Bitcoin has undergone numerous metamorphoses since its introduction to the public in 2009. These changes have of course aroused various debates in the digital currency circle with recent talks about impeding Bitcoin hard fork taking center stage.
If memory would serve me right, Ethereum, a recently developed digital currency, underwent a hard fork in late 2016 that saw it split into two distinct currencies run on different software with distinct rules. Now of all the changes, the Bitcoin has undergone, this impending Bitcoin hard fork threatens to split the Bitcoin coin into two possible digital currencies.
However, what is a Bitcoin hard fork? According to coinbase.com, “fork” is the possibility of a Bitcoin block chain taking a two-pronged path going forward due to the introduction of new rules or alteration of its network or software that would affect the determination of a valid and invalid transaction. In the case of Bitcoin hard fork, it would entail the introduction of new software with very different set rules. This software, of course, would be incompatible with other previous software. The contention is which rules would be favored and accepted by a majority of users of the network (SeWit or BU).
On the one hand SegWit – Segregated Witness would allow the miners more control of the transactions increasing the block limits whenever necessary and control of the mining fees charged. On the other hand, BU- Bitcoin Unlimited would make Bitcoin transactions more decentralized with each participant having an input on the charges and changes within the Bitcoin network. Both options appeal to particular parties and present their merits, which make it harder to decide on which path to take.
There is scant know-how related to Bitcoin hard fork, which makes it harder for the digital currency stakeholders and users to decide on which path is most appropriate. This is usually a “hard” decision for the users to make as either decision has its merits. One way to break the impasse is through establishing a threshold of acceptance, which would then help in deciding the path to take if the acceptance rate is reached. With no clear agreement, it is possible that the Bitcoin would be split into two distinct block chains giving rise to two possible digital currencies.
Bitcoin hard fork is meant to facilitate the rate of transactions, which are hampered by current set rules, and limits while increasing the transaction amounts. However, with a possible split, there is also a chance for the coin to lose half of its value, we can only wait to see the results. It is also worth mentioning, that a lot of bagholders, will be lined up to withdraw their bitcoin to cash.