With the Bitcoin (BCC) fork fresh in the minds of the crypto-lustful public, the recent BTC price increase in may be attributed to buyers loading up to capitalize on the upcoming SegWit Gold & SegWit2X forks. If BCC taught the market a lesson, it was that forks are a good thing, as you make more money when they happen.
In the past forks were something to be feared, and the community tried very hard to avoid them. These days forks are seen as an opportunity. The past meaning of a Bitcoin fork is when some part of the network is mining one chain while the other part of the network is mining a different chain. This was a very bad thing, something to be avoided at all costs. It actually happened before, on March 12th 2013. After the 0.8 upgrade, a block was found that was rejected by miners that hadn’t upgraded to 0.8. For a brief moment, about 60% of the miners were mining the “Pre-0.8” chain, and about 40% of the miners were mining the “0.8” chain. The BTC software is written to prevent confusion like this, but there was a small bug making it possible for the new version to mine a block that the old versions couldn’t understand. Luckily, in 2013 BTC had a cohesive and responsive developer team, and an emergency upgrade was quickly applied with minimal damage. You can read about this footnote of BTC history in Gavin Andresen’s BIP 50 on GitHub.
Since that time, the landscape has changed drastically. The community is no longer cohesive, with multiple factions emerging to fight for what they believe is “Bitcoin.” Roger Ver, Bitmain, and other supporters launched BCC a few months ago, believing that restricting the block size to 1MB is severely hurting the growth and adoption of the cryptocurrency. On August 1st 2017, Bitcoin Cash “forked” from BTC, with both currencies sharing the same history up until that date. If you owned BTC before August 1st 2017, you now owned the same amount of Bitcoin Cash. One could make an argument that this was an airdop, not a fork, despite the shared history. An airdrop, as it relates to the cryptocurrency space, is when holders of one cryptocurrency are given free coins of a new cryptocurrency. Airdrops have happened multiple times. Byteball, Clams, Stellar Lumens, and Bitcore have all distributed their new currency to past BTC users. Litecoin, widely regarded as the first altcoin, (although the Namecoin developers may beg to differ) was simply a recompiling of BTC but changing the proof-of-work algorithm from SHA256 to scrypt and shortening the block timing. Litecoin is not regarded as a fork because there is no shared history. It’s also not an airdrop because no coins were freely distributed. Charlie Lee created the genesis block & off you go. Dogecoin is a copy of Litecoin, again with only slight changes made. In the world of altcoins, the vast majority are derivatives of BTC.
No matter where you side on this argument of semantics, two new cryptocurrencies based on BTC will soon be freely distributed to current BTC holders: Segwit2X & SegWitn Gold. SegWit Gold (SWG), also known as Bitcoin GPU, BGOLD & BTG, is set for release on August 25th 2017. The main difference between SegWit Gold and BTC is that the mining algorithm has been changed to use GPUs, rendering the current crop of ASIC miners useless on the new SegWit Gold network. How much this currency will be worth is yet to be determined.
Segwit2X (SW2), also known as S2X & BT2, will “fork” from the BTC network sometime in November, after block #494,784. Similar to BCC, miners will have the option of pointing their hashing power to either chain, as both will be compatible. Different this time is the lack of any replay protection or adjustments to network difficulty. This fork is as contentious as they get—one chain will survive and the other chain will starve. The winner of this hashing power showdown will likely be crowned “Bitcoin,” with the losing chain taking weeks or months to normalize their network difficulty, if anyone continues to mine it at all. The price of each coin is a major factor miners will be looking at when deciding where to point their power, although politics will also play a role. Multiple futures markets have begun trading the Segwit2X coin, with Bitfinex and OKex already trading the yet-to-be-activated crypto. As of this writing, SW2 trading between 0.12-0.14 suggests that the current SegWit1X (SW1) chain is the favorite to retain the title. That being said, if we head over to coin.dance we find that 85% of miners are signaling for SegWit2X. If the majority of hashing power leaves the SegWit1X chain in favor of 2X, the 1X chain would see only a handful of blocks mined each day, rendering it unusable. If an overwhelming consensus of miners, merchants, and users determine the SegWit2X chain to be “Bitcoin,” then a massive amount of value could quickly jump from one chain to the other. Because of the shared history between the two chains, holders of BTC should take a “wait and see” approach after block #494,784 is found. A clear winning should emerge rather quickly, minimizing the general disruption that forks cause.
Place your bets and get your popcorn ready—it’s a high stakes battle for the title of “Bitcoin.”
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