Crush The Street’s Luke Dodwell was one of the first cryptocurrency analysts to break the story about the upcoming Bitcoin hardfork being averted; now, the mainstream media has followed suit. The proposed plan to implement a scalability solution to the original digital token, called SegWit2x, has been dropped by consensus. And I for one couldn’t be happier.
SegWit2x was supposed to go live on November 16. The cancelled hardfork was actually step two of a two-step master plan called Segregated Witness. The first phase, a softfork nicknamed SegWit, occurred back in August. SegWit improved the transaction capacity of the Bitcoin blockchain, in part by allowing some transactions to occur outside the original blockchain pathway.
However, that improvement did not satisfy cryptocurrency developers, who sought to raise Bitcoin’s block size to two megabytes. Theoretically, this SegWit2x hardfork would immediately scale up the blockchain to meet current demand volume. But miners and other opponents decried that it could impugn Bitcoin’s integrity.
Should SegWit2x have moved forward, the Bitcoin community would have adopted a new pathway, abandoning the original. This would create more supply of Bitcoin and Bitcoin offshoots, in turn jeopardizing the value of already held tokens.
In the end, SegWit2x proponents decided that green-lighting the hardfork would probably split the Bitcoin community in two. Previously supportive exchanges and digital wallets renounced the hardfork, while prominent investors also jeered the proposal.
No matter what side of the debate you fall under, there’s one thing we can agree on: in this particular case, decentralized administration worked! I’m fortunate (and grateful) that the SegWit2x programmers didn’t just ham-fist their hardfork proposal; they listened to the community and are now apparently working with what we have.
And hot damn, we’ve done a lot. Bitcoin has already endured two prior hardforks: Bitcoin Cash and Bitcoin Gold. Thank God the third time’s not the charm.
I’m sure people who were speculating on “free” SegWit2x coins are disappointed. But even in the crazy world of cryptocurrencies, fundamental economics apply. That is, we can’t continue to split or offshoot the original Bitcoin blockchain and expect to suffer no consequences other than free money.
To borrow a phrase from Mike Maloney (who indirectly borrowed it from Isaac Newton), wealth is not created nor destroyed, only transferred from one party to another.
These hardforks were getting a bit ridiculous, and it’s not just Bitcoin. Ethereum suffered a massive setback early on, resulting in a hardfork solution — the new Ethereum that enjoys massive support (including from the original development team), and the holdout Ethereum Classic. The first Ethereum hardfork was necessary, but any more is just overkill.
I can make the same argument about Bitcoin. At the end of the day, if crypto programmers want to create a scalable platform, they should start their own or garner support from an altcoin community. In my view, Bitcoin doesn’t need to be a transactional vehicle. Today, we have so many cryptocurrency alternatives: let’s use them without having to dick around with our flagship product.
To those that are still disappointed about not making free money, let me just say this: there’s no such thing as free money. At some point, hardfork proposals like SegWit2x are like steroids. They may solve one problem, but end up potentially creating more unforeseen problems down the road.
It’s just a risk that I don’t think we need to take.