In this blog I will write about what is going on with Bitcoin. In a way that people like me who do not have a tech background can understand it.
The problem
Bitcoin has a scaling issue, which result in slow transactions and rising transaction fees. There are two camps that have a solution for this problem.
Scaling issue explained
To get a better understanding we first have to look to how a Bitcoin Blockchain transaction looks at the moment. Every transaction consist layers of information in a block that has a size of 1 MB. Inside every block is a script that contains signature data. The size of the script clogs the block and this results in slow transactions and higher transaction fees.
Solutions
Segwit will separate the signature data from the block and move it to an extended block. This will reduce the size of the block and make transactions faster and cheaper. This is called a soft fork. With this solution the block size of 1MB (which is a core protocol) stays the same and Bitcoin undivided.
Another solution is to make the block size bigger. This can only happen through a hard fork. Meaning that there will be a second Bitcoin that splits itself from the original one. This will divide the market into BTC (Bitcoin Core; the original Bitcoin) and BTU (Bitcoin Unlimited; the new Bitcoin).
21 july 2017 and 1 august 2017
If the majority of the miners does not switch on the 21st of july or latest at first of August to Segwit than the creation of BTU will be unavoidable.