BIP 148 and Segwit2x Explained : Major Change To Come In Bitcoin
There are a lot of whispering going on in bitcoin community about these two term BIP 148 and Segwit2x. In order to dive deep into this topic I strongly suggest you to go through the bitcoin scaling issue first.
With a lot of people getting involved in bitcoin investment, the load on bitcoin blockchain has increased very much. When bitcoin was created, creators never thought that there is gonna be such huge traffic on bitcoin blockchain in upcoming years. Situation is only worsening with time, as use of bitcoin is increasing. Which is causing load on blockchain, resulting into slower bitcoin transactions. In blockchain, a block is like a page of ledger keeping records of all the transactions happening in a fixed time interval. There are thousands of transactions happening every minute and blockchain’s block has just 1mb to record all those transactions and to validate them. That is why with increasing load, time to validate transactions is increasing and will keep increasing if further improvements are not activated on blockchain. This was just an insight of bitcoin scaling issue.
Now, let’s come to the point.
BIP 148 and Segwit2x are the solutions provided by bitcoin community for bitcoin scaling issue. Both of the solutions are provided by different but major bitcoin communities. As the bitcoin is a decentralized cryptocurrency, any kind of central authority can not decide the fate of bitcoin on his own. In order to change even a bit in bitcoin’s structure, there must be approval of all the bitcoin community members, mainly includes miners and users. Bitcoin miners are the roots of bitcoin structure, to know more about bitcoin mining and miners click here.
So, let’s see what kind of improvements these solutions suggest?
What is BIP 148?
Bitcoin Improvement Protocol 148 is a User Activated Soft Fork (UASF) suggested by core developers of bitcoin, that is designed to activate the existing Miner Activated Soft Fork (MASF) in all capable nodes on network (about 80% of the nodes). This protocol doesn’t require miner’s acceptance to activate. It is a user (not miner) activated soft fork which requires economic majority insated of miner’s. In simple terms, BIP 148 proposes to upgrade the nodes without miner’s support, because some of the miners doesn’t want to get upgraded while some them want to upgrade. This will cause a weak execution of BIP 148 without fulfilling the actual goals of advancement. So, BIP 148 will ensure to upgrade the network and those miners who are not willing to support it would be generating nodes which will no longer be validated by the chain. This would cause splitting of bitcoin chain in two parts, upgraded and non-upgraded. Those who will not support BIP 148, will be generating an altcoin instead of bitcoin, having similar features but with old version.
“BIP148 requires support from the economic majority, particularly exchanges and wallets. If this does not occur, node software supporting BIP148 should not be run after August 1st as it will cause a chain split leading to the abandonment of BIP148. There are strong economic incentives in the Bitcoin system for nodes to cooperate and remain in consensus to prevent chain splits. If the economic majority is signalling as of August 1st, miners have many incentives to follow along. Not following along would make it difficult to sell coins mined after August 1st as the blocks would not be accepted by the economic majority. Essentially, miners would be producing an altcoin not recognized by users and exchanges, making them less useful and in lower demand.” As written on USAF website.
What is Segwit2x?
Segwit2x is a proposal given by many bitcoin related companies during there meet at Consensus 2017, newyork. Segwit2x is kind of same proposal to rectify bitcoin scaling issue. This proposal differs in way that it gives completely freedom to miners. If some of the miners don’t want to upgrade, they can remain in their old version of bitcoin, while old version will also be able to create and validate newer version compatible nodes. According to some results, a lot miners are in support of Segwit2x. It will increase the blocksize to 2mb. (Actually both of the proposal will increase the basic block size)
BIP 148 is gonna activate on 1st of august no matter what. So, Segwit2x is likely to activate before 1st august to avoid split. So that majority of hashrate, around 80% which is in support of Segwit2x will be accountable, when the code will activate. That means, those who agreed upon Segwit2x will have the majority for further changes because they have 80% of hashrate.
Still, there are chances that the chain might split because Segwit2x is supposed to attempt hard-forking to increase the basic block size. Unlike soft fork, hard fork is not backwards compatible and can lead to chain split if there is support for it on minority chain.
If in any case chain splits, there will be two cryptocurrencies running on different networks and the same could happen When Ethereum used hard fork to bail out DAO token holders and two networks are there now, Ethereum and Ethereum classic. Nobody is still sure what outcomes are gonna occur after activation of both proposals. All that we can do right now is just to hope that Bitcoin doesn’t split.
There might be still a lot of points not covered here, you can ask your queries in comment section below.
Hitesh Malviya is the Founder of ItsBlockchain. He is one of the most early adopters of blockchain & cryptocurrency enthusiast in India. After being into space for a few years, he started IBC in 2016 to help other early adopters learn about the technology.
Before IBC, Hitesh has founded 4 companies in the cyber security & IT space.