Today marks a historical date for Bitcoin as miners agreed for a proposed update and SegWit is locked-in.
Miners have continuously signalled support for SegWit, reaching the desired threshold of 80% (around block 479,708). This will bring Bitcoin one step closer to increasing the network size to 2MB and allow more forward-looking technology, e.g. Lightning Network.
What is going to happen next?
Bitcoin network won’t be upgraded straight away, it will go through two stages:
- Stage 1 – SegWit will enter a two-week ‘grace period’ which will stop activating the change until August 21.
- Stage 2 – Bitcoin network will have to go through the software upgrade in order to support the necessary network changes.
What Is SegWit and What Does the Lock-In Mean?
Bitcoin’s rising popularity resulted in an increased demand, which has drastically slowed down the network. Because of that, the transaction can take up to few hours to be confirmed and mining became unaffordable.
Thanks to SegWit, Bitcoin network will increase by 1MB and the transaction speed will be more agile.
The lock-in ensures that SegWit will be actually added to the network. After the chain split on August 1 there was a lot of uncertainty on what was going to happen to Bitcoin and whether the entire network would be able to survive the storm.
But despite Bitcoin Cash and other proposals, SegWit is the least invasive solution for Bitcoin. It gives miners time to upgrade the software during the so called ‘grace period’.
What is ‘Grace Period’
After locking-in SegWit, miners will have to go through an adjustment period, during which they will have to upgrade the software in order for a smooth change to the new era of Bitcoin network.
The ‘grace period’ will last for two weeks and it will allow miners to create blocks that enforce new rules. It’s in the miners’ best interest to upgrade to the SegWit network – without it, their blocks will be rejected and there will be a risk of losing funds.
It’s still unclear how long will it take for particular exchanges and wallets to implement SegWit but some of them have already expressed their support, e.g. Blockchain Wallet, BitPanda and LocalBitcoins.
The mandatory waiting period will end on August 22.
Why Should You Care?
If you own Bitcoins or planning on investing, you cannot be oblivious to the new update.
Bitcoin has been considered slow and outdated for the last few years and without SegWit it won’t be able to move forward. As a first cryptocurrency, it deserves the credit for starting the new trend, but it has been outsmarted by a modern technology.
SegWit will open a window for other upgrades to be implemented in the future. Each one of them will be developed in their own time, by a different set of developers and won’t need a consensual agreement from the network.
The proposed update brings a breath of fresh air and it shows Bitcoin’s willingness to change. Investors and buyers will gain more trust which is already shown in Bitcoin price.
Few days after the chain split, Bitcoin’s price crossed the $3,000 line and it keeps on growing. After SegWit is locked-in, Bitcoin price will likely go up again until it reaches a stable level.
What’s Next for Bitcoin
The next chapter begins in November when miners will decide if Bitcoin should be kept as it is or go ahead with the SegWit2x upgrade. If the latter happens, the network will go through another hard fork as some miners may reject it.
If this happens, we might witness another chain split, resulting in Bitcoin with SegWit2x, without it and Bitcoin Cash.
SegWit2x has been agreed by representatives from niche cryptocurrency businesses as well as by miners who represent 80% the global hash rate.
There is a controversy around adopting SegWit2x as it would put Bitcoin in the hands of Jeff Garzik and other volunteering Bitcoin developers. They’ve been working on the new version of Bitcoin outside of the current protocol.
This hasn’t been welcomed by Bitcoin core developers who have been expressing their disapproval since July 2017. In their eyes, SegWit2x is unnecessary and rushed.
For the time being, SegWit is locked-in which gives a certain reassurance of Bitcoin’s future to buyers and investors. But the newly released survey by CoinDesk indicates that majority is expecting another hard fork to be followed in three months.