Bitcoin’s scaling issues have been hogging the limelight on the crypto currency scene for quite a few months now. Not only are these proposed code upgrades controversial, they represent the biggest change in the history of the $40 billion economic network, a change which could indeed shake the very foundations of the trust that has thus far surrounded the digital currency. What exactly are these upgrades meant to deal with though and are they needed to begin with?
There’s very little agreement among the various entities and people involved with Bitcoin on anything that’s scaling-linked. While some argue that Bitcoin’s scaling problems – brought about by the limited nature of the Bitcoin network transaction handling-wise – have turned the currency into a sort of store of value at the expense of its initial ambition of becoming a globally accepted currency and eventually being used as such.
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Others, like Pete Rizzo (an editor at CoinDesk), explore the theory that Bitcoin’s resilience when faced with the question of scaling, is in fact proof of its strength and the superior quality of its design. The bottom line in this regard is that the majority of the community has grown to consider this poor scalability a liability, and a drag on the value of the crypto currency.
How will proper scaling be achieved, and will this scaling debate ever go away
Often considered a victim of its own success, Bitcoin is not likely to ever shed its scaling “issues.” In the long run, this will more or less always remain a problem. Any solution in this regard is a bit of case of kicking the can a tad further down the road. That said, what exactly are we looking at code upgrade-wise right now, and how are the coming changes going to impact the price of this virtual commodity?
SegWit2x – The Solution?
We keep hearing about SegWit2x and about various competing scaling solutions, such as BIP 148. The problem isn’t with these solutions in and of themselves, but rather with the inability of the Bitcoin ecosystem to reach a consensus over which of these proposals should be pursued at this time. Over the last couple of months, SegWit2x has floated to the top of the pool of weighed options, and we can now be certain that it will indeed go live at the beginning of August, thus kick-starting a lengthier process of scaling-issue management which will likely eliminate these problems for some time. Many are hoping that SegWit2x’s adoption will go smoothly, and as a result of that, the price of Bitcoin will double within the first couple of months following the launch of the new code. More importantly, people hope that a successful SegWit2x run will effectively return Bitcoin to actual, practical currency status.
Of course, things could go wrong too SegWit-wise, so there’s a very real chance of a hard fork in the Bitcoin block chain, which may result in the emergence of a Bitcoin-related altcoin, such as Bitcoin Unlimited (BTU). In such a case, exactly where the price of Bitcoin and the resulting altcoin will head, is anyone’s guess at this point.
What exactly is SegWit2x
SegWit2x consists of two gradually applied code-updates, the first one of which is SegWit (Segregated Witness), which is effectively a new way to store some of the data on the BTC network. Through this optimization, more transactions will fit into each block, without block-size being impacted in any shape or form. Transaction malleability will also be removed through this part of the update. This is the part of the update that essentially started going live on July 21, with an August 1 deadline. While for a while there, it looked like the measure would not garner the support of a large-enough majority of mining pools, things look better in that respect now.
The bad news is that SegWit2x has actually forked with its testnet, resulting in two incompatible versions. Developers seem convinced though that the same problem won’t happen during live adoption.
The second part of the SegWit2x update involves the increasing of the block-size from the current 1 MB to 2 MB. What that would mean is that instead of 1 MB of block-data per 10 minutes, the BTC network would be able to handle twice as much data over the same time-period. This part of the scaling-upgrade is set to be implemented 3 months after SegWit, providing another major price-influencing milestone a tad further down the road.
What does all this mean in terms of BTC value-outlook
We can only be certain that we’re looking at volatility ahead. Depending on how the first part of SegWit2x unfolds, we may indeed see a price-bump, though if political wrangling loosens trust in the crypto currency, while accompanied by a hard fork and the resulting altcoin hitting the scene, price may indeed suffer…
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How to trade all this if you’re a crypto currency trader
For short-term volatility, you can indeed resort to scalping, though given the magnitude of the changes we’re looking at here, you should keep your trades manual under all circumstances. You should definitely avoid making actual BTC transfers in the first part of August, as the possibility of losing your currency is indeed very real. Trading the volatility indirectly via forex or simplified forex is an option too, one that would reduce your exposure and thus level out risks a little.
What every trader needs to do is to stay on top of the SegWit2x news during this coming period of volatility and change. Remember: SegWit2x hit the testnet on July 14, and the adoption period begins on July 21. Strap yourself in, as we’re definitely in for a wild ride starting that day. coin.dance is a good place to keep an eye on the number of nodes and mining pools running/supporting the new software.
How would a new altcoin surface in the case of a hard fork?
Suppose you have 1 BTC now. After such a hardfork, you’d have two incompatible blockchains, on one of which (the majority/official one) you’d retain your 1 BTC, while on the other, you’d gain 1 unit of the new altcoin (BTU?), the value of which would later be set by the market.
Are YOU going to use this opportunity to finally purchase Bitcoin? Let us know by commenting below!
Disclaimer: We are not licensed to provide investment advice and this article should only be regarded as educational material. Always consult with a professional before investing.
I got bitcoin on coinbase but cannot sell it here in Canada bicoin also won’t move it any where for me I am stuck can’t sell or trade it some mess am not buying any more now