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.
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.
