The news came loud and clear yesterday. The bitcoin fork is cancelled.
There will be no split and no SegWit2x on Thursday. Instead bitcoin will remain as it is… for now.
If you have money in cryptos, you’ll probably have noticed a lot of price changes over the last 24 hours – probably upwards, by a significant amount.
So let’s go over what’s happened, and what you can expect in the coming days.
It’s all about the block size
Bitcoin has forked so often in the last few months it’s easy to lose track of what the latest one was about.
The snappily named “SegWit2x” fork was supposed to address bitcoin’s transaction bottleneck.
Visa averages about 2,000 transactions per second, and can handle up to 56,000 per second. Bitcoin can currently handle… wait for it… six transactions per second.
This bottleneck is often touted as bitcoin’s biggest hurdle to becoming more widely used.
The more popular bitcoin gets, the more it needs a solution to this problem. With bitcoin’s popularity rocketing in recent months it’s caused a lot of congestion on the network. More transactions are trying to get through, but there is only limited space for them.
Right now, if you want your transaction to go through in a reasonable amount of time, you need to pay higher fees. If you pay a higher fee, the miners will verify your transaction first because it will make them more money.
The SegWit2x fork would have dealt with this by doubling the size of each “block” of transitions from 1mb to 2mb.
But the idea wasn’t without its flaws. It would have made the network susceptible to a certain type of hack, and it wasn’t ever a long-term solution.
Many of the big names in bitcoin opposed it, and a “NO2X” movement started on social media. Still, it looked like the fork was going ahead.
Then yesterday, the news came out that SegWit2x was off.
Here’s the email that broke the news, in full.
The Segwit2x effort began in May with a simple purpose: to increase the blocksize and improve Bitcoin scalability. At the time, the Bitcoin community was in crisis after nearly 3 years of heavy debate, and consensus for Segwit seemed like a distant mirage with only 30% support among miners. Segwit2x found its first success in August, as it broke the deadlock and quickly led to Segwit’s successful activation. Since that time, the team shifted its efforts to phase two of the project – a 2MB blocksize increase.
Our goal has always been a smooth upgrade for Bitcoin. Although we
strongly believe in the need for a larger blocksize, there is something we believe is even more important: keeping the community together. Unfortunately, it is clear that we have not built sufficient consensus for a clean blocksize upgrade at this time. Continuing on the current path could divide the community and be a setback to Bitcoin’s growth. This was never the goal of Segwit2x.
As fees rise on the blockchain, we believe it will eventually become
obvious that on-chain capacity increases are necessary. When that happens, we hope the community will come together and find a solution, possibly with a blocksize increase. Until then, we are suspending our plans for the upcoming 2MB upgrade.
We want to thank everyone that contributed constructively to Segwit2x, whether you were in favor or against. Your efforts are what makes Bitcoin great. Bitcoin remains the greatest form of money mankind has ever seen, and we remain dedicated to protecting and fostering its growth worldwide.
Mike Belshe, Wences Casares, Jihan Wu, Jeff Garzik, Peter Smith and Erik Voorhees
So the lack of community consensus was what killed it in the end. Who said social media movements never achieve anything?
One coin to rule them all
In the world of crypto, bitcoin is the tide that raises all ships. It’s so much bigger than any other coin that a small movement in bitcoin can have huge effects on altcoins. (An altcoin is essentially any crypto that isn’t bitcoin.)
Over the past few weeks the crypto communities have been full of people jumping ship from altcoins to bitcoin, in expectation of the fork. That’s one of the main reasons behind bitcoin’s latest bull run.
People saw a pattern and took advantage. The last two times bitcoin has forked, here’s what happened:
- In the run-up to the forks, altcoin prices dropped by a big percentage and bitcoin prices rocketed.
- Then after the fork, bitcoin had a small wobble and altcoins rocketed.
So, naturally, in the run up to the SegWit2x fork, even more people jumped ship for bitcoin. The run became a self-fulfilling prophecy. Bitcoin kept smashing all-time highs, day after day.
Everyone was waiting till a day or so before the fork to jump back into alts with an increased pot of money and then ride the altcoin wave.
But, as usually happens in crypto, what everyone thought turned out to be wrong.
“The only true wisdom is in knowing you know nothing”
The above quote is usually attributed to Socrates. Although, there’s no actual record of him saying it, which has a nice circular kind of irony to it.
No one, it seems, saw this coming. Our old Twitter favourite, Litecoin founder Charlie Lee, hoped for it, but I don’t think even he thought it would happen.
The thing is, though. This is good news.
As I said earlier, because bitcoin is so big, a slight movement of money out of bitcoin and into altcoins can multiply people’s money.
Take a look at this snapshot of the top 13 coins from yesterday afternoon.
Bitcoin is only down 3.42% – still way above where it was on Monday.
But many of the top altcoins are up by double digits. Some by over 30%.
The crypto see-saw
And what’s more, the overall market cap of all cryptos is up, still well over $200 billion.
If you’d like the chance to catch gains like these, you need to start reading my friend Sam Volkering’s work. Many of his readers will have made a lot of money out of the altcoin bounce yesterday.
You can start here with his cryptocurrency book. It tells you everything you need to know to get involved in this world. And as an Exponential Investor reader you can get it for free. Just click here to get started.
And next time something like this happens – which seems to be every other week in crypto – hopefully you can profit from it too.
If you have any thoughts on the fork, let me know: firstname.lastname@example.org.
PS All of this was accurate of about 16:10 yesterday. But as you well know, things move fast in crypto. So by the time you’re reading this, things may have changed. In order to stay ahead of the game, you should .
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