Segwit2x Fork - What Was It?

In 2017, Bitcoin was enjoying massive growth.

At the start of the year, the price hovered around $1000, but by November it had soared to $7000. It was also fluctuating wildly.

The decentralized monetary system had been presented with the kinds of challenges that they weren’t prepared for.

The increase in demand for the cryptocurrency led to a massive increase in transactions, which then drove the cost of operations and the length of time it took for transaction confirmations.

If Bitcoin was going to scale in any real sense, it needed a software upgrade to its protocol. Which is where SegWit and SegWit2x were supposed to help.

Hard Forks vs. Soft Forks

It helps here to explain a little bit about how blockchain expansion works, and the suggestions for upgrading. Part of the issue with SegWit2x was that it required a hard fork.

A soft fork is, at its core, backward compatible. It allows for a shift in network rules and creates blocks that will still be recognized by existing software.

On the other hand, a hard fork involves taking a blockchain and splitting it into two permanently. It performs a complete overhaul of the rules that apply to the blockchain and completely redesigns it so that it will not recognize old software.

In some cases, a hard fork can split a network into two, creating different systems that allow people to choose which they wish to adopt. This was seen in the case of bitcoin and bitcoin cash.

However, a split can also be caused if enough people adopt both possible outcomes, causing disruption to networks and systems.

While SegWit required a soft fork, SegWit2x required a closer look at the entire infrastructure for bitcoin’s blockchain and offered up a significant challenge to the way it was governed and would behave.

The challenge of a hard fork became a battle of ideologies that would prove to be the undoing of SegWit2x.

What was SegWit2x?

SegWit2x was a proposal that would require a hard fork, and it built on the back of a soft fork proposal.

The soft fork, SegWit, was introduced in summer 2017 as part of a two-stage process that became known as the “New York Agreement.”

The bones of the SegWit2x protocol were proposed to challenge the issues with the expanding blockchain network. It would increase the block size from 1MB to 2MB, thereby helping to speed up the process.

Users had also been paying miners to make transactions, which had driven fees upwards - and SegWit2x would remedy that.

In order to implement SegWit2x, there would have to have been a considerable change in the rules of bitcoin governance.

However, the revolutionary aim was that SegWit2x would keep all existing bitcoin users on the same singular blockchain.

Who supported SegWit2x?

In the run-up to its proposed adoption, startups and miners were the most overt supporters of the new update. Fundamentally, this was based on the frustrations people had over bitcoin adoption. Bitcoin’s slowness caused other cryptocurrencies to overtake it.

Existing upgrades had caused massive amounts of frustration as they failed to address many of the issues that bitcoin was facing - and where a remedy was made, it often wasn’t anywhere near what it could have been.

While the initial Segwit proposal failed to excite miners, SegWit2x actively incentivized on-chain transactions, allowing them to turn a profit. With the time and investment that miners spend on their equipment, it was only common sense that they hoped to see better returns on their investment.

The other huge fans of the SegWit2x proposal were larger bitcoin companies like Circle and Coinbase. While they would ultimately suspend their support, their logic was similar to that of miners and startups.

Supporters of SegWit2x were looking for a simple and efficient solution to the problems of scaling up a blockchain. The SegWit2x proposal would double the size of the blockchain but was ultimately considered to be a linear scaling solution, rather than offering exponential growth.

This satisfied many of the shared aims of the various stakeholders. It would allow Bitcoin to remain desirable while still allowing them to expand. The ultimate objective for supporters of blockchain and cryptocurrency comes from a desire to see a scalable, decentralized system that can be quickly and easily adopted around the world.

Coinbase is adding consistently vast numbers of users, but Bitcoin is suffering. The fact that users are willing to invest in cryptocurrencies other than Bitcoin, mainly because of the failings inherent in the system, felt too risky.

The problem with Segwit2x

The opposition to SegWit2x came from node operators and developers. Part of the debate came from an inherently different understanding of what bitcoin should do. While fans of SegWit2x were hoping for a new global currency, developers and node operators look at bitcoin as a value store.

The risk of introducing a new protocol challenged this, and with people feeling like miners and businessmen would reap the rewards, the risks outweighed any potential benefits. While SegWit2x would increase the speed of transactions, the burden would have been felt more keenly by node operators who would have to store more data.

With opposition in both ideology and the rollout of the protocol, SegWit2x led to a battle within the blockchain community. While attempts were made to create a consensus on when and how the protocol should be implemented, it was ultimately too wide a gulf to bridge.

The SegWit2x hard fork was scheduled for November 16, 2017. Yet on November 8, the proposal was suspended due to the ongoing resistance to the protocol. Companies such as Coinbase and Circle revoked their support, and ultimately the protocol failed.