Ever since BCH forked away from BTC in August, there have been other similar actions that followed. Now a new date has been set, 28th December, when the much anticipated BTC fork will occur. Being just days away, it is important to know what all this debate is all about, and how it will affect the value of BTC.
What does it mean
Just think of it as the saying, ‘a fork in the road’. The people behind keeping the BTC network running smoothly have to constantly keep updating and troubleshooting the network. Sometimes, all that is required is an update, which is referred to as a soft fork. This simply means that the network gets an upgrade and newly created blocks follow new rules. However, even those miners running old software can continue to operate because a soft fork allows for backward compatibility. (The: Basic Coin Terms You Need To Know)
The only problem, though, is that if there are still just as many miners running old software as there are those running the new software, this may create a split into separate blockchains. Otherwise, a hard fork is a complete change in the software where new blocks created by new software do not recognize blocks generated by old software. Such cases therefore create a split in the BTC network with separate groups running varying software on multiple chains.
The main reason why a fork in the BTC network becomes necessary is when there is a problem that needs fixing. If it is a simple enough problem, then a soft fork is implemented and the network keeps running. In case the problem requires a total overhaul of the software, though, then a complete fork is implemented. This becomes necessary when the people keeping the network alive can’t agree on a solution, and they decide to part ways. (Learn the: Coin Regulations Around the World)
This is what happened to ETH last year after the DAO attack. The DAO was an ICO held on Ethereum that raised over $150 million. Soon thereafter, hackers made away with a third of the DAO tokens, causing a rift among ETH developers. Some wanted to keep going regardless of the hack, while others wanted to recover the money stolen. In the end, most of the developers chose to go back to the blocks before the hack and recover the money. Because ETH founder Vitalik Buterin was on this side of the table, it became the most recognized version of ETH. Those who decided to maintain the integrity of the blockchain formed Ethereum classic (ETC), although it didn’t have as much support. (Do you know: What is An ICO and How Can I Make Money On It?)
As early as last year, there had been some efforts, or at least the intention, of upgrading the BTC network. As the coin kept gaining more users, the developers noticed that, at some point, there would arise problems. The upgrade was termed Segregated Witness 2x, SegWit2x. The idea behind it was to double the block size limit from the current 1MB to 2MB. You see, the block size limit is put in place by the developers to prevent spam transactions. However, not everyone agreed with the SegWit2x plan, and this has been the cause of heated debates all through the year. (5 tips to forming the most promising coin investment portfolio for 2018)
Whenever there is a hard fork or split, BTC holder find themselves owning both coins. For example, if you had 1 BTC and a hard fork occurs, you would still have your BTC, and one coin based on the BTC fork. Some analysts have even commented that BTC forks create money out of thin air in this way. (The: 10 Most Important Resources to a Coin Trader)
Such previous forks
The first major fork on the BTC network occurred this year on the 1st of August, resulting in the creation of BCH (BCH). According to the team behind the fork, they did not agree that the proposed SegWit2x update was going to be effective. They felt that a doubling of the BTC block size would not work in the long-term because the same problems would arise. Therefore, instead of doubling the block size, BCH has an 8MB block size limit, which allows more transactions to be processed in a second. (Comparing: BCH Vs. BTC: Confrontation Forecast in 2018)
Since then, BTG (BTG) also forked on the 24th of October with the goal of reducing monopolies in the BTC network. The team behind BTG were against what have become ‘monopolies’ in BTC through the use of ASICs. ASICs are dedicated devices meant just for mining BTC and other coins. A few groups possess many ASICs, and they have raised the difficulty in mining BTC so much that an individual cannot mine on their PC. Many of these mining pools are based in China where electricity costs are low, and have created a monopoly where they get to make the decisions for the entire network. (The: 5 Most Popular Uses of BTC and other Coins)
Afterwards, there have been about half a dozen more BTC forks that have created coins like:
- BTC diamond,
- Super BTC,
- BTC platinum,
- Lightning BTC,
- BCH plus,
- BTC silver, etc.
On this list, perhaps BTC diamond has had the most success since it has a lot of support. BTC diamond has been listed on over 30 exchanges around the world and can be held on several wallets. Futures for BTC diamond are also available on the EXX.com exchange! As for the rest, they don’t have as much support. In fact, it can be argued that their creators are simply trying to create alternative coins while riding on the popularity of BTC. Today, websites like Forkgen allow anyone to create their own BTC fork, although it requires some knowledge on blockchain technology. (Do you know these: 5 Tips to Choosing the Ideal Coin Exchange?)
What do these forks mean for BTC’s future?
At first, most people thought the forks on BTC would affect the coin negatively, but instead the opposite happened. When BCH forked in August, the value of BTC skyrocketed because BTC holders who found themselves holding an equal number of BCH tokens immediately sold them in favour of BTC. Even when BTG forked in October, this didn’t affect the value of BTC either. (Find: Alternative Coins beside BTC to invest in)
As it turns out, there is simply overwhelming support for BTC that there hasn’t been any negative impact on its value. Besides, only very few BTC forks make it to the top 10 list. BCH and BTG have been the only successful forks, and that is because they have great teams and support. As for the rest, they can’t touch BTC whatsoever. (Do you know: What will happen to Ethereum in 2018?)
What about BTC’s own fork?
During this year, the BTC community had approached what would seem like an agreement. A proposal named BIP-91 was locked into, meaning that 95% of miners were behind the SegWit2x proposal. The date for the update was expected to be around mid-November, but this update was suspended. The announcement came on the 8th of November, citing a lack of consensus. After the announcement, the value of BTC dropped sharply from above $7,000 to under $5,000.
However, the SegWit proposal has once again been renewed and scheduled for the 28th of December. The agreement is being referred to as the NYA agreement, and it intends to raise the block size limit to 4MBand reduce the block production rate to 2.5 minutes. The team behind the project have hailed the move as a solution to BTC’s problems. The founder of the project, Jaap Terlouw, even claimed that BTC had become ‘impossible to use as a form of payment’. (The: 5 tips to identify the perfect ICO to invest in)
The speed of transactions processing had risen and it would even take days for it to be confirmed. Besides, the costs had also got so high, costing upwards of $20 for each transaction. After the upgrade, BTC holders will receive the same number of BTC 1:1. Additionally, there will be a reward coming from Satoshi Nakamoto’s BTCs that will be distributed. There will also be a change in the public address, whereby holders shall receive a unique address format. (Find out: The lowdown on coin)
What will happen to BTC after the fork?
So far, BTC has been dropping in value rapidly since it reached a high of $20,000. Today, it has been trading at around $13,500, but it doesn’t mean the bull run is over. Many experts believe that this is just a correction, and that it should have been expected. According to them, the sharp spike in BTC’s value had sent it to bubble territory, but the correction would prove its worth. (Learn all about: Looking for market correction)
If this fork does happen as planned, expect the price of BTC to rise once again, perhaps even beyond $20,000 even before we reach 2018. In the past months, coin enthusiasts had turned to altcoins like Litecoin and BCH because of the high transaction costs and slow speeds on the BTC network. This upgrade fixes all that, meaning that BTC would once again become usable for everyday transactions. If that happens, then we should see BTC thrive throughout 2018, perhaps even faster than other altcoins. (Do you know: What will happen to BTC in 2018?)
If you’re still not clear about how a fork happens, or what it actually means, watch this short animated video to learn: