Bitcoin is one step closer to upgrade as BIP 91 has officially locked in.

Miners of Bitcoin have reached consensus of over 80% approval for a proposal (BIP 91) that will avoid a coin split and bring Bitcoin a much needed upgrade. This means that miners have completed the first task in a larger effort to upgrade bitcoin, called Segwit2x.

In a recent article published by CoinDesk 'BIP 91 Locks In: What This Means for Bitcoin and Why It's Not Scaled Yet ' it states:

The controversial proposal seeks to change the transaction structure of the network via Segregated Witness, and increase a cap on the amount of data that can be stored in transaction blocks, a move tentatively scheduled for later this fall.

This will speed transactions and also have the potential for lowering transaction costs. This resulted in a huge price increase yesterday.

In response, bitcoin saw a sharp price increase on Thursday due to the perceived forward progress, with some calling the BIP 91 lock-in a victory marking a "new dawn" for bitcoin.

Bitcoin has more challenges to face moving forward...

The lock-in is just the first step to activating SegWit on the network, and other steps come with a bit more complexity.

Specifically, the following things need to happen for it to activate:
There will be a 336-block "grace period," taking about two and a half days, during which miners have time to prepare for activation.BIP 91 will activate at block 477,120. Theoretically, mining pools will start rejecting blocks that do not signal support for SegWit (BIP 141). In this way, BIP 91 is a "coordination mechanism" that gets other mining pools to follow along or lose out on mining rewards. SegWit could lock-in during the next difficulty adjustment period of 2016 blocks, which takes about two weeks.

Here's where it gets tricky based on my understanding of this process. The miners have the power to pull away from this agreement if they had motivation to do so. Based on the current decentralized governance of Bitcoin there is the possibility that an incentive to further manipulate the market and gain profits by doing so may motivate some mining pools to pull out at the last minute.

The sharp increase in price is simply a reaction to a fair bit of confidence by investors that this process will go smoothly and a coin break will not occur. Expect a lot of volatility coming in the next few weeks as they progress through this roadmap.

As always, don't invest what you can't afford to lose and try to follow this process closely to be better informed about how the market may react.

Thanks for reading!

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CoinTelegraph