SegWit2x fork halted; bitcoin value skyrockets
For a few years now, the issue of the bitcoin block size has been a contentious issue. Members of the bitcoin community have proposed various hard forks to boost the block size and thus improve transaction processing, the most recent of these being Segwit2X, which was expected to trigger a block size increase on Nov. 16.
However, growing opposition from the bitcoin community prompted BitGo co-founder and CEO Mike Belshe to call off the project and issue the following statement.
The SegWit2x effort began in May with a simple purpose: to increase the blocksize and improve bitcoin scalability. SegWit2x found its first success in August, as it broke the deadlock and quickly led to Segwit's successful activation. Since that time, the team shifted its efforts to phase two of the project — a 2MB blocksize increase. Unfortunately, it is clear that we have not built sufficient consensus for a clean blocksize upgrade at this time. Continuing on the current path could divide the community and be a setback to bitcoin's growth.
Belshe also emphasized that as blockchain fees go up, the community will likely gather together to create a solution to increase the block size.
Many in the bitcoin community view Belshe's latest action as a positive and necessary move to preserve bitcoin's integrity.
"Cancelling SegWit2x is a step in the right direction, and it looks like Bitcoin Core's roadmap will prevail for now. While the intent behind increasing the block size was to make the bitcoin network more efficient, going ahead with the fork without broad community consensus would have caused more harm than good for bitcoin," Nucleus Vision CEO Abhishek Pitti wrote in an email to Blockchain Tech News.
Bitcoin value skyrocketed in the aftermath of Belshe's announcement, climbing from $5,000 to more than $7,400 over the course of one week. It is widely believed that the increase indicates greater enthusiasm and optimism in the bitcoin community due to the cancellation of SegWit2x.
"When 2x was called off, it became immediately clear there’s greater consensus for a single bitcoin blockchain and therefore there is greater value retained in the bitcoin ecosystem,"Steemit CEO Ned Scott wrote in an email. "The case was made by the immediate price increase when 2x was called off."
SegWit2x has not been the only proposed fork in the months since Bitcoin Cash and Bitcoin Gold branched off in an attempt to solve the block size dilemma (Bitcoin Cash) and and the concentration of mining power (Bitcoin Gold).
However, the bitcoin community generally views such offshoots as a threat to both bitcoin and the community, believing that forks undermine confidence in the system. Like all empires, the Republic of Bitcoin would undoubtedly experience a significant decline in power and prestige if its citizens were to revolt and set up their own competing mini republics.
As Leverj CEO Bharath Rao explained in an email:
While occasional forks due to deep philosophical differences are inevitable, habitual forks damage the network effect of any blockchain and undermines security and faith in the system.
Cryptocurrency is still experimental and repeated forks can fracture the community into tiny siloes and undermine the very concept of nongovernmental money. Rewards exist precisely because risk and opportunity exist. Every small mitigation of a risk [affects] value, and this event is no different.
Though SegWit2x has been shelved — at least for the time being — the issue at the heart of the contentious proposed fork remains. Whether it comes as a small change or a seismic shift, a change to the bitcoin blockchain is inevitable. It will take consensus in the bitcoin community to determine when — and how dramatically — to attack the problem of scalability.
Bradley Cooper is a Technology Editor for DigitalSignageToday.com and BlockchainTechNews.com. His background is in information technology, advertising, and writing.www