BIP 91 locked in as the majority of miners, 90% of the hash power signalled for the soft fork. This means that the miners intend to trigger SegWit2x. This means that August 1st shouldn’t have any significance and BIP 148 will not be happening.
What is BIP 91? (Bitcoin Improvement Proposal 91) is a piece of code that makes it easier for the blockchain network to adopt Segregated Witness or SegWit. This is an upgrade that aims to fix the transaction malleability. This bitcoin improvement proposal therefore overrule BIP 148 that posed a risk of causing the bitcoin network to split and creating two separate chains with two separate coins.
The aim of BIP91 is to prevent a chain split from happening by making BIP148 and SegWit2x compatible with one another. As BIP 91 has activated and is the largest blockchain this means that the network will only accept SegWit signalling blocks. Most of the community does not want the split as that will cause uncertainty and will make the already volatile price potentially even more so.
Because 90% of the hashing power has already signalled for BIP 91, BIP 141 is enforced using the same technique as BIP 148. Hence the split will not happen.
What’s the point of this?
You’ve probably noticed that sometimes there’s a delay with transaction confirmations. SegWit is essentially a fix for that. As bitcoin is now widely used the network just cannot handle the 1MB block size limit with all of the transactions coming in. The new update will increase the block size to 2MB. This will result in faster transactions and lower fees for the users.
Why has all of this caused so much fuss?
As blockchain is a decentralized ledger it needs all of the miners to accept the changes and come to a consensus. The rules that are used by the vast majority of the miners are compatible. If some nodes accepted transactions that some nodes reject, the block would be considered invalid. This could cause double spend issues if that same node is also a miner. These consensus rules concede transactions to lock up and unlock bitcoin in many different ways at the same time.
So here it is vital that the network reaches a consensus to make sure everyone is adhering to the same rules. Which in fact has just happened as 90% of the total miners hashing power signalled “bit 4” to show their support to go ahead with SegWit2x and hence there’s no need for a split.
What is Segregated Witness?
Segregated Witness is basically an add-on to the bitcoin code that carries signatures and some extra data. The data that the nodes carry is not hashed along with other parts of the transaction into its ID. This means that both new and old nodes will consider these transactions that contain signatures in the Segregated Witness valid.
Segregated Witness or SegWit is essentially where data that is related to the signatures is removed from bitcoin transactions. That makes their size smaller, this in turn makes the blocks smaller. As a result more transactions can be included in a block. Fixing the current scalability issue
The old nodes will accept these transactions as they essentially don’t see the signatures and don’t require them. New ones accept them because the signature is in the Segregated Witness. In addition to this because both of them hash the transaction data into the same transaction ID, all agree on the way these blocks are made up, hence agreeing on the structure of the entire blockchain.
With this may occur a in issue: if the signatures no longer have an effect on the makeup of the blockchain, it no longer serves as proof that the signatures were in fact included in the transactions. To make sure that they indeed are included in the blockchain, SegWit enabled miner adds a trick. It creates a Merkle Tree out of all the Segregated Witnesses. That in essence mirrors the transaction tree.
Where does Paxful stand?
We’ve been receiving a lot of questions and emails asking about whether we would support 2 different coins on Paxful. This now should not be a concern. Paxful is supporting the original bitcoin developers bitcoin scaling approach as this is extensively researched and tested. Because Paxful is using BitGo multi signature wallet infrastructure to handle our hot wallet and bitcoin deposits no bitcoins will be lost during potential hard fork and afterwards all users coins will be safely used in most favoured blockchain by the community and which is used by other bitcoin businesses as well.
As BIP 91 has activated there will be no delays or issues with the transactions and withdrawals on Paxful.