As of late, there’s been a lot of confusion for investors and traders of the Bitcoin community. Several proposals are leaving non-technical and new investors speculating about the impacts of the changes that will take place the 1st of August. Bitcoin and the cryptocurrency market as a whole is experiencing an influx of demand. Its increased usage has slowed down the network causing an increase in transaction time and fees. Currently, Bitcoin blocks have a limited storage capacity of one megabyte. Some suggest increasing the capacity to two megabytes, while others believe the increase in capacity would only suffice a temporary fix.
If you’ve read my previous article about Blockchain, you know that Bitcoin is decentralized and has no central authority. Having said that, the mining community holds the power on decisions for future changes and improvements to the network. One solution is to activate Segregated Witness, also known as SegWit. It enables an immediate increase of the block size limit up to four megabytes, which is the maximum megabytes per block. SegWit also adds benefits like fixing an important issue called malleability bug in the Bitcoin protocol and the speed of the transaction can go back to its previous highs.
How Does SegWit Get Implemented?
SegWit requires 95% of miners to signal support measured in hash power in order to be activated. Currently, there is 46% of miners support SegWit. You can monitor the status on http://www.segwit.co
Dangers of the Split:
Keep in mind that we are in the beginning stages of cryptocurrencies and problems may arise every now and then as the market grows larger. The bad news is that Bitcoin can split between two block sizes, this can be messy and risky, which can result in lost funds if you’re not careful. There could be a possibility of having two types of Bitcoins with different sets of rules competing with each other for users. A key piece of advice would be to control your own private keys for the time being and try not to buy or sell bitcoins from July 21st till the dust settles near August 3rd.
As a cryptocurrency investor, I might be transferring most of my Bitcoin to Litecoin in the near future. Bitcoin market can slow down due to its massive scaling problems, while Litecoin doesn’t seem to be having any scaling issues and SegWit is currently active for Litecoin. In my opinion, Bitcoin is still a great investment for the future once they solve their current problems, which is yet to be seen. We will have to wait and see what the Bitcoin miners decide to do and move accordingly from thereon.
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