Miners, the development community and businesses have finally agreed on a scaling solution. Over 63 percent of bitcoin’s hash power is now signaling for the activation of Bitcoin Improvement Proposal (BIP) 91 or Segwit.
Since early July, traders and investors have panicked due to the possibility of a potential hard fork execution and chain split, an event in which the bitcoin blockchain splits into two and creates two bitcoins.
However, since then, the scaling debate has seen significant progress, mostly because of the pressure of the community’s user activated soft fork (UASF) proposal and Barry Silbert-led Digital Currency Group’s Segwit2x proposal.
The general consensus amongst the community and industry in regard to the codebase of Segwit2x was that it was not ready for activation, production and implementation. It lacked testing and the timeline was highly unrealistic. As a result, the mining community has agreed on activating BIP 91, a solution created by James Hilliard.
BIP, also known as the “Reduced threshold Segwit MASF,” is very similar to the original Segwit Bitcoin Improvement Proposal. The difference is that it allows miners to activate Segwit with a majority threshold that is lower than 95 percent.
The motivation of the BIP 91 was that the redeployment of Segwit will require significant testing and will ultimately delay the activation of Segwit, which is a viable and practical solution to many existing problems.
“This BIP provides a way for a simple majority of miners to coordinate activation of the existing segwit deployment with less than 95% hashpower. For a number of reasons a complete redeployment of segwit is difficult to do until the existing deployment expires,” the BIP 91 proposal read.
Like Segwit2x, BIP 91 allows miners to activate Segwit with a 80 percent majority threshold. At the moment, hash power signaling BIP 91 is at 63.2 percent.
But, the more important aspect of the hash power signaling BIP 91 is that Bitmain’s Antpool, Bitcoin.com and BTC.com, which were all against Segwit, are signaling for Segwit. Miners are now convinced and motivated to activate Segwit as a short-term scaling solution and work towards a new scaling solution in the future with sufficient time to test new software and codebase.
Experts including Blockstack co-founder Ryan Shea also emphasized that Segwit is like a “Swiss Army Knife” of a solution because it fixes most of the problems bitcoin and bitcoin-based platforms are currently struggling to deal with.
“Anyway, “Segregated Witness” or “SegWit” is a Swiss army knife in terms of benefits. It leads to improvements on so many levels it’s actually surprising. It’s really, really good. So good that it’s worth listing out all of the benefits. It fixes the substantial transaction malleability problem once and for all, enabling second-layer scaling solutions like Lightning. It 1.7x’s the # of single-signature transactions per block and up to 3.7x’s the # of multi-signature transactions per block.” said Shea.
Bitmain and other mining pools previously introduced their intention to hard fork the bitcoin network and create a new persistent blockchain network. However, it has become evident that a hard fork will not be executed and a new blockchain network will not be created because Bitmain and the rest of the mining community have agreed to the activation of Segwit via BIP 91.
Unlike BIP 141, the original Segwit proposal, BIP 91 does not have an established due date. Hence, Segwit can be activated as soon as the majority hash power hits 80 percent. The hash power supporting BIP 91 increased from nearly zero to 63 percent within days. The possibility of hash power signaling BIP 91 increasing to 80 percent within this week is exceptionally high.
The market has already started to react to the mining community’s move to BIP 91. Bitcoin price has increased from $1850 to $2230 within 2 days.
Featured image from Shutterstock.
Last modified: July 13, 2020 3:12 AM UTC