Potential Bitcoin updates
Currently there are problems with the scalability of Bitcoin as a whole, the 1MB block sizes mean that as Bitcoin becomes more popular the transactions are taking longer and longer to process which in turn means the fees are increasing as a larger amount of hash power is required by miners in order to validate each of the blocks. There are a number or proposals on the horizon which are aimed at solving these issues. Some of these are soft forks, some are hard forks and some are a combination of the two, this article will explain what each of the updates are proposing and how you as a user should prepare for the upcoming updates whatever happens.
With BIP 148 due to lock in on August 1st you probably want to know what this is and what it means for the Bitcoin blockchain.
Bitcoin Improvement Proposal 148 (BIP 148) is a UASF (user activated soft soft) which requires that miners signal for readiness for Segregated Witness (SegWit), however this does not mean that they support SegWit.
As of 1st August, nodes which enforce BIP 148 will reject blocks from any miners which do not signal SegWit.
Following on from the 1st August update, if a majority of miners signal for BIP 148 and a percentage do not this could cause a splint in the Bitcoin chain meaning there would be at least two recognised different version of the Bitcoin blockchain. If one of the chains accumulated a higher amount of proof of work then this would become the recognised blockchain once again and would discard the other nodes meaning the split was only temporary.
Bitcoin improvement proposal 91 (BIP 91) is a proposal made by James Hilliard, a Bitmain engineer. The proposal is compatible not just with the New York Agreement, but also with BIP 148 and over the course of the last week miners have been signalling for BIP 91, once 269 in a 336 block window 80%) signal for this, BIP 91 will lock in.
BIP 91 is a soft fork and as of the 20th July locked in after more than 90% of hash power signalled support for the proposed soft fork and is scheduled to take place in the next 116 blocks as of 22nd July. One would assume that the majority of miners intend to activate Segregated Witness (SegWit), however it is not that simple.
BIP91 is similar to BIP148 in as much as the main aim is to activate SegWit, however there is no official activation date with BIP 91 differing with the official August 1st lock in for BIP 148.
This will effectively mean that BIP 91 aims to soft or using hash power alone. One of the biggest issues here is that the majority of Bitcoin users will not be signalling
SegWit2x was first proposed back in May and offers two main upgrades to the Bitcoin protocol; the activation of segregated witness and a specified date for the increase in block sizes from 1MB to 2MB within 6 months of activating SegWit. Currently over 87% of miners have signalled their intent for SegWit2x according to http://coin.dance.
SwgWit2x will be a hard fork which is inherently comes with greater risk than a soft fork as the nodes running the updated consensus rules will not recognise the old blocks and this in turn has a higher chance of a split occurring.
Keeping your bitcoin safe and secure
At this current time we can only confirm that BIP 91 has been locked in which we can assume that SegWit will be implemented in the coming weeks, however this is still not a certainty. Although SegWit will speed up the transactions there will still be the issue with the size of the blocks which may mean that we will still need a hark fork in the foreseeable future. As we are unsure which direction Bitcoin will take the only precaution to take is to ensure that you are fully prepared for any potential outcome.
It is highly recommended that you hold onto your own private keys and either store them in a hardware wallet or on a paper wallet, whichever route you choose you should make sure you create backups as an extra security precaution. Remember if there is a split and multiple Bitcoin chains are created and you are holding your private keys you will then have both/all versions of the coin