- 08 Jul, 2018
Implementation of Segwit2x is just a couple of days away. Segwit is consensus based approach to increase network capacity without affecting the existing blockchain. The segwit consensus group was doing its best to avoid bitcoin blockchain split, however this outcome looks uncertain.
Hard fork most likely outcome
A group of miners, developers, investors, and bitcoin users are favouring user activated hard fork to create Bitcoin cash (BCC). The group is not happy with the Bitcoin Improvement Process 91 (BIP91) that leads to soft fork. They believe Segwit is a short-term solution for a long-term problem. This temporary solution will only delay the block size scaling conflict and will re-start again very soon. In the absence of required consensus support, a hard fork is most probable outcome on 1 August.
What is Bitcoin cash?
On 1 August, user activated hard fork will bifurcate the blockchain into two branches. Bitcoin cash will be continuation of the original blockchain. It will share the entire transaction history with bitcoin until the split point. Bitcoin and Bitcoin cash will essentially be two separate cryptocurrencies working independent of each other.
How is Bitcoin cash different from Bitcoin?
Bitcoin cash will be a more scalable and upgraded version of Bitcoin. It will be a bitcoin without segwit and hashing problems. Some of the prominent features of Bitcoin cash includes;
Bitcoin cash increases the block size to 8 MB from the existing Bitcoin block size of 1 MB
Bitcoin cash will enable peaceful co-existence of two blockchains. The replay and wipe-out protection feature will reduce disruption of blockchain users into separate groups.
Bitcoin cash introduces additional transaction features such as input value signalling for better security without quadratic hashing problems
It is considered as the simplest, fastest, cheapest and most secure form of money.
Bitcoin cash will be freely allocated to bitcoin private key holders after the fork. Cryptocurrency traders are withdrawing their bitcoins from online exchanges most exchanges do not allow access to bitcoin private keys. It is priced at $350, which is less than 20% of bitcoin price. The digital asset community is eyeing on bitcoin and bitcoin cash prices to benefit from the probable market correction.
Who supports Bitcoin cash
China based mining firm ViaBTC is amongst the early supporters. It launched new mining pool designed for mining ‘bitcoin cash’ and trade the same on its exchange platform. ViaBTC is the eighth largest mining pool holding over 4% of global mining hashrate. Bitcoin mining hardware company, Bitmain and Bitcoin mining pool, Bitcoin.com also have the contingency plans to support hard fork.
Online cryptocurrency exchanges such as Kraken, Bitfinex, HitBTC and Korbit are supporting hard fork by providing equivalent Bitcoin cash to its users while other exchanges such as Poloniex and C-Cex are following a more reserved approach. Bitcoin wallet companies like Trezor, Electron Cash, Bitcoin ABC, and Freewallet have enabled compatibility and security features for storing bitcoin cash.
Bitcoin security recommendations
As we are nearing 1 August, curiosity regarding final outcomes is exciting for the bitcoiners. Bitcoin holders are strategically buying more bitcoins with prospectus of getting equivalent number of free bitcoin cash if hard fork happens. Blockchain split may lead users to lose their bitcoins due to technical incompetence and inadequate safety measures.
Bitcoin holders having access to their private keys will be allocated with same number of bitcoin cash. Private key provides access to original as well as newly formed chain after the chain split. Many bitcoin businesses such as exchanges, software providers, cloud mining companies, and hardware wallet providers have designed different approaches to handle the possible fork. Bitcoin holders are recommended to check with their online exchanges regarding their contingency plans during the hard fork
Bitcoin holders should store bitcoins in a hardware wallet as it provides access to private keys. It will minimize the risk of losing bitcoins during hard fork and will also allow access to both chains after the forking. Bitcoin expert’s advice users to avoid making bitcoin transactions for at least two days prior to 1 August.