Bitcoin, the most prominent cryptocurrency is on its way to increasing capacity. On August 1st, it divided into two rival versions. In this article, we are about to explain in simple words what was going on and look into possible outcomes and scenarios.
At the very beginning, nobody knew that Bitcoin would be that demanded. With increasing its popularity, the Bitcoin community faced the fact that the blockchain scalability is insufficient. On average, the blockchain processes only 3 transactions per second while there are several thousand transactions pending for days.
The forthcoming measures were taken and coordinated between miners and node operators. It’s their decision that determines Bitcoin’s future path.
What is SegWit
Segregated witness, or SegWit, is a blockchain soft fork update that doesn’t conflict the existing system in any way. The update allows to compress information by increasing its size limit from 1 to 4 MB. In this case, the original block size remains the same – 1 MB. This update not only increases blockchain capacity, but also aims to resolve issues with transaction malleability which allows to change a txID before it gets confirmed by the network. If SegWit goes through, implementation of second level solutions will become possible. One of those is Lightning Network that allows to move a heap of transactions off the main blockchain and dramatically increase the capacity.
What is SegWit2x
Despite promising features of SegWit, the new technology requires over 95% of core members to accept it. The real figures turned out to be far from that point, as some members argue for a hard fork that determines increasing the block size. In order to come up with a consensus, the community offered a compromise named SegWit 2x. It is an alternative that consists of two steps: SegWit activation and blocksize increasing up to 2 megabytes.
BTC vs. BCH
Bitcoin (BTC) will hard fork if SegWit will be supported by 95% of nodes that activated BIP 148, a signal that they work with a new blockchain version. Currently, the updates are running in a test mode the duration of which is determined by a certain number of blocks processing in a new way. If succeeded, Bitcoin will be more scalable, secure and convenient. The process can be tracked here.
However, a lot of differences and disputes among the miners and nodes caused Bitcoin separation. Only 1% of them didn’t support the updates and activated Bitcoin Cash (BCH), the currency fork locked in from August, 1st, at 12:20 UTC. All Bitcoin holders are supposed to have the equal BCH amount in their wallets, provided that they control private keys. This is the way BCH is going to be integrated in contrast to the original currency. BCH represents an experimental blockchain replication for implementing new technologies different from the upcoming changes in Bitcoin (BTC).
The next few weeks are going to be pretty interesting for the crypto industry as a whole. Bitcoin is going to have critical updates that will totally change the way the currency functions. In addition, there will be another Bitcoin (BCH) that may transform the market. Changelly has announced its official statement about the process and will keep an eye on the situation.
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