It's heady days for bitcoin. Not only is virtual currency's price cruising above $2,000 USD for a single coin, but a long and acrimonious debate—referred to as a "civil war"—seems to be finally nearing its end. In order to force the war into an agreeable conclusion, bitcoiners are now plotting an event they're calling "independence day."
For over two years, the bitcoin community has been locked in a stalemate over a code change that would, proponents argue, allow the technology to support worldwide adoption. Right now, the bitcoin network is so choked with transactions that it can take hours or even days for bitcoin to make it through the network—not ideal when that bitcoin might be for, say, a morning cup of coffee and you're late for work. While most now agree that some sort of change is needed, not everyone believes in the same solution.
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One proposed code change called "segregated witness," or SegWit for short, would alleviate this congestion, but a decisive majority of bitcoiners have to agree to implement it first. This is where the planned "independence day" comes in. It's an ultimatum from some bitcoin users to other players in the network (like miners who invest millions to upload blocks of transaction data to bitcoin's public ledger, the blockchain) to get on board, or be left behind.
The plan requires a critical mass of bitcoiners to agree, and poses major risks to the currency if major players decide not to. The bitcoin network could actually split into two, creating two blockchains and two different versions of bitcoin. That scenario could sink all of bitcoin's recent gains, turning bitcoin's overnight millionaires into… Well, not that.
According to a post on GitHub outlining the plan, which is technically called BIP 148, independence day is August 1, 2017. On this day, people running full versions of the bitcoin software (which does the work of collectively "confirming" bitcoin transactions as valid) will start rejecting blocks from miners who do not signal SegWit readiness. This will presumably force miners to start getting ready for SegWit, because otherwise, they'll be wasting computing resources and electricity on blocks that the network won't accept.
This is all meant to put pressure on miners so that the entire bitcoin network gets ready for SegWit together in the lead-up to November 15th, the final day for SegWit. If, by then, enough miners have signalled they're ready, the network will start enforcing the new rules, meaning little disruption for the bitcoin network. However, if there are major mining holdouts, two versions of bitcoin will emerge as they continue to pour their considerable resources into mining the original blockchain.
This risk is very real. While nearly 80 percent of bitcoin nodes support SegWit now, according to a site set up to promote independence day, the consensus isn't so strong with bitcoin companies and miners. Jihan Wu, co-founder of mining giant Bitmain, is not for independence day, and neither is BitPay, a major bitcoin payment processor. Without groups like these on board, independence day will fail.
Independence day's cheerleaders know this. Even the pro-independence day site warns users not to participate on August 1st if it looks like the majority of economic power in bitcoin doesn't support the move. If bitcoin users go ahead with their rebellion without miners and companies in agreement, bitcoin will split.
There's still plenty of time for things to get even wilder in the world of bitcoin while independence day looms. Some expert observers are already bracing for the conflict to become even more unhinged as the stakes get higher, and the deadlines get closer.
Bitcoin, never change.
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