UPDATED — SegWit2x CANCELLED — Details) To SegWit2x Or Not To SegWit2x… That Is The Question; Who Will Miners Support?
I here by decree that this year be called “The Year of The Forks” from this day forth! Go forward and act as my herald, letting all know that we WILL survive! Ok… so maybe we are not quite out of the woods yet… The BIG SegWit2x fork of Bitcoin is looming in the distance and it has the entire crypto market going bonkers. The whole thing is a mess and it has most cryptocurrency investors confused. Keep reading as I break down the SegWit2x fork for beginners in the only way my ‘stache knows how… Simply
UPDATED INFORMATION: Not more then a few HOURS after I posted this article an email leaked that SegWit2x is CANCELLED by Bitgo president Mike Belshe saying the following:
As fees rise on the blockchain, we believe it will eventually become
obvious that on-chain capacity increases are necessary. When that happens,
we hope the community will come together and find a solution, possibly with
a blocksize increase. Until then, we are suspending our plans for the
upcoming 2MB upgrade.
We want to thank everyone that contributed constructively to Segwit2x,
whether you were in favor or against. Your efforts are what makes Bitcoin
great. Bitcoin remains the greatest form of money mankind has ever seen,
and we remain dedicated to protecting and fostering its growth worldwide.
You can read the entire email here. This was confirmed by another big SegWit2x supporting Erik Voorheez on Twitter.
I will say that I am personally happy about this, I hate seeing the Bitcoin community divided on this stuff. In response, all the markets are up on this news pretty much!
Hard forks of a coin are one of the harder aspects of crypto to wrap your head around. I won’t go into the fine details of all forkings, but you can read my previous article about What is a Hard Fork here. When it comes to this latest in a long line of recent hard forks (see my article about Bitcoin Cash here, and Bitcoin Gold forks here), the SegWit2x fork might just be the biggest nightmare.
The Bitcoin SegWit2x (B2X for short), is a disputed hard fork of the Bitcoin core software. To put it plainly, the B2X crew & supporters want to increase the Bitcoin mining block size from 1MB per block to 2MB per block. To many, this may not seem like that big of a deal, but one of the main problems is the lack of “Replay Protection”. Never heard of Replay Protection? It is what prevents you from spending the same cryptocurrency twice. This is an ABSOLUTE NECESSITY in my opinion when it comes to any crypto out there (even the Bitcoin Cash team knew that!).
So here we have a team that wants to fork Bitcoin, but the only thing they want to really change is increase the block size to 2MB each and NOT include replay protection. Bitcoin Cash has already succeeded in increasing the block size (BCH has an 8MB block size) AND they also have replay protection. Well Mr. ‘Stacheman, then what is the point then?? Exactly…
A Crypto Cash Grab
The fact that this fork does almost NOTHING to improve the Bitcoin software means that most people view it as a plain and simple cash grab. I see this as mainly an attempt at taking over the Bitcoin “brand” by a small group of supporters that have gotten a little too greedy for their own good. Following the online trends in my groups and other places online, the debate on what is going to happen around the fork and what people should do with their money has become fierce. This has to do with a few factors, namely, a lot of disinformation or lack of information on the B2X fork plans as well as the fact that if you hold Bitcoin through the fork you will once again get an EQUAL amount of B2X when it is listed. Now of course, this is not every place you hold your Bitcoin so please make sure you do your own research when it comes to that. My wallet of choice, Exodus, will be supporting B2X in some way, but many others will not be.
To Support, Or Not To Support?
Most of the B2X supporters took part in the New York Agreement that took place earlier this year. This was an agreement signed by about 50 cryptocurrency companies that controlled over 80% of the mining power for Bitcoin to adopt the SegWit2x upgrade. There were many mining companies as well as some of the biggest names in crypto that got on board and signaled their support for B2X upgrades. While they may represent a large portion of the corporate interest in Bitcoin, they in no way speak for the majority of Bitcoin users and it is starting to show. This is yet another attempt to divide the Bitcoin community and not everyone is going to take it lying down this time.
The folks over at Bitcoin.org have been against the B2X fork for good reason and they have even gone as far as putting the companies that are supporting it on blast in their latest blog post. Here is a list of the companies they are “warning” people about potential issues with compatibility. I have highlighted some of the major ones:
Abra (United States)
ANX (Hong Kong)
Bitangel.com /Chandler Guo (China)
BitClub Network (Hong Kong)
Bitcoin.com (St. Kitts & Nevis)
Bitfury (United States)
BitPay (United States)
BitOasis (United Arab Emirates)
Bloq (United States)
Circle (United States)
Civic (United States)
Coinbase (United States)
Digital Currency Group (United States)
Filament (United States)
Genesis Global Trading (United States)
Genesis Mining (Hong Kong)
GoCoin (Isle of Man)
Grayscale Investments (United States)
Korbit (South Korea)
Netki (United States)
OB1 (United States)
Purse (United States)
SFOX (United States)
Veem (United States)
Xapo (United States)
Yours (United States)
Of course Bitcoin.org are not the only ones. Big names like Charlie Lee (creator of Litecoin), Blockstream, and of course the Bitcoin Core developers just to name a few. The Bitcoin community is also up in arms over this fork and the general consensus I get is that most Bitcoin “users” do not support the fork. While many people believe it is the Miners that hold all the power in making decisions in Bitcoin’s future, the truth is the users are the ones that are in charge.
Who Will Miners Support?
There are quite a few major mining pools that signed on to support B2X, but essentially miners just want to mine what is going to be the MOST profitable. Politics come in to play of course, but at the end of the day the majority of miners will end up supporting and mining the Bitcoin that “users” continue to transact in. According to one of my favorite sites, Coindesk, mines seem to prefer Bitcoin Cash over B2X and this may cause things to flipflop during the B2X fork.
If the majority of Bitcoin users still support Bitcoin core during the B2X fork, keeping the price of the original Bitcoin higher then what B2X trades at, I think that even if the majority of miners DO switch to B2X in the sort term they will be almost forced to go back to supporting Bitcoin. I think this might happen for a few reasons.
Many daily users of Bitcoin are confused and mad at more & more forks, leaving them spiteful towards B2X greed
There has been a flood of new Bitcoin users in the last month due to big news about Bitcoin derivatives launching on CME. These people know Bitcoin, they don’t know B2X or what is going on.
There are companies that are supporting B2X by designating it an “Altcoin” instead of taking Bitcoin’s place.
Miners are in it for the most profit, B2X does not provide anything that will guarantee an increase in profit.
Bitcoin Cash is a miners best friend 😉
How I See It All Going Down & What I Am Doing
Annnnd there is the forkoff folks… B2X has the ball and is driving down the field. The Bitcoin defense is looking strong Bob, I don’t know that B2X has the depth to take this one to the inzone! Is that a fumble?!?
I think that many people are going to hold BTC through the fork to try and get more free crypto, the miners will jump over to B2X as their futures ($1297 as of today) go to all time highs. Once you can sell your B2X, I think the coin will tank as users sell it off to pump their favorite alts and buy back in to Bitcoin at a lower point after they sold at the top. Bitcoin may stifle for a day or so with it’s speed of confirmations while miners are showering the new kid with their hashrate. With the price of B2X plummeting from users jumping ship, the miners will be forced back over to Bitcoin (or even Bitcoin Cash honestly) to avoid making Bitcoin Gold type of profits (burn!). The altcoin B2X will live on as yet another failed attempt at taking down the one and only Bitcoin.
Personally I am betting on Bitcoin to come out on top. I believe in the “brand” of Bitcoin. Being the biggest and most well known brand name is a huge driving factor in our modern day era of brand worship. I will hold my Bitcoin through the fork, I will claim any B2X I get, and I will try to dump it as close to it’s peak as I can and reinvest that back into my old pal Bitcoin (and maybe a few alts!). This is just me, what about you? Have you done your research? Do you have a plan, or will you follow the masses like a lemming to his death? Let me know your thoughts on this one!
NO ONE Forks The ‘Stache!