Segwit Bitcoin basics

SHARE
← Back to articles
SHARE

SegWit: the countdown progresses

July 19, 2017 12:39 pm Published by

The Bitcoin scaling debate is now entering a key phase. SegWit2x and BIP148 are two of the most popular scaling proposals that intend to activate Segregated Witness (“SegWit”) within a month. If this happens, the protocol upgrade could be in effect within two months.

When this happens, Bitcoin could conceivably split. If both SegWit2x and BIP148 diverge from the present Bitcoin protocol, even more splits could result.

 

What is Segregated Witness?

Segregated Witness, or Segwit, is a protocol upgrade originally proposed by the development team at Bitcoin Core. SegWit has also been integrated into the New York Agreement, a different form of scaling roadmap supported by several Bitcoin companies.

A user activated soft fork (UASF) titled Bitcoin Improvement Proposal 148, or BIP148, also intends to activate SegWit. The BIP148 and SegWit2x difference lies in how the activation should take place.

The Bitcoin Core development team advocated the original and first option, a BIP141-defined SegWit code that activates if 95% of hash power is reached within a single two-week difficulty period before November 15th. If the miners who broadcast that activation readiness are actually in a position to support the upgrade, there is a limited risk of a split in the Bitcoin currency and blockchain.

At present, however, only 40 to 45% of hash power is suggesting readiness for BIP141, which is why some Bitcoin users intend to use a BIP148 UASF to activate SegWit from August 1st onwards. If the majority of miners support this proposal, a split can be avoided. But if only a minority support it, a BIP148 chain could create a divide in the current protocol.

The New York Agreement, also known as SegWit2x, intends to use BIP91 to activate SegWit. This approach can also avoid a split, but the second step of SegWit2x doubles the Bitcoin base block size and is not backwards compatible, which could result in a split.

So what can we expect? Below is a list of SegWit calendar dates to keep on the radar:

 

BTC1 Deployment – July 14

BTC1, a fork of the Bitcoin Core codebase, will deploy. Regular users should not be affected.

 

BIP91 Signalling to Start – July 21

The BTC1 nodes are scheduled to be up and running. Miner signalling commences. Regular users should not be affected.

 

BIP91 Lock In – July 23

If the SegWit2x blueprint is followed, this is the earliest that BIP91 could lock in. Again, regular users should not be affected.

 

BIP91 Activation – July 25

BIP91 could now potentially go into effect. Any blocks not ready for SegWit will be rejected. Regular users should still not be affected, but miners should only mine on top of blocks that signal readiness for BIP141.

 

BIP91 Deadline – July 29

Bitcoin miners who want to avoid a currency and blockchain split have until today to do so.  If BIP91 is not activated by July 29, a Bitcoin chain-split could result. Miners will now have only two days to decide whether they want to mine the BIP148 or legacy chain.

 

BIP91 Deadline – July 31

Today is the miners’ second chance to prevent a split. BIP91 must become active or BIP141 must lock in.  Because there’s a minor chance that July 31st will actually be the closing day for a difficulty period, both miners and users should be prepared for a potential split.

 

BIP148 Activation – August 1

BIP148 activates, making August 1 the final day for miners to avoid a split.

If BIP141 or BIP91 have locked in and/or activated by the deadline, no chain-split should occur. If a majority of miners support BIP148, a split can also be avoided. But if the chain does split, two types of Bitcoin will emerge: 148 Bitcoin (“148BTC”) and Legacy Bitcoin (or “LegacyBTC”). Miners will have to decide which chain they will mine.

 

Potential Bitcoin ABC Launch – August 4

A new Bitcoin, Bitcoin ABC, may emerge. This contingency plan, which was announced at the Future of Bitcoin conference, will be mined privately by Bitmain. If this happens, users may need to download software to send and receive currency.

 

Possible BIP148 Proof-of-Work Change – August 15

Another type of Bitcoin could be introduced. NewPoW Bitcoin (or “NewPoWBTC”) may appear if mining on 148 Bitcoin accounts for less than 15% of total hash power. Its emergence will confirm a split with Legacy Bitcoin and potentially create another split on the 148 Bitcoin side.

 

SegWit Lock In – Mid – to Late August

If a chain-split was avoided, SegWit should lock in between mid – and late August. If a split happens, there could potentially be up to four Bitcoins:

  • 148 Bitcoin
  • NewPoW Bitcoin
  • Bitcoin ABC
  • Legacy Bitcoin

 

SegWit Activation – Late August to Mid-September

SegWit should activate around this time provided a chain-split was avoided.

 

SegWit2x Hard Fork – Late October to Mid-November

SegWit2x’s hard fork portion should happen at this time. A base block that exceeds 1 MB in size should be mined, which will cause compatibility issues between BTC1 clients and Bitcoin clients that did not implement the hard fork code. It is uncertain yet how regular users will deal with this situation, but miners who were only running the BTC1 client with no intention of supporting the hard fork should now revert back to a non-BTC1 client.

 

Update: Recent changes suggest an optimistic forecast (with hard fork unlikely to happen). Miners started signalling BIP91, which means it looks likely that all the hard fork drama can be avoided for now at least, and the prospect of two rival bitcoin blockchains with competing assets won’t become a reality.

Look out for more updates in the coming days as things progress.

(BIP91 Progress as of July 20th ; source: xbt.eu)

 

Notable Replies

  • Satoshi24

    SegWit2x has been called off, or at least for now postponed. Why is this and what does this mean for Bitcoin?

  • raphael.shalaby

    In the simplest term possible; SegWit2x seems to have presented more potential problems than solutions.

    It was both a proposal that seeks to change bitcoin’s technology and a formal written agreement reached between certain parties interested in that change.

    Mike Belshe one of the lead architects of the SegWit2x protocol, stated:

    Unfortunately, it is clear that we have not built sufficient consensus for
    a clean blocksize upgrade at this time. Continuing on the current path
    could divide the community and be a setback to Bitcoin’s growth. This was
    never the goal of Segwit2x.

    The recent price spike in Bitcoin to $7700 after SegWit2x was called off suggests that the community is happy with this decision.

It’s the #WirexWorldCup!

As World Cup fever grips the nation, we’re doing something special for you. Football fanatic or not, this is your chance to be part of the #WirexWorldCup. Simply share your favourite football moments, whether you’re supporting your team at home, with your mates at the pub, or you get an opportunity to capture a moment… View Article

Wirex payment cards are back!

Payment cards aren’t exactly new to Wirex — and bringing back something you’ve done before isn’t always that exciting. An ex is an ex for a reason, right? Well, not in this case, not at all. Take a look at what arrived last week at Wirex HQ and we’re so excited to start processing orders for… View Article

Will BitGrail’s demise boost calls for crypto regulation?

In January of this year, Nano (XRB) looked like the rising star of crypto. Its fee-free transactions and instant confirmations offered an exciting alternative to the strained Bitcoin network. And Nano requires no mining grunt at all, unlike most of its rivals. In a feverish trading atmosphere, the price of Nano — then named RaiBlocks… View Article

Is Google banning crypto-related ads from its service a good thing?

Google recently announced its plan to ban online advertisements related to cryptocurrencies – including ads for everything from ICOs to exchanges and wallets. Facebook announced a similar ban in January. With the two largest online advertisers seemingly condemning cryptocurrencies, prices dropped and investors around the world panicked. Is this the start of a wider crackdown?… View Article