Preparing for Bitcoin Wars: Segwit vs Bitcoin Unlimited
The Problem:
Bitcoin takes too long and costs too much to process transactions.
The time it takes to process a transaction is a result of the current block size, if you want your transaction to process faster, you’ll need to pay higher transaction fees. Unfortunately this has led to both slower transaction times as well as higher transaction fees.
The Debate:
Segregated Witness AKA Segwit
Adjusts how much information is recorded in each block, this can be implemented as a soft fork, can be done quickly and will not split the blockchain. It is not a permanent solution, but some will argue that a permanent solution is not necessary at this time, rather we just need to improve transaction times.
If segwit is implemented, this opens the door for an additional improvement to the bitcoin protocol in the form of what is called the Lightning Network.
Bitcoin Unlimited AKA BTU
Increases the actual size of the blocks, thus allowing for more transactions to be recorded in each block. Since any increase of block size over 1 megabyte would change the rules of Bitcoin, this would result in a hard fork. This would take much longer to implement and runs the very real risk of splitting bitcoin into two different coins, which will very likely result in a decrease of the price of each coin for quite some time before they can recover. When Ethereum hard forked, it took about one year for the price of ether to recover.
What are the ramifications if there is a hard fork of the bitcoin blockchain?
There are many variables in this problem
First, will the online exchanges, hardware wallets and third party wallets support BTC, BTU, or both?
Will your BTC remain BTC? Will it be converted into BTU? Will you receive an equal amount of BTU for your holdings of BTC?
I should note that BTC stands for bitcoin core, which is the name of the long standing development team behind bitcoin. and BTU stands for Bitcoin Unlimited, the development team with Roger Ver at the head.
In order for you to make in informed decision as to what is the best way to prepare for this possible hard fork, I strongly suggest you investigate the stance of the company behind where you store your bitcoins.
For example, if you keep your bitcoins on an exchange, your bitcoins will be subject to whichever side they choose to support.
If you store your bitcoins on a hardware wallet, you will also be subjected to whichever side they choose to support.
The Trezor and Ledger and KeepKey hardware wallets have all announced that they will support both BTC and BTU if Bitcoin Unlimited is implemented.
If you store your bitcoins on a local wallet where you control your private keys then you will receive an equal amount of BTU for your holdings of BTC. Which is exactly what happened when Ethereum hard forked and resulted in the creation of ether classic.
Additional Reading:
99Bitcoins Article
CoinTelegraph on Roger Ver and TBU
Crypto Tips Segregated Witness Video
Crypto Tips Lightning Network Video
BTC stands for Bitcoin and always has.
Bitcoin is fundamentally whatever software the majority of miners choose to run.
https://steemit.com/vivacoin/@williambanks/introduction-to-viva-part-6-a-game-of-chains
Please don't buy into the hype that BTC stands for Bitcoin Core. The correct term would be BSCore, (Pronounced BS Core or B Score depending on your tastes).
BlockStream is just one company in the bitcoin ecosystem. They hired a bunch of developers from the core team and those guys always do whatever is in the best interests of their employer.
The only thing that makes these guys different than the Bitcoin Unlimited people is that they have commit access to the "Core" bitcoin repository used by most people, and also they have the run of bitcointalk and the bitcoin subreddit where they immediately shutdown and censor anyone who is positing a different view point than one that is financially beneficial to BlockStream.
You see BlockStream profits immensely from lightning network.
But we've had side chains for a long time. We just have always called them altcoins. Anything which changes the consensus protocol is an altcoin.
One company should not have the right to create an altcoin and call it bitcoin.
Changing the block size is also technically a change to the protocol, but saying that, ignores the fact that limiting blocksize was not in the original design. The block size limit was a stop gap measure implemented some several months after launch in order to allow people on slower connections to compete with people on multimegabit connections.
This is no longer an issue because all mining is highly centralized and concentrated in the hands of a few miners in China who all have high speed datalinks. So whatever they decide to mine, automatically becomes Bitcoin, and there is nothing any of us can do it about.
Kinda like white walkers marching on the wall :D
Thank you for elaborating on Bitcoin core and blockstream.
I'm curious for your opinion on the problem with the transaction fees and if that's any motivation for the beneficiaries to continue this "problem" with blocksize.
so in short, btc core sucks , bitcoin unlimited rules?
and that they wont really be competing
new pool.bitcoin.com is bitcoin ulimited...so btc unliimited can allow for more tha 21 million btc right?
Good video. I have seen a lot of confusion and misinformation, so I believe this video was very timely. Might be important to note if people use Coinbase, they have not been entirely clear on how it will be handled, even mentioning temporary suspension of with drawls...I would take it off Coinbase to be safe.
Thank you for the info!
Hmmm not ideal, where did you transfer it to? What is Coinbase position here?
https://blog.coinbase.com/update-for-customers-with-bitcoin-stored-on-coinbase-904dea08ac5f
"Customers who wish to access both blockchains at the time of the hard fork should withdraw their BTC from Coinbase since we cannot guarantee what will happen during the hard fork or when this access may be available."
I did not have very much BTC on coinbase anyways, I transferred the little I had to a hardware wallet.
Thanks mate - I actually did not think of what blockchain i want to access - I just have it to park my BTC - these complicated crypto stuff - why can BTC just remain BTC and grow to 40,000$ lol?
Haha, I know right lol
Thanks a lot for this post! I wasn't aware of the implications of a possible hardfork, now that I have some BTC stored in Coinbase!!
i think it is wrong to see bu and segwit as competitors.
they both are upgrades and they both may be good to implement. implementing one does not prevent the other from being used or implemented.
Not quite. BTU may be a good idea, but from a standpoint of implementation, it's a scam. It isn't open source. It has inbuilt bugs. It doesn't look like an improvement, but like the best plan to split bitcoin community and destroy original. It won't work.
SegWit may not look like a great improvement right now, but it is a natural and open source evolution of bitcoin network, that will allow further improvements far beyond current problems
Very relevant post, especially for non-traders that thought to invest and sit on some BTC to become rich there might still be confusion what to do.
Resteemed this to see more discussion.
What a lovely home you have Heidi - I like your matching lamps ;)
Well aren't you sweet! Thanks :)
You, me and @knozaki2015 should compare countries visited one day ... for me it's currently 123 - the same as the Queen and Hillary Clinton :) Next month it's Poland and Israel pour moi! Safe travels Heidi and I hope you get to India. You won't regret it I promise you.
Hey there. I wrote this post explaining what to do to protect your bitcoins from the outcome of the scaling debate (which I explained on the Bitcoin Hardfork for Dummies post)
Looks like SALES for HW Wallets will be INCREA$ING
double coinage ftw =)