Bitcoin has cancelled the planned hard fork – Segwit2x. This represents a momentous occasion as it symbolises the first time in history that we are aware of where the community is more important than the wealthy 1%.
In today’s article, we’ll be covering why the fork has failed and why it was considered to be bad by the community in the first place.
YOU WILL LEARN:
The Original Goal Of Bitcoin’s Fork – Segwit2x
Why The Fork Failed
Why The Fork Was ‘Bad’
- What Was The Fork All About?
- Why Was The Fork Cancelled?
- Why Did The Community Hate The Fork?
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1. WHAT WAS THE FORK ALL ABOUT?
The original aim of the Bitcoin Fork was to “increase the blocksize and improve Bitcoin scalability”.
(Side note: For the majority of this article, I am discussing the 2x part of Segwit2x as this is the contentious part – I believe the majority of the community are happy with the Segwit element which began implementation months ago.)
The Pro Segwit2x argument goes like this:
- Years ago, Bitcoin was very cheap and fast
- As more people have begun using Bitcoin, the network has become overworked
- This has caused Bitcoin to become slow and expensive as a means of transferring money
- Currently, it can handle around 6 transactions per second
- If we double the block size, the network speed would double, fees would drop and the network would improve.
The Counterargument is:
- Doubling the block size may increase transaction speed but the the increase is only from roughly 6 to 12 transactions per second
- To put this into context, Visa is able to handle 24,000+
- Therefore, is the increase from 6 to 12 really going to help much?
- No. And if it doesn’t help much, why take the risk and make an untested change that could damage the network?
- This point is especially valid when you consider that there will be future solutions such as the lightning network which can increase the transactions by a multitude of thousands.
- Surely, it makes more sense to continue developing the network without a huge risk until a serious solution such as this is possible to use?
There is also another key point to talk about which is how the decision was made in a boardroom by a group of CEOs – not the community – but we’ll get into that in the next section to explain why Segwit2x failed.
2. WHY WAS THE FORK CANCELLED?
The hard fork was called off because the majority of people in the Bitcoin community were strongly against it and the intention was never to divide the community.
In other words, the reason behind cancelling Segwit2x is because most people were against it and, as a result, it was beginning to cause a split in the Bitcoin community which is bad for Bitcoin.
That’s the official reason at least.
For us, it’s more likely that the team behind the fork realised that they had already lost before the fork had even begun so there was no point continuing with their plans. This was evident because of the following reason:
- Bitfinex were offering people the opportunity to buy Bitcoin and B2X futures. This is essentially a bet on what the price would be after the fork and is usually a good representation.
- Bitcoin futures had a price of around $6,300 while B2X futures were priced as low as $1,300 just before the fork was cancelled.
- With such a huge difference in prices, it’s a pretty obvious choice which coin miners would choose to mine – Bitcoin.
- Even though 75% of miners were signalling that they would back B2X, several had dropped out and it’s highly likely more would have, especially as signalling doesn’t really mean anything binding.
- Without many miners to mine B2X, the coin would have simply died or, at least, failed miserably
So why don’t we believe that they cancelled the fork for the good of the community instead of for their own financial gain?
Why Are We So Cynical?
You might call us cynical by saying that we believe profits are the real reason that the hard fork was cancelled. However, ask yourself this:
The #NO2X has been so common over the past couple of month as a symbol of the community fighting back against the fork. It has been clear for a long time that this fork would split the Bitcoin community so why is it only now that the fork has been called off?
Anyway, let’s move on to why there was such strong opposition to the fork from within the Bitcoin community.
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3. WHY DID THE COMMUNITY HATE THE FORK?
Bitcoin is a decentralised currency. The emphasis is on decentralised here because this is the most important premise behind Bitcoin – the idea that nobody controls it and we, as a community, all decide on how it should run.
This is what separates Bitcoin from any currency that has ever existed before; they are all controlled by central authorities.
Did The Community Vote For The Fork?
Based off this, you might think that the community voted for the hard fork, right? After all, if we have an equal say and Bitcoin is decentralised then surely we must have?
No. The decision to carry out a hard fork – Segwit2x – was made by a group of CEOs in a boardroom meeting; the CEOs of the top mining pools and other major Bitcoin related companies.
In other words, a group of around 40-50 people made a decision about what should happen to the Bitcoin network without consulting anybody else.
To quote Richard Heart: “What could be more cancerous to a censorship proof cryptocurrency than a backroom signed agreement”. You can check out that quote – with a lot more swear words in the video below (it will jump straight to that quote if you hit play).
And this point is why the Bitcoin community has been so strongly advocating that the fork is ,not only bad for Bitcoin in general, but also lays the foundation for a dangerous principle – that Bitcoin can be controlled by CEOs instead of the community.
The community won the second that the fork cancelled.
Rather than the fork setting this dangerous precedent of how CEOs can control the network, the community has proven this isn’t the case and the users will decide how Bitcoin evolves over time.
If it hasn’t already sunk in, this is a huge moment for Bitcoin and the fundamental premise of decentralisation whereby the community holds the power, not the CEOs.
This a moment of celebration but also wariness as another principle has been set during this event – how easy it is to manipulate a market through a hard fork. If you don’t agree, answer one question for us:
Do you think that the CEOs bought altcoins before they announced the fork?
The majority of these altcoins shot up 20-30% in the few hours after the announcement and we would be willing to put money on the fact that the CEOs who cancelled the fork made huge amounts of money by tactically buying alts just before the made the announcement.
In the regular financial market, this would be considered insider trading but, in Crypto-land, this type of occurrence is commonplace and often looked past.
How Is This Dangerous?
This is dangerous because it has triggered it has most likely triggered the following thought for scammers out there in the community – of which there are many – ‘why don’t we create a hard fork and then cancel it? If we buy the altcoins before we make the announcement, we will make more money than any scam ICO has ever made.
If you’d like to learn more about the dangers of this, along with how we can prevent this as a community by educating people that forked coins are not free coins, check out our article and video here.
That’s the end of the article! Thanks for stopping by and don’t forget to check out our other articles for regular Crypto/ICO reviews and market updates.
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Disclaimer: None of the above is financial advice. Always do your own research.
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This article has been provided by our Business Analyst; Joseph Abiy.