Segwit2x: The Hard Fork That Failed to Activate
After a tumultuous two weeks, Segwit2x appears to be more like a distant memory. Industry sources have uncovered that as many as 150 nodes running the algorithm have stopped accepting transaction blocks. Although it’s impossible to declare a project like Segwit2x formally dead, the avenues for its implementation have quickly narrowed.
The stoppage limits miners from actually producing transaction blocks larger than the 1 MB standard. One Segwit2x developer implemented a patch to make it easier to create bigger transaction blocks, but this doesn’t appear to have motivated wider industry adoption. At this point, it seems like the proposed fork has run out of leg room – and the necessary support from the community.
Lack of Consensus
Backers of the protocol, which included miners, startups and other market participants, cancelled the fork on Nov. 8, citing a lack of consensus. The 2x upgrade was supposed to boost bitcoin’s transaction capacity, thereby making it more attractive for consumers. This was part of a broader initiative to make cryptocurrency more relevant from an payments perspective.
The Segwit2x protocol emerged from the so-called New York Agreement, a comprehensive scaling proposal that was signed back in May by a long list of market players. The agreement was followed by months of infighting, including a heated debate about which cryptocurrency would get the coveted BTC symbol.
Fork day was supposed to happen on or about Nov. 16. Not a single Segwit2x block has been mined since the anticipated fork date – at least, none that we know of so far.
Analysts have also noted that software bugs made the new algorithm’s implementation difficult to pull off well before expected fork day. This was especially the case for btc1, a Segwit note designed to diverge from the original blockchain.
That being said, the activation of Segwit2x in the future isn’t impossible, no matter how unlikely it may appear now. Some analysts think the fork’s backers could file their grievances by supporting another project with similar goals (those aren’t difficult to find, given the increasing demand for scalable bitcoin solutions).
The following chart provides a simple breakdown of what the fork proposed to achieve relative to bitcoin and Bitcoin Cash. A more detailed discussion on the matter can be found here.
|Bitcoin (BTC)||SegWit Activated||No Increase in Block Size|
|Bitcoin Cash (BCH)||No SegWit Activated||Increased Block Size to 8MB|
|SegWi2x (B2X)||SegWit Activated||Increase Block Size|
The cryptocurrency market hasn’t taken the Segwit cancellation lightly. The decision to abandon the fork triggered heavy buying interest in bitcoin and its newly created alternative, Bitcoin Cash (BCH). Over the past two weeks, these coins have demonstrated inverse trading patterns, with BCH surging to levels that would have seemed highly improbable just a few weeks ago.
Both cryptos appeared more in tandem this week, although Bitcoin Cash traded at less than half of its record levels. Bitcoin, on the other hand, touched $8,000 on at least two occasions.
Disclaimer: The writer owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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