Bitcoin Is Forking. Again.
In November there will be three versions of the world's most popular cryptocurrency.
Immagine: Flickr/Metro Centric. Composizione: Autore
Just a few years ago it seemed like bitcoin was a singular force, which in retrospect was incredibly naive since it's open source tech managed by a bunch of fighting nerds.
After a years-long debate about how best to speed up the bitcoin network failed to resolve in unanimous agreement, in July bitcoin "forked," a term for when open-source software gets cloned by users who want to create their own version. This created two different versions of the world's most popular digital currency. Now, the fork is becoming a trident. On Wednesday, a group of bitcoiners scheduled yet another split for the network in November, which would create a third version of bitcoin.
So, what makes this version different from the others?
Right now, the bitcoin network can sometimes take a long time to process transactions due to so many people using it. This is because the "blocks" of transaction data that get added to bitcoin's public ledger, the blockchain, are getting full. In the weeks preceding the fork, bitcoin coalesced around a solution called "segregated witness," which will change how data is stored in blocks to free up some space when it kicks in later in August. But the size of the blocks themselves will stay at one megabyte on the original bitcoin blockchain.
Still, some bitcoiners maintained that the only way to speed bitcoin up for the foreseeable future was to increase the size of blocks themselves. So, a group of bitcoin companies and developers got together and launched a fork called bitcoin cash, which does not include segregated witness. It bumped the size of blocks up to a maximum of eight megabytes. That fork was widely anticipated to be a failure before it happened, but at the time of writing, bitcoin cash is trading above $300 USD per coin, which is comparable to cryptocurrencies like ethereum. Sounds like everyone got what they wanted, right? Oh, no.
There's a third group of bitcoin developers, companies, and users who advocate for a "best of both worlds approach." This group includes Bitmain, the largest bitcoin infrastructure company in the world, and legendary bitcoin developer Jeff Garzik. They got together back in May and signed what is known as the "New York Agreement," which bound them to implement a two megabyte block size increase alongside segregated witness via a hard fork within six months of the time of signing. They call the fork Segwit2x.
Now, that's exactly what's happening. According to an announcement posted to the Segwit2x GitHub repository, a bitcoin block between one and two megabytes will be created at block 494,784. After that, anybody who wants to join the New York Agreement signatories on the Segwit2x chain can create bitcoin blocks on top of that one. Thus, a new blockchain with its own set of rules will be created. Bitcoin's timing works via blocks, which can come at unpredictable intervals (although usually around one every ten minutes), and so the exact timing of the hard fork isn't known, but it should occur in November.
To recap, three months from now, there will likely be three different versions of bitcoin all attempting to prepare the currency for more traffic in different ways. Just so it's super-crystal-clear, here's what the main differences are:
- One megabyte blocks
- Segregated witness
- Eight megabyte blocks
- No segregated witness
Segwit2x/New York Agreement
- Two megabyte blocks
- Segregated witness
What does any of this mean? Well, basically, things are about to get even more interesting as the community and industry ecosystem decides which bitcoin versions to support, and how. One may even die out. At the very least, we'll get a real-time test of how these different approaches to scaling bitcoin eventually work out.
As for which version is the "real" bitcoin, that may be a bit of a personal choice regarding your preferred scaling solution. After all, every version contains the original's transaction history going back to 2009. Bitcoin developer Gavin Andresen, who was a driving force in bitcoin's early days, wrote a recent blog post that cast a wide net around what technical specifics define the "real" bitcoin. Under Andresen's definition, which you can check out here, any one of the three versions could claim the throne as long as they have a majority of community and industry support.
Please, bitcoin, never change. The unending chaos gives me life.
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