An 80 percent majority of mining pool operators have signaled their intent to follow the New York Agreement (NYA), ensuring the continued growth of Bitcoin as a currency investment and payment network. A hard limit of 1MB for block size will no longer threaten to curtail the utility of Bitcoin, which was beginning to show signs of technical stress due to the popularity of the currency.
This software upgrade optimizes Bitcoin code, establishing a safe path for scaling through a consensus among the international community. A new, backward compatible architecture of transaction blocks called segregated witness (SegWit) will help scale base blocks and block size up to 2MB, increasing capacity for transaction volume while maintaining security for Bitcoin assets.
Despite at least four out of five mining pool operators signaling intent for the SegWit2x path, there’s no guarantee that all Bitcoin business and operators will follow suit. Some within the industry, most notably Bitcoin Core, were not part of the extensive NYA discussions. This has created some uncertainty, and the potential for multiple pathways for the inevitable SegWit upgrade.
Segregated Witness Technical Advantages
The segregated witness upgrade will separate witness data — also called the Sender’s Signature data — into a block extension by limiting block weight instead of block size. This increases the bandwidth of data transmission for Bitcoin currency transactions, allowing for the expansion of economic development and activity.
A larger volume of potential transactions allows businesses to expand a growing ecosystem of products and services for the community. Mining fees and confirmation time for transactions will trend towards user benefit, also growing the overall application of Bitcoin for investment and transactions.
Before the NYA was established, Bitcoin was stuck in terms of volume. Technological constraints restricted the system to process only 1MB of transactions every 10 minutes or so, creating a bottleneck during times of heavy network activity. These high-volume periods cause transactions to slow, inflating the normal approval time.
Stagnant network volume created an environment where miners could raise costs on transactions fees, leveraging limited supply and rising demand. Opening a larger bandwidth for transactions via SegWit increases the supply of available transactions, which should lower fees. Despite lower fees and greater storage cost for larger block sizes, miners will have the opportunity to increase profits through higher quantities of transactions and upcoming innovation enabled by the software upgrade.
SegWit2x Enjoys Majority Support Worldwide
The worldwide support for SegWit2x lessens the atmosphere of uncertainty for the future of Bitcoin, ensuring that the currency will scale as envisioned. Mining operators, investors, established businesses and startups have overwhelmingly agreed on a path that establishes an environment of economic growth and innovation.
Those against the scaling of Bitcoin, and the implementation of SegWit, tend to view changes as a threat to idealistic views of the currency as a bulwark against centralized economies. Bitcoin Core software developers have been the most notable members of the anti-scaling faction. The SegWit2x software upgrade was created against this opposition, adding SegWit to the original version of the open source system.
Some ex-Bitcoin Core developers and maintainers decided to work within the NYA framework, contributing key adjustments to the new version of the open source software, which has since been approved by the community. Now that the segregated witness upgrade has begun, the only question remaining is the fork in the road ahead.
Multiple Roadmaps For Bitcoin Upgrade
This historic moment for Bitcoin could play out through multiple means, depending on the actions of mining operators over the upcoming months. Most agree that two outcomes remain possible: a soft fork and a hard fork. When 80% of miners signaled their support for SegWit2x, the potential for a hard fork dramatically increased. Nonetheless, a user activated soft fork (UASF) could still occur.
Part of the challenge revolves around a tight implementation schedule. A timelock of August 1st, 2017 exists for the BIP141 protocol, which supports SegWit through a user-centric code upgrade. At least 95% of miners must upgrade to prevent any possibility of a minority chain, which would operate under old software standards.
The existence of a minority chain greatly increases the chances of a permanent UASF, creating a split. Those running the SegWit upgrade would become part of the majority Bitcoin chain. Both chains would operate independently, with the minority chain sharing history with the original source code.
SegWit is an inevitability now that at least 80% of miners have signaled their intent to upgrade. By August 1st, most miners will have adopted BIP141, and by November 1st, the signaling for a 2MB hard fork will take place. Any operators who avoid SegWit2x will fall off the majority chain.
A majority of 95% of SegWit2x miners should be enough to avoid any network split, with the rest risking loss of value by not converting. If too many mining operators choose to stick with the original software, a split will occur through a UASF.
Unocoin Contingency Plan And Support
Unfortunately, a UASF opens the road to replay attacks and the potential for other issues. Unocoin planned for contingencies through consistent support of the upcoming SegWit upgrade.
Unocoin joined a consensus with 58 companies in 22 countries, all of which agreed to segregated witness and a 2MB hard fork. This represents 83% of worldwide hashing power, $5.1 billion USD in monthly transactions, and 20.5 million bitcoin wallets.
During the upcoming months, software upgrades will occur according to schedule, and customers will be successfully guided throughout the process. Users should protect the value of their Bitcoin through a paper, hardware or software wallets, with a private key in your possession. Selling or converting Bitcoin represents another option, and users have access to technical support and advice through Unocoin services.
Unocoin pledges to follow the majority chain which implements the SegWit upgrade and the 2MB hard fork, regardless of the existence of a UASF. Any shorter or weaker chains created over the upcoming months will not receive support. This ensures that Unocoin customers will benefit from Bitcoin scaling along with the rest of the industry, while safeguarding the value of current Bitcoin holdings.