Fork! Fork? What is Happening? What You Need to Know About SegWit2X!
Maybe you have heard the terms fork, SegWit, SegWit2X or just that in the mid of November Bitcoin is going to change a bit. On approximatly 14th of November, Bitcoin is going to be forked, which means a second coin is going to be created as a duplicate of Bitcoin with slightly adjusted technical details. But hey, what does that mean for you? Let us break down everything and make it simple to understand!
- What is a fork? Basic background.
- What is the Bitcoin Fork now about? The current problem and upcoming change in Bitcoin explained.
- What will happen to my Bitcoin? No panic, nothing will happen.
- How to get the new coin? You will have as many as you have Bitcoin at the time of the fork.
- tl;dr: Tell me what I should do!
Besides a useless utensil when it comes to pizza, a fork is the technical term for the duplication of an existing coin in order to modify it. Since you once (hopefully!) bought Bitcoin, you are ensured by the system of blockchain, that no one ever can modify or freeze your Bitcoin. This is the base principle of the blockchain. Otherwise, this would be just another pseudo-democratic system where the participants are puppets of someone’s that can rule over their money.
Now an issue with technology is that it cannot simply cover every possible scenario, thus when documented, doesn’t deliver the code already in its final state. It’s only after a while that bugs are detected and/or technical limitations uncovered. As soon as something like that happens, the code must be adjusted. The problem with blockchain is that no one alone can simply change the code. If I come along and upgrade the code of Bitcoin, then I have created a new coin – think of it as CoachingCoin. But why is CoachingCoin a new coin and not Bitcoin, if I have used the Bitcoin code base? Because not everyone has agreed that his or her Bitcoin are now upgraded to include my code change and so, my CoachingCoin is not accepted as Bitcoin.
Bitcoin has reached its technical limitations when it comes to transaction throughput. You want to have your Bitcoin sent quickly to someone else, don’t you? Then you care about big volumes of transactions fitting in each Bitcoin block (estimated solution time of every block is 10 minutes), because that means that the chances that your transaction is in there are high. However, currently there are not that many transactions fitting in there. The size of the block is simply too small for nowadays demand. Therefore, if you have a small transaction with a small fee, you might wait hours till you see your transaction through. And that is not really democratic. It’s also one of the important problems Bitcoin wants to solve.
In order to encounter the transaction volume limit, upgrading Bitcoin was proposed. Thus, the code has changed in order to fit more than double the amount of transactions in there. Now the miners are the big players in the Bitcoin network. And they kind of all agreed to upgrade Bitcoin to that new size in the beginning of the year and the date for that upgrade to happen is the 1st of November 2017.
So, on the 1st of November, Bitcoin will change its block size to hold more transactions.
As long as you have in your possession your private key on the Bitcoin blockchain (If you do not, read about why you should do it and how to do it) you can always access your Bitcoin as such. It does not matter what other people do or even if a coin clone of your coins is created. You will never ever loose your Bitcoin because of whatever scenario is happening!
Let’s get to the interesting bit. Once the fork has happened, a clone of Bitcoin will be created. In this case, they call it Bitcoin2X, because the technical upgrade is named SegWit2X. On the 1st November, they will take a snapshot of all the transactions and the state of the blockchain, copy it, adjust the code and release it.
Once that is done, you will be able to open a wallet on the new blockchain Bitcoin2X. Instead of creating a new one, I recommend taking your private key from your Bitcoin wallet and use that to open a wallet on the new blockchain Bitcoin2X. Since a private key is uniquely bound to a specific address and that algorithm does not changed in this upgrade, you will have the same address in Bitcoin2X as you had in Bitcoin!
To get even fancier: Remember that the whole history of the blockchain with all transactions hasn’t changed. This means, that you will have the same amount of Bitcoin2X as you had in Bitcoin just before the snapshot was done on the 1st November!
I will let you know of my course of action, as this might be of some use to you.
- I will collect all my Bitcoin and store them before 14.11.2017 on HitBTC. That exchange will give me automatically my Bitcoin2X as soon as they are out!
- On the 1.11. I am able to trade directly my Bitcoin and Bitcoin2X. I will dump the coin that is less supported. At the moment, it seems to be Bitcoin2X. But I will see it at the price on that day.
- Afterward, I will transfer my mid and long term investment to a private wallet.
I use HitBTC, since they do everything concerning the Bitcoin-Bitcoin2X splitting for me. I do not need to care about opening a second wallet or whatever. It is simple. I like that.
Hope that was a good overview and you feel prepared for the fork now! Tell me if something is missing for you and I can help you. That’s what I am here for!