We are safe from a fork.... MOSTLY
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BIP-91 has just done what is called locking in.... I'm going to try to explain this as best I can so as many people can understand this as possible. However, I'm a bit under the gun trying to write this up before it locks in. So I can post this the very moment it does. So let us get started.
The TL;DR / outline is this:
- A major fork is unlikely.
- Tiny forks can occur all the time, worry about the big ones.
- You don't need to update your wallet just yet. You got time, and only need to update when you send money.
- If you are worried about forks make sure its a private wallet that you have the keys to. Any online wallets or exchanges make sure they are supporting a fork anytime there is one or hold crypto in your own wallet for a while.
- A hard fork will occur late this year and may be seamless or not.
BIP-91 Lock-in
BIP-91 (Bitcoin Improvement Proposal #91) is a kind of way to mix most of the competing bitcoin upgrades to where they play nice. A lock does not mean that everything has been implemented. It just means that the bitcoin network has committed itself to the rules in BIP-91. BIP allows for things called SegWit and 2x to both occur and play nice with each other. This helps to avoid a hard fork from these two camps. There are many different groups in bitcoin more than just these. SegWit and 2x were the two major groups in conflict.
Now lets cover what a fork is.
Image 2 Public Domain
Technically anyone can fork a blockchain they have access to. A fork is just two copies that now how different rules for working. Let's say you create your own. How many people will be using it, only one. Every transaction that occurred before the fork will be in both copies. So if you added a friend to your copy. This friend also fully owned half a coin before your fork. He would now own both half an original coin and half your new coin. The same is true for if he had 3 whole coins. He would still have 3 of the original and 3 of yours. If he bough some coin from you after the fork, he would only have those and none of the original. And if he bought some coin from the original network after the fork he would only have the original coin.
So why do people sometimes loose coins in chainsplits/forks? And what makes this BIP help to avoid one for now?
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Firstly how does this reduce fork problems. That is because these changes are being enforced through people signaling (similar to voting) in the bitcoin network itself. When a bunch of the crowd all agree to do something it gives it stronger influence. New forks would have to work to push for support by others. The main rush for this BIP has been that agreements and signaling had already occurred that would force bitcoin to upgrade as a group or fork. Why? Not long ago bitcoin transactions and their fees became a mess. The bitcoin network went above max capacity causing delays and costs to rise. So many different groups in the bitcoin community have started pushing even harder to implement changes. Previous signaling has locked us into changes but there was not enough agreement on the next initial steps to get there. This is why there was so much risk before and there is way less now.
So on to the loss. What causes people to lose one side of a fork aka a chainsplit when a copy of each balance appears on both copies? The problem here is full ownership of a wallet. A wallet is a numbered account that holds a balance. You can have multiple wallets easily. Real ownership of a cryptocurrency requires control of the private key(s) to your wallets. If you don't have the keys then who ever has it is holding it on your behalf. You are at their mercy if they choose not to support a fork. And asking them for the key is usually out of the question because they often mingle funds together in wallets to lower operating costs. Also if they are hacked and the keys are gotten you are out of luck. However if you have the keys and someone hacks your keys, you are out of luck. This is an important thing to consider when choosing between wallets, exchanges and online wallet services.
Will Bitcoin hard fork? Will I need to update my wallet?
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Yes and no. BIP-91 starts a soft fork process that finishes some where around August 22nd after a series of various signalling requirement dates. Any miner not signalling on these various dates before the final activation are kicked off the network. A soft fork requires no update to regular users who just have wallets. If you are a miner you need to update ASAP. However, BIP-91 also sets a deadline for implementation of 2x. If 2x is activated it will be incompatible with the previous version. This will occur around November 16th. Various groups will have to finish and agree to the changes by then or a large group could fork. Hopefully all the wallets and exchanges will smoothly update before that occurs. Either case as long as you have the keys or the organization upgrades you will be fine. Even if you don't update your wallet after the hard fork you are fine until you send money or a message. You can hold it without an update if you control the private keys. You only need to update before you interact with the network.
Why should we even upgrade bitcoin in the first place?
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Bitcoin needs to remain solid but also improve. The times of slow transactions and higher fees indicates an update is overdue. These trying times are actually a good thing for the cryptocurrency community. It gives us a battle grounds for the best solutions to rise to the top, this should be embraced. Also these fixes will cause in my opinion the price of Bitcoin and Steem to continue their moon (climbing up high in value) trajectory. This is an awesome time to be alive, we have a free market economy maturing quickly before out eyes. This is the future of currency, you are the bank, you contribute to the rules with your choices of currency. Embrace it.
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Like, questions, comments, dislike? Please comment. Let me know how I can improve, how you disagree, etc.
