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 blockchains 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 blockchain, then you would likely lose a large portion of your investments, overnight. Neither of the blockchains 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 woud 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.
Keep your Satoshi’s crossed!