(November 9) A group of businesses and mining firms that use bitcoin's software to provide services decided not to go forward with a change in the rules on the bitcoin blockchain that would see block size doubled.
The decision came after months of acrimonious debate over following through with the execution of the second part of the plan called Segwit2x. The Segwit2x is explained in detail by Coindesk.
Past bitcoin hard forks
At the beginning of August, bitcoin experienced a hard fork that created bitcoin cash. The new, rival coin unilaterally increased the size of the total bitcoin block by a factor of eight.
The first part of the Seqwit2x agreement has been in effect since the beginning of September, as described in a previous Digital Journal article. The '2x' part of the agreement, which would double the size of existing blocks, was to come into effect the middle of November.
Another hard fork happened to bitcoin on October 28th resulting in the creation of another coin: Bitcoin Gold.
Pending hard fork created uncertainty
Because of the disputes over doubling the size of the blocks there was a cloud of uncertainty hanging over the future of bitcoin. This came at the same time that bitcoin set a new high above the $7,000 level.
Among those opposed to the 2x factor, litecoin creator Charlie Lee claimed that common sense had prevailed. Author and bitcoin commentator Andreas Antonopoloulos tweeted: "Put a fork in it, it's done".
In the initial tweets reacting to the proposed agreement, there were many strong supporters of a protest movement called "NO2X". The protesters included dozens of companies and users who added NO2X as a prefix to their social media names.
Bitcoin software requires a quite diverse group of stakeholders to agree to how the system operates and must approve of any change to the rules. There is no central authority or third party that can enforce any rules upon them. As a result, it seems that when some group suggests a rule change often others reject it.
Response to suspension of hard fork
Even many of those who supported Segwit2x were relieved that the agreement had been suspended. Gary Corem a former miner who signed the Seqwit2x agreement back in May said: "I am glad it is over. It was the right call."
Some supporters of Seqwit2x were resentful of some of the remarks made by "NO2X" proponents who often made disparaging remarks about them. Seqwit2x developer Jean-Pierre Rupp said: "I guess I can now pay more attention to more fruitful technical pursuits than following the news and fighting trolls online."
Bitcoin still needs change to allow more users and transactions
Many believe that bitcoin needs changes to serve more users and deal with an increase in numbers of transactions. it also needs to ensure transaction costs are not too high.
Developer Peter Rizun said: “We'll either bring bigger blocks to people [with bitcoin], or we'll bring the people to bigger blocks [on bitcoin cash].”
The failure to double the block size could very well increase investment in bitcoin cash that resulted from an earlier fork in bitcoin.
An opening for Lightning Network?
The Lightning Network praised the decision not to enlarge the block as some bitcoin users may decide to move their transactions off the blockchain onto the microtransaction network. Bitcoin has already implemented Segwit, which Lightning Network needs to operate. Litecoin has also implemented Segwit.
CEO of Lightning Elizabeth Stark tweeted: "Now that 2x is officially donezo, excited to get back to work building long term solutions like Lightning!"
On display recently at Scaling Bitcoin, a two-day technical conference at Stanford University, were challenges facing the Lightning Network technology. This included privacy in transactions and a better understanding of the economics of using the technology.
Some analysts are now speculating that the Lightning Network will not be enough to deal with increased user numbers and transactions. Others think that it will take too long to have the Lightning Network function as a solution.
This type of thinking have led some seeing bitcoin cash or litecoin as vehicles for quicker merchant payments.
An opportunity for bitcoin cash and litecoin?
Cofounder and CEO of Civic Vinny Lingham said: "We may start seeing more and more businesses move to bitcoin cash for on-chain transactions, due to the high cost of transacting on bitcoin, which is what Segwit2x was attempting to solve."
Jake Smith, the business developer of Bitcoin.com said he sold his bitcoin immediately after the news came out. Smith claimed that as far as he was concerned bitcoin had signed its own death warrant.
Segwit2x as a takeover attempt
Many opponents of the doubling of the block size saw Segwit2x as a takeover by some big stakeholders to make changes to the rules without gaining the support of everyone. To them the defeat of supporters of Seqwit2x shows the strength of the bitcoin community not its weakness.
Others saw the need for changes to the culture and community. Core contributor Eric Lobrozo said: "[W]e must continue with the research into forks and chain splits and building tools and defenses because it will almost certainly be tried again."
Another bitcoin developer Matt Corallo who had been active in feuds with Segwit2x supporters also favored the suspension. Corallo tweeted: "Let's take Segwit2x's failure as a learning experience – bitcoin's community is strong, and needs to broadly support any changes to bitcoin's consensus rules." Yet bitcoin blogger WhalePanda tweeted: "We won this battle... but they will keep coming to destroy bitcoin. We will not forget.”
Bitcoin's volatile price
After the decision was made to not double the block size investors were obviously relieved. The price of bitcoin rose to as high as $7,721. However, many investors must have decided that it was a good time to take some profits while others decided it was time to invest in other coins. The price quickly dropped off down towards $7,000 but was still most recently at $7,184.
While some saw the drop off as a sign that the bitcoin price was a bubble that was bursting, it was priced below $6,000 at the beginning of November.
There are many analysts predicting the bubble will burst including Nouriel Roubini Dr. Doom himself.
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