Technology holds the potential to disrupt the marketplace and overhaul the entire ecosystem. Often technology benefits those who enjoy prime mover advantage. Bitcoins are a technology-enabled cryptocurrency which is penetrating heavily and is challenging the conventional practices of exchange and trade practices. Bitcoin hard fork is one such upcoming event.
Common Man and the Uncommon Practices
Conventional trade used to be carried out through a barter system. With the development of civilizations, currency system came into being to facilitate the exchange of goods and services. This system was further replaced by virtual currency or plastic money. Of late, Bitcoins have emerged as an instrument of exchange for goods and services.
The Dilemma of Bitcoin Hard fork
Bitcoin hard fork has been gaining momentum for a while now. Due to the fast burgeoning user base, the transaction volume of Bitcoin is going off the charts. This has led to Bitcoin blocks getting larger and clogging up the network. The Bitcoin developers have developed a solution to this problem called the Segwit, which is short for Segregated Witness. Segwit resolves the problem of congestion without changing block size limit of 1MB. Additionally it provides the feature of adding a transaction layer on top of the Bitcoin, which will enable the users to make off-chain transactions to be incorporated within the Blockchain at a later date.
The Segwit solution while feasible is not popular among miners as they believe this will reduce the transaction fees they receive. They are vying for another solution, called the ‘Bitcoin Unlimited’ or BU. BU would allow the user to customize the block-size. The problem with this system is that it gives miners control of the decentralized Bitcoin network by allowing them access over the block-size.
The BU solution is seeing strong opposition from the developers who are instead suggesting hardforking the system, which practically means creating a fork in the Blockchain, in which one path would follow the new upgraded Blockchain and the other would follow the old path. The hard fork solution is gaining momentum over the last few days, this allows for the competing factions, to implement their own solutions and let the market decide which one comes out as a winner.
Demystifying the Ground Reality
So what would that mean for a common user? It would lead to the creation of two Bitcoin chains, i.e. Bitcoin core and Bitcoin Unlimited. At the time of the fork, the user’s Bitcoins would be live on both chains. If on each chain the Bitcoins have the same price as before the fork, his money would have doubled. It is likely however, that one chain would win over the other. Which chain would eventually win out, only time holds the answer. A user should thus keep an eye on the developments happening, so as to make an informed decision, when hardfork actually becomes a reality.