SegWit2x – What is it and How Does it Work?

0
190
SegWit2x - What is it and How Does it Work?
SegWit2x - What is it and How Does it Work?

If you are into bitcoin or cryptocurrencies, the word “SegWit2x” probably rings a bell. The hard fork SegWit2x is perhaps one of the most controversial terms in the blockchain world. In short, the SegWit2X hard fork aimed to make bitcoin transactions easier and more efficient by increasing the block size.

Before that, another fork, SegWit, was launched, which resulted in the blockchain forking into several independently operating chains – Bitcoin Segregated Witness and Bitcoin Cash. In this article, we will be discussing what SegWit is and how it does work.

What is SegWit2x

SegWit2x is a proposed software upgrade designed to increase the block size limit and increase Bitcoin’s overall transaction processing speed. Despite being described as a hard fork of Bitcoin technology, it was never implemented.

History

The original SegWit optimisations are credited to the developers of “Bitcoin Core”, the open-source bitcoin community centre. Developer Pieter Wuille launched SegWit in 2015 to increase transaction volume per Bitcoin block.

In contrast, SegWit2x is not yet supported by Bitcoin Core, and during the implementation of the original SegWit, SegWit2x will also create a block size increase process to allow for more transactions.

Its usefulness was questioned due to the debate over using SegWit2x. The most interesting thing about Bitcoin is that it allows all miners utilising the system to change the rules or create a new set of rules by forking Bitcoin. This is how SegWit forks exist.

How SegWit2x Works

To understand how SegWit2x works, it is first necessary to examine the difference between hard forks and soft forks in relation to blockchains. A hard fork refers to a revision of the rules for the blockchain. This is a major change in the blockchain code that makes old blocks incompatible with the chain being rebuilt.

The result of a hard fork is the splitting of the affected blockchain into two parts. It is also possible to split the cryptocurrency network in two if it is not fully taken over with a hard fork. If enough miners, nodes, validators, or other entities on the network adopt the proposed hard fork, they could force the blockchain to split.

Soft forks, on the other hand, require a change in network rules and backward compatibility with newer blockchains. This means that data from the old block is merged into the new block, and the blockchain continues to exist.

Blockchain Concerns

One of the most worrying issues Bitcoin faced at the time was scalability. Because the block size on the Bitcoin blockchain is limited to 1 MB (megabyte), the number of transactions per second that the network can handle is limited.

Cryptocurrency developers and enthusiasts have grappled with this issue, but the debate over how to effectively scale the network is difficult and contentious. Segregated Witness (SegWit) was proposed by developer Pieter Wuille in late 2015. SegWit proposes moving witness signature information, which takes up most of the available space within a block, to Coinbase transactions. This transaction is the first to be recorded in the new block.

Removing this information increases the amount of data that can be stored in a block while implementing a new method of determining block size – the block weight unit. Units of weight (WU) allow the Bitcoin blockchain to vary the size of blocks based on the block weight limit of 4 million WU.

The goal of SegWit is to increase total transaction capacity through a soft fork mechanism that does not trigger a split. Segwit2x is trying to increase the block size limit in megabytes to improve transaction verification and network speed.

SegWit2x Supporters

Prior to the SegWit2x release date, miners and startups tended to be the most vocal advocates of the new protocol. They have often argued that Bitcoin’s inaction caused competing cryptocurrencies to overtake the leading digital currency and that existing upgrades were insufficient to alleviate the problem.

SegWit2x Opposition

On the other hand, developers and node operators often resist adoption. They propose that Bitcoin should be a store of value and not a payment system. Furthermore, they argue that the risks of the new deal outweigh the potential benefits. Some also believe that miners and companies will benefit disproportionately from the protocol.

Disadvantages of SegWit2x

When SegWit was introduced, the block size was automatically increased based on the transaction size. Therefore, Segwit2x is unnecessary as SegWit allows the size of the block to vary depending on the unit weight of the block.

SegWit2x was controversial (partly due to its status as a hard fork), and its developers couldn’t agree on its launch. The hard fork was initially scheduled for November 16, 2017. However, the leaders of the SegWit2x movement suspended the hard fork on November 8, 2017, due to ongoing disagreements and a lack of broader consensus among participants.