Bitcoin has been immersed in a number of disagreements regarding scalability and transaction costs for a number of years now. After a long period of discussion it seemed a consensus had been found with an agreement to implement Segregated Witness (SegWit). However, for some this was too little and late and a spin-off group has decided to perform a hard fork in November this year.

SegWit2x

The SegWit2x agreement was announced back in May and has support from more than 50 cryptocurrency related parties including miners, technologists and companies such as Coinbase, Shapeshift, and Jaxx. On May 25th the group contained:

58 companies located in 22 countries

83.28% of hashing power

5.1 billion USD monthly on chain transaction volume

20.5 million Bitcoin wallets

After a move to implement SegWit across the Bitcoin network was finally agreed upon by all parties it seemed that the SegWit2x group would quietly disassemble, however they have announced that the planned network capacity expansion will take place in November 2017. The main reason for continuing with the split was to ensure an increase in the block size from 1MB to 2MB. The increase in the non-witness data will be around 2 MB with a limit of 4 MB and the upgrade will happen at Block 494,784.

The SegWit2x group released the following statement:

“During the month of November 2017, approximately 90 days after the activation of Segregated Witnesses in the Bitcoin blockchain, a block between 1MB and 2MB in size will be generated by Bitcoin miners in a move to increase network capacity. At this point it is expected that more than 90% of the computational capacity that secures the Bitcoin network will carry on mining on top of this large block”.

Hard Fork Number One

The Bitcoin network experienced its first hard fork in August this year with the creation of Bitcoin Cash. The disagreement over transaction speeds and block sizes led to a group fronted by Roger Ver to create a version of Bitcoin that implemented eight-megabyte blocks, whilst also rejecting SegWit. The fallout from the scaling debate has resulted in the possibility of two additional Bitcoin blockchains being created in the same year.

Implications

November 2017 will see three versions of Bitcoin operating on separate blockchains. Bitcoin (BTC) will operate with SegWit support and a 1MB block size. Bitcoin Cash (BCC) will operate without SegWit Support and utilize 8 MB block. Finally, the SegWit2x Fork will work with SegWit Support and a 2MB block size.

The creation of Bitcoin Cash had no adverse effect on the Bitcoin community, at this stage it is difficult to predict exactly what effect the creation of the SegWit2x coin will have on the world of Bitcoin. At this point, it may be safe to say that we are just seeing the beginning of a number of Bitcoin hard forks.