How did we get to the Bitcoin fork? The value of Bitcoin has more than tripled since January 2017, and with this growth also comes increased risks and rewards – notwithstanding the fact that Bitcoin is still very much a developing technology. The block size debate has been ongoing for years and taking into account Bitcoin’s recent rapid growth, one such risk is the proposed hard fork come August 1, 2017. This leaves the question, what should you be doing to prepare?
1: Keep your money in a local wallet and “sit back and watch it happen”.
2: Hold it in an exchange which will use its own discretion on how they choose to disperse the assets.
3: Exchange your Bitcoin currency to another digital currency such as Ethereum
4: Just sell it all in exchange for fiat currency.
5: Keep telling yourself that everything will be alright in the end!
What is your opinion or plan of action facing the looming proposed Bitcoin hard fork? Scroll down to the comment section to share your opinion or proposal. We want to hear from you!
More about the Bitcoin Fork
Luno‘s Werner van Rooyen sheds some light on the proposed fork and what it might mean for South African owners of Bitcoin, miners and exchanges. “Bitcoin, in its current form, can only handle a certain amount of transactions. The Bitcoin network has, however, been growing in popularity and used at such a rate that transacting has become painfully slow and much more expensive than it had been a few years ago.”
DEFINITION of ‘Hard Fork‘ As it relates to blockchain technology, a hard fork (or sometimes hardfork) is a radical change to the protocol that makes previously invalid blocks/transactions valid (or vice-versa), and as such requires all nodes or users to upgrade to the latest version of the protocol software.
To put these transactions in context, note that when a transaction is made with a credit card, it could still be reversed within six months’ time. However, with Bitcoin, once a transaction is confirmed six times (it takes about an hour), it is impossible to reverse. So the question is not whether more transactions should be happening, the question is how to go about that.
What is Bitcoin up against?
Van Rooyen explains that since Bitcoin software is built on open protocols and consensus, any developer (or groups of developers) can propose changes and improvements to the technology. This means that Bitcoin miners can vote on these changes and whether or not they want to implement them, and Bitcoin users can decide whether to follow them or not.
“If the proposed changes are significant enough, it results in a new version of the software, which may not be fully compatible with the old. If the change is controversial in the Bitcoin community, the new version then ‘forks’ from the main branch and operates by the newly implemented rules.”
“In recent months, one of these proposals, known as Bitcoin Unlimited, has been growing in popularity and miner support. Bitcoin Unlimited plans to increase the block size limit to allow for more transactions to be processed simultaneously than the current version of the software, known as Bitcoin Core.”
Team Bitcoin Core
Wants to keep the 1mb Block size limit. They propose to optimize the code in a way that will make transactions smaller and use other various techniques in order to increase Bitcoin transaction volume through the use of a soft fork.
The main solution proposed by this camp is called “Segregated Witness” or Segwit in short. It’s an upgrade that fixes a lot of Bitcoin bugs and also opens the opportunity for future scaling via the lightning network (which I won’t go into in this post).
Team Bitcoin Unlimited
Wants bigger blocks. They propose to increase the block size limit to whatever is needed (initially 2mb) in order to expedite confirmations on the network. However, if you decide to increase the block size to more than 1mb you are causing a hard fork by definition (since you are changing Bitcoin’s rules). This may not be a long-term solution though as bigger blocks will eventuallly be needed again.
Are your coins safe?
Van Rooyen if of the opinion that either way, your coins will be safe on the Luno exchange. “Our main goals are to keep our customers’ money safe and to maintain an orderly, useful and simple Bitcoin market in the countries we operate in.
We will support –buying, selling, receiving, sending, storing and trading– the version that enjoys majority support from the Bitcoin community of customers, miners, wallets and exchanges. We may decide, based on market conditions, to support just one or both versions or to discontinue support for a certain version in the future.”
Share your opinion on the Bitcoin fork in the comment section below.
A Luno guide to the potential outcomes of a Bitcoin fork
Bitcoin Split- Be Prepared for the Bitcoin Fork – if it does happen
• More about cryptocurreny: What are bitcoin/altcoins and the mining of these cryptocurrencies?
• More about mining in South Africa: Beginners’ guide to altcoin mining and getting paid in bitcoin
Share your opinion on the bitcoin fork in the comment section below.