wallets like Coinbase and even Blockchain.informatie (which Roger Verafgelegen is one of their investors) and I’m storing them on several hardware wallets.
I don’t think a fork will toebijten, but if it will I will just hold on to both coins until I see who the market determines is the winner. Personally, after watching hours of debates and reading numerous articles on the matter I’m ter favor of Segwit.
Because it seems to mij their team has more practice, their solution is less risky and mainly because I don’t think wij need to solve ALL of Bitcoin’s future issues at the ogenblik. Bitcoin Unlimited is stating that it is a long term solution, however wij don’t truly know what Bitcoin will become yet,
Bitcoin is still te its early stages. Wij need to permit it to grow but not determine on its future just yet. I see it very similar to Facebook te the way it wasgoed permitted to evolve and not limit itself to just a social network for students.
The ugly side of the fork
Now that you know about the technical aspects of the fork, Segwit and Bitcoin Unlimited it’s time to touch upon the political aspects of it. The entire kwestie is pretty ugly and both sides carry some of the blame ter my opinion.
The dark side of Bitcoin Core:
The Bitcoin Community skill center is mainly its subreddit (r/bitcoin) and the Bitcointalk forum. Since both of thesis sites are run by moderators who do not agree with the block size increase solution, they have embarked moderating threads discussing any such option.
Thus you can see posts and comments being regularly deleted under the keuze that a coin that uses fatter blocks isn’t the “real” Bitcoin and should be considered spil an altcoin. Since thesis sites don’t discuss altcoins the postbode is deleted.
This has enraged many users (and myself) since it doesn’t go forearm te forearm with the censorship resistance Bitcoin represents. You can read more about the strong moderation and its implications here. This wasgoed also the cause for the creation or r/btc – a subreddit created by Bitcoin Unlimited volgers what opposes censorship.
It’s significant to state that even tho’ Bitcoin Core or Blockstream are not directly related to thesis sites they have not publicly denounced this coerced censorship spil well.
The dark side of Bitcoin Unlimited:
Bitcoin Unlimited is spearheaded by Roger Veraf. Even however I believe Roger’s main cause for wanting an increase te the block size is to “save Bitcoin”, his persona is questionable. I mean, if more transactions vanaf block is so significant to you why not just approve Segwit to start with and then wij can discuss enhancing the block size.
Seems to mij that the kwestie is more political than technical.
Roger wields Bitcoin.com – a very strategic domain name (not to be confused with Bitcoin.org the official Bitcoin webpagina). On his webstek which is powerfully promoted online (trust mij, I’m a marketer) he promotes his own notulen. Of course this is downright his right since it’s his webpagina – however it’s a bit annoying that he is masking this zakagenda under Bitcoin’s name.
Another example is that roger is funding out of his own pocket a mining pool for Bitcoin Unlimited. Miners who join that pool don’t have to pay mining fees (usually around Two.5%) from their profits and they get an extra 10% on their earnings.
If you go through Roger’s bio you’ll notice he is a business man and he is strongly invested ter Bitcoin. It just seems that he is using a loterijlot of his money to attempt and switch public opinion by marketing and financial incentives instead of actually creating a good product.
To conclude this part – both side aren’t playing nice. Te my opinion you need to separate the chaff form the wheat, and all of the slander and accusation are just chaff.
Conclusion – What can you do?
Nothing. Wij’re just going to have to see how this plays out.
However, if you would like to influence the outcome – Get involved. Use the information you’ve learned here and from other resources online to educate others and form an opinion. Make sure to voice that opinion on social channels like Reddit, Facebook, Google +, local meetups and any place you think is relevant.
That’s the best any of us can do for now.
If you’ve found any mistakes or want to ask any more questions about this subject feel free to leave them te the comment section below. Ter the meantime h ere are some good movies for you to learn more about the subject.
And don’t left behind to stir your coins to a local wallet!!