Due to the events that are about to occur with Bitcoin, it is necessary that everyone be aware of what is about to happen, regardless if you are invested in bitcoin or not.
The Issue
For several years now scaling has been a major issue with bitcoin. There are two ways to scale. One is increasing the block size, which would require a hard fork. The other is Segwit which can be done by soft fork.
An Overview of Hard forks and Soft Forks
Think of hard and soft forks as ways to deploy updates to the network or protocol.
A soft fork is considered safer than a hard fork, because a soft fork isn’t supposed to require nodes, exchanges, or users to upgrade. With a soft fork, all blocks considered valid by the newer version are also valid in the old version.
With a hard fork, all users and miners must switch to the new version or the chain will split in two the way Ethereum and Ethereum Classic did.
The Bitcoin Improvement Proposals (BIP)
BIP141 Segwit
BIP141 (Segwit) requires 95% of the miners to signal they are ready. Since November of 2016, developers have been trying to reach the 95% threshold, but a lot of the miners don’t like the segwit, and would prefer a hard fork to a 2mb block size.
BIP1478 UASF
BIP148 UASF (User Actived Soft Fork) is another proposal trying to get segwit activated. BIP148 has the built-in capability to reject blocks of miners that don’t accept it, and that could split the Bitcoin network in two. The idea of this is that it will force 100% adoption of segwit. BIP148 is already built into the software of miners that are supporting segwit. BIP148’s goal is to get enough mining power to overtake the other fork, and wipe it out. The other fork in this case, is the non-segwit fork.
Should this scenario occur, all of the transactions in the blocks that didn’t support segwit would be nullified. This could be really bad, because it could cause a double spending problem. An example of double spending is if you sell somebody a good or service on the chain that loses then that transaction becomes like it never happened and the buy still has the good or service you provided.
Segwit2X
The ideal outcome is that segwit is adopted by over 95% of the miners by August 1. In a move to reach a compromise with miners, Segwit2x was created. With Segwit2x the miners get their 2mb blocks and segwit gets activated. They are trying to get Segwit2x pushed out in July to beat the August 1st deadline. In the worst-case scenario, Segwit2x could yet again split the bitcoin chain.
Play It Safe
There is such a significant risk of Bitcoin forking into 2 different coins during the first week in August, that I am taking all my crypto off of exchanges, and putting it in cold storage. If the worst-case scenario happens, exchanges will likely have technical difficulties, and the price of BTC (and probably other coins) will move wildly. Exchanges could take huge losses, and no one knows how they will be able to handle them.
What You Can Expect if bitcoin forks into two chains....
- Exchanges will be unpredictable.
- Stop losses on trades not being honored.
- Exchanges taking huge losses due to the volatility which is why you don’t want your crypto in their possession.
- It is very likely that other altcoins will be subject to price swings due to these events.
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Thanks for posting! Sounds like really good advice to get everything off the exchanges before August 1.
Question: How would you know if your BTC is stored in a non-segwit fork? Are you saying that it is possible, even if you store BTC offline (in paper wallet or thumb drive), in the event of a UASF (BIP 148 ), the BTC is stored in the blockchain in a non-segwit fork could disappear?
Great question! If the split does occur and both chains survive you will have the same balance on each chain. That is why when this happens to other coins the price is split in half almost instantly also.
Got into Genesis mining a few weeks ago for ETH contracts and was doing them in bigger MH bulk buys, but I started doing it just +1/2/3 MH/s increments at a time so I could use other people's affiliate codes and hoping they will use mine next time too!
I just used yours, it was only for +1 MH/s for ETH at but looking to spread the love! I followed you also, trying to connect with people here on STEEMIT!
Next time you upgrade your hashpower use my code! NkQanX
Any contract upgrade is fine, I am investing in ETH myself but appreciate the return love of any Hashpower! I followed you too :)
I am looking forward to this date
ironically enough you are seeing the problem
without being governed by a centralized "bank"
Excellent post
helpful, thank you. followed
You are welcome, thank you.
Seems like a good practice to never keep anything of significance on an exchange anyway, but I am assuming (speaking of only 3 figures) it is ok in a desktop wallet (Exodus).
The other thing I heard was to simply abstain from any BTC exchanges of any kind during the upcoming bitcoin rapids/fork in the river! Kinda makes sense, but I couldn't explain why!?
Yes a desktop wallet is way safer than an exchange. The problem with an exchange is you don't know the private key to your wallet and if they go down you are out of luck.
Seriously excellent post! I hope for mine to look like this one day. Followed and resteemed :)