The much awaited and discussed event of the past few days happened as per the plan. The Segregated Witness (SegWit) has officially locked-in on 8th August 2017, at block #479707. This block is the point where the required level of miner support was reached, within the required time.
While full activation will happen in a couple of weeks, this is seen as a significant milestone for Bitcoin’s future, as it will solve the long-standing problem of delayed transactions on the bitcoin network.
Around the same time last week, the focus of the entire Bitcoin community was on the new baby on the block, Bitcoin Cash aka BCash, born on August 1, a little after 12:20 UTC. Now with the umbilical cord cut, the baby is under observation.
The question people have been asking is: Hold, buy or let the new currency mature for a while?
Still in its nascent stages, it’s difficult to say anything convincing about the future of the new cryptocurrency.
While we wait for the new currency to find its way; Bitcoin hit a record high, breaking through the $3,500 mark, just ahead of the lock-in and immediately after the lock-in, it was around $3,430.
SegWit Lock-In
The SegWit lock-in indicates that SegWit has been added to the Bitcoin network. The SegWit upgrade follows the guidelines in BIP 91, which is the Bitcoin improvement proposal activated on July 20 by the network. It dictates how any upgrades to Bitcoin, including SegWit are made.
The SegWit Proposal
SegWit mainly proposes moving some data outside the main bitcoin network and increasing the block size.
To understand the SegWit proposal, it is important to understand Bitcoin transactions. As we have seen in our previous post, the problem that has been bothering Bitcoin is the block size. Each block on the Bitcoin network processes a certain number of transactions within a time frame. With the increasing number of transactions, getting all of them through the system has become a problem, leading to a huge backlog. This has been a topic for debate over the past few years.
Want more information? Visit our post on the Bitcoin hard fork.
First Milestone: SegWit Lock-In
Implementing SegWit involves achieving two milestones: Reaching the code “lock-in” threshold and “activation.”
SegWit requires 95% support from miners, and initially miners were not too fond of SegWit. If that continued or they had stopped offering support ahead of the lock-in deadline, the lock-in would not have happened. But that was not a cause for concern, as miners had a stake in it as well. They risked losing a huge financial incentive, if they had withdrawn support.
Now that SegWit has been successfully locked-in, this information may not really matter much, but it helps the novice understand the workings of SegWit better.
Second Milestone: SegWit Activation
The next step is SegWit activation, which is expected to happen in two weeks, as the change will only activate at block 481,824, as shown below. This is expected to happen around August 22.
Now that SegWit has been added (locked-in) to the Bitcoin network, the software for all bitcoin services will also need to be upgraded to support the new style of transactions. Bitcoin miners and other services will now be busy for the next two weeks, upgrading their software to handle the changes.
This will involve increasing the block size limit on the blockchain and removing signature data from Bitcoin transactions. A part of the transaction will be removed to free up space, and allow more transactions to take place.
Finally...
This lock-in comes after more than a year of being proposed, and is considered a turning point for Bitcoin. A majority of businesses and miners have supported the SegWit implementation, followed by a 2MB hard fork in November. So far things are going well Bitcoin, but there is opposition to the second part of the plan, from many quarters, with Core developers saying that the hard fork in November will not have their support.
We will just have to wait and see what happens. If things follow the expected route, it will finally change how Bitcoin transacts and stores data, putting an end to the woes of the last few years. This could also prove to be a confidence booster for investors, as it reflects Bitcoin’s willingness to change, and offers the possibility of further scalabiity in the future.
This positive sentiment is likely to take Bitcoin price higher.
Have you invested in Bitcoin? What are your thoughts on SegWit Implementation? What are your predictions on Bitcoin prices? We would love to hear your opinion on anything related to the current happenings in the world of Bitcoin.
Author: @knowledge1