August 1 2017, Judgement Day for Bitcoin
A lot of Bitcoin users are confused and still don’t know exactly what will happen to Bitcoin on August 1 2017.
This article will explain each and everything and will also list out the precautions that a Bitcoin user must take care of.
So what exactly is going to happen to Bitcoin on August 1 2017. Before understanding that, first understand the current situation.
Bitcoin transactions are stored in a Block of size 1 MB. These blocks containing Bitcoin transaction are confirmed/validated by Bitcoin miners. Once, these blocks are verified, it gets added to Blockchain and then becomes immutable.
Bitcoin popularity is increasing day by day. It’s adoption as a mode of payment is also increasing.Hence, more number of Bitcoin transactions are taking place. More number of transactions will result in :
- More the number of unverified Blocks.
- Increasing the work of Bitcoin miners
- Miners are now charging high fees to mine the block
- Bitcoin transactions are getting slow and delayed.
Hence, the basic purpose of Bitcoin which was cheap,easy and fast remittance is getting defeated.
The Bitcoin community brainstormed about this issue. Various ideas, Bitcoin Improvement Proposals (BIP) were proposed to resolve the issues and scale up the Bitcoin network.
SegWit or Segregated Witness, a Bitcoin Imorovement Proposal was being put up.
SegWit Basically reduces the transaction size, thus creating more space in a block. Hence more number of transactions can be verified in the same size block.
Bitcoin miners are now required to signal for their support towards SegWit.
August 1, 2017 is the deadline till which Bitcoin miners can signal to support SegWit. Also on same date User Activated Soft Fork (UASF) will get activated .
What will happen to Bitcoin on August 1,2017.
On August 1, 2017, UASF BIP 148 will go live. UASF is a method to reduce the SegWit activation requirements. Without majority hashrate support it will create a serious chain split. With majority hashrate it will force SegWit activation.
Any Bitcoin block that does not signals for support of SegWit will get rejected.
This situation creates three possibilities:
One Single Bitcoin
If majority of the hash power signals to support Segregated Witness on or before 1 August 2017, the Bitcoin network will be upgraded smoothly.
In this case, no other Bitcoin Blockchain will be created and there will be only one single Bitcoin as it is now. No worries in this case.
But yes, Bitcoin price and volume may decrease further but only to grow further.
Two Bitcoins, Chain-Split
There is a possibility that SegWit won’t get activated. In this case UASF will be live, which means now two chains will be created in the Bitcoin Blockchain. Any Bitcoin block that does not supports SegWit will get rejected and will be added in the other chain.
Two chains means, two Bitcoins. ( like Ethereum and Ethereum Classic.)
In this case, let suppose of you are holding a Bitcoin, post the split, you will be holding two Bitcoins. It is because the original Bitcoin will be copied into the two chains.
Both the chains will then function depending upon who has the majority of hash power. Obviously that chain which has more hashing power will be demanded more and hence it’s price will increase.
Temporary chain split
On or after August 1,2017 if the SegWit activated Blockchain gains more hashing power, it is possiblle that the other chain created will get merged in SegWit activated chain. Hence, again coming back to only One Bitcoin. This will resolve the issue.
NOTE: In this case, one Bitcoin from the two created will get disappear. Hence, do not buy neither accept Bitcoins during that period.
A user who is worried about his Bitcoins is correct at his posotion. As the upcoming situation is the first time for everyone, amatuers won’t understand the problem and hence end up loosing their Bitcoins.
But following are the precautions that a user must take care of during the upcoming days:
- Don’t buy/accept Bitcoins these days as well as for a week after 1 August 2017. Resume the activities only when everything is clear.
- Store your Bitcoin in your own wallet, for which you control the private keys.
- Keep your Bitcoins offline on physical/paper wallet.
- Don’t store your Bitcoins on a any exchange/trading platforms/custodial wallets. If you have Bitcoins on trading exchanges, convert them to altcoins.
- Last, but not the least, be patient and don’t panic. Just secure your Bitcoins and relax for a while. Witness the History getting written in front of you.
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