Is There a Valid Reason to Go Ahead With SegWit2x?

There are many different opinions about the activation of SegWit2x. As most people are well aware by now, on August 8 the Bitcoin network successfully locked in the activation of Segregated Witness. SegWit will be going live in two weeks, but come November there was supposed to be a hard fork to increase the block size to 2MB. According to Samson Mow, that hard fork has been canceled.

What is the Deal With the SegWit2x Hard Fork?

There is a lot of conflicting information regarding the future activation of SegWit2x. Most Bitcoin users will recall this scaling solution agreed upon through the New York Agreement. It is also one of the main reasons why the Bitcoin network finally locked in the activation of Segregated Witness after nearly a full year of stalling, political discussion, and the Bitcoin Cash hard fork. That does not mean SegWit2x will activate without a hitch, though.

Originally, SegWit2x was to be introduced as a hard fork. Just because its supporters wished to activate Segregated Witness did not mean they would follow the plan of Bitcoin Core. In particular, the part about forcefully upgrading the Bitcoin block size to 2MB has kept the community divided. If SegWit2x were to hard fork and attain enough traction to keep the chain alive, we would effectively be dealing with three different instances of Bitcoin come November 2017. (This would not include fake Bitcoin clones like BitcoinPlus and BitcoinDark.)

However, the above tweet from Samson Mow suggests there will be no hard fork for SegWit2x. It is unclear whether this is an official statement that holds any merit, but it would make a lot more sense not to have another blockchain fork unless it were absolutely necessary. After all, the people who want larger blocks can easily support Bitcoin Cash, even though that network does not have Segregated Witness in place. In theory, that is not necessarily needed to solve the transaction throughput issue, but SegWit is about so much more than just that.

According to Hubert on Twitter, a 2x hard fork is “unnecessary” as there will be no need for a 2MB block size increase once SegWit successfully activates. Not only will Segregated Witness increase the Bitcoin transaction throughput, but it also paves the way for solutions such as Lightning Network, Rootstock, drivechains, and even sidechains if need be. A lot of information can be moved off the main Bitcoin blockchain which would only keep the bare essentials of transactions. A 2MB block size increase would do the same as well, but pushing for Lightning Network is perhaps a better solution.

That is much easier said than done. Despite phenomenal progress being made on Lightning Network, implementing it for Bitcoin may take another three to twelve months. This is not a short-term scaling solution, even though it has much more long-term potential than a flat-out block size increase would. There will always be a certain trade-off regardless of which solution receives the majority of support in the long run.

There is still a lot of signaling support by mining pools for SegWit2x. Do keep in mind that this only reflects the intention to support it when the time arrives and is not a full commitment. Now that BIP141 has been properly locked in, it will be interesting to see how many entities back out of the New York Agreement in the coming weeks and months. It is possible everyone supporting SegWit2x may find themselves on the losing side of this scaling war.