Bitcoin2X is coming. From 17 November the Bitcoin blockchain is about to separate once again, forking off to create Bitcoin2X. Before you think this is simply just another variant of Bitcoin Cash, the cryptocurrency that split off from Bitcoin earlier this year, Bitcoin2X represents a far bigger deal than simply creating a new hard fork.
What is Bitcoin2X and how does it differ from Bitcoin Cash?
Bitcoin2X is, like Bitcoin Cash, a “fork” off of the original Bitcoin blockchain. A fork means that previous transactions made in Bitcoin are replicated in Bitcoin2X, but all future transactions will be entirely independent from one another. It’s the same process that Bitcoin Cash underwent when it split from Bitcoin on 1 August.
Bitcoin2X is a brand-new cryptocurrency that has been created from the original Bitcoin blockchain and Bitcoin technology. Like Bitcoin Cash, Bitcoin2X is designed to improve Bitcoin as a whole, unlike Bitcoin Cash, Bitcoin2X focuses on increasing transaction block size limit instead of simply speeding transactions up via something called SegWit. SegWit split the witness of the transaction from the transaction itself, allowing witness data to be compressed down and free up more space for transactional data in each block.
What Bitcoin2X proposes to do is use SegWit2X, a protocol that uses SegWit while also doubles transaction block size from the current 1MB limit to a 2MB limit. This means it will create a hard fork from the Bitcoin Blockchain as Bitcoin continues to trundle along on 1MB transaction limits. Seeing as the price of Bitcoin is skyrocketing as more people are starting to use it, being able to process larger transactions quickly, instead of splitting them across lots of blocks, is a boon.
If that rather simple overview is a tad confusing, I’ve got bad news for you, things get more dense when you get into the pros and cons of Bitcoin2X.
Why does Bitcoin2X exist?
The simplest way I can explain the existence of Bitcoin2X is that, basically, nobody knows what comes after Bitcoin.
Having placed a hard limit on bitcoin transaction sizes to curtail DDoS-style abuses of the Blockchain on fraudulent transactions, Bitcoin can’t scale like intended by its creator Satoshi Nakamoto. This means Bitcoin has to change to survive, but there’s no clear idea how this split will occur. Initially it was looking as if Bitcoin2X wouldn’t really be a new currency, just a change to the rules of Bitcoin. However, over time, it’s looking more than likely that a new currency will emerge come 17 November.
The intention of having faster transactions means that Bitcoin can go back to being instantaneous like it used to be. In its current form, Bitcoin transactions actually take longer than exchanging many global currencies. Some exchanges have overcome the speed problem by doing “off chain” transactions that exchange before they’ve been confirmed on the blockchain. As you can imagine, many do not believe this solution is suitable and therefore something needs to be done – enter Bitcoin2X.
What’s the problem with Bitcoin2X?
Other than being a divisive measure to solve Bitcoin’s scaling problem, there are a handful of other worries around the forking of the Bitcoin blockchain into Bitcoin and Bitcoin2X. Because this is a “hard fork”, instead of the “soft fork” that was Bitcoin Cash, there are a plethora of new problems that need to be overcome.
One issue is the worrying rise of the “replay attack”. In the case of Bitcoin’s blockchain, replay attacks – which are also known as playback attacks – use information provided as part of one chain to recreate them on the other. This means that, when the Bitcoin blockchain is forked and the Bitcoin2X blockchain begins, both chains will share the same transaction information prior to the fork. This, essentially, duplicates all past transactions and means someone could use those previous BTC again – despite the fact they actually only exist once.
Because Bitcoin2X lacks replay protection, this is a very possible threat that could see merchants out of pocket as people buy goods with non-existent BTC, while keeping the real BTC for themselves. Exchanges and startups are working on solving this problem, but it’s a lot tricker than it may sound so, until it actually happens, it could be a killing blow against Bitcoin2X.
Should you care about Bitcoin2X?
Armed with all this information, the real question is, should you care about Bitcoin2X?
If the hard fork on 17 November doesn’t come to pass due to the reasons stated above, you’ll receive the same amount of B2X as you have in BTC. This means you’ve got some B2X to play with and can do with it as you please, either selling it for BTC or opting to keep it and see how B2X plays out.
The biggest impact Bitcoin2X will have on you is if miners and exchanges decide to adopt the new cryptocurrency. If they jump ship to the new currency, you’ll see Bitcoin transaction speeds lengthen, with fees rising. It’s also likely the value of Bitcoin would tank. If B2X doesn’t take off, everything will carry on as normal with Bitcoin and people will probably continue debating what the next step will be for the cryptocurrency.
It’s likely that, whatever the outcome, Bitcoin will survive relatively unscathed as it has the bonus of being the posterboy of crypto. Those outside of the Bitcoin/Blockchain world still believe it’s the standard-bearer and, in some cases, the only cryptocurrency available.