Segregated Witness Activated! What Does Bitcoin Face Next… SegWit2x Fork?
We’ve Got SegWit!
On August 24th, 2017, Bitcoin finally activated Segregated Witness (SegWit), the highly anticipated scaling solution for the Bitcoin network, which was activated on Litecoin months before!
SegWit alters the parameters of Bitcoin’s software by removing the witness data from the block and putting it into a smaller separate block, ultimately freeing up more space to allow more transactions into the block to be verified and confirmed by miners.
What is the Next Step?
SegWit by itself doesn’t solve the scaling solution; it merely kicks the can down the crypto road a little bit more, as the block capacity limit at the moment is still 1MB! What SegWit enables are off-chain applications to help manage the additional volume on the network using an application called the Lightning Network.
The Lightning Network will enable instant transactions, and development is already near completion, with successful tests on a Lightning wallet! The vison is to have Bitcoin and Litecoin enabled on the Lightning Network and be able to complete cross-chain transactions, called Atomic Swaps.
A Decentralized Bitcoin/Litecoin Payment Network!
When the two coins successfully activate the Lightning Network, we will see Bitcoin, Litecoin, and any other similar coins with SegWit activated create a payment network that could undermine the financial system even more than it already is. The benefits could bring huge growth via market capital, as more businesses and usage would flow into the digital gold and silver’s ecosystem.
Flexible Litecoin Pioneered While Bitcoin Was Swamped With Politics!
While Viacoin was the first coin to activate SegWit, Litecoin’s size and large market cap meant there was an element of risk involved with its activation.
Despite the controversy with ASICBoost and Bitcoin’s political drama slightly overspilling into Litecoin’s process of activating SegWit, the procedure was a success. The markets witnessed Litecoin exploding from the $3.00-$4.00 range to a now impressive $57.00 at the time of writing!
While hard forks are nothing new in the realm of cryptocurrency, and in some cases are very much needed, such incidents with a particular stigma, such as the Ethereum DAO incident hard fork or the recent Bitcoin Cash hard fork, seem to cause high levels of volatility in the markets.
A few months ago, we reported on the New York Agreement, where numerous movers and shakers came together on an arrangement to activate SegWit and increase the block size to 2MB, ultimately pleasing everyone on both sides of the debate.
We now face the possibility of yet another fork where we have two versions of Bitcoin, both with SegWit and one with a 2MB block increase! However, this is not guaranteed, and it isn’t due to happen until late November 2017.
There are rumours of the SegWit2x fork not having replay protection, which could potentially cause chaos on both networks. Bitcoin Cash split off with no issues due to the fact that it had protection against replay attacks.
On a positive note, Bitcoin facing constant challenges will only strengthen itself, the industry, and make it more battle-hardened in the long-term!