Cryptocurrency supporters generally welcomed the cancellation of SegWit2x in the wake of disagreement among developers and miners over the proposed solution to the need for a larger bitcoin block size. Crypto observers generally believe the fork would have had a negative impact on bitcoin.
Bitcoin’s price has witnessed some volatility since the cancellation was announced. A short-term spike to an all-time high just below $7,900 in response to the news was followed by a flash crash. The bitcoin price dropped 4 percent, falling from $7,408 on Wednesday to $7,143 early Thursday.
Market Sorts Out Cancellation
Many traders had maintained larger bitcoin positions in anticipation of the SegWit2x airdrop of bitcoins that was expected following the fork. The fork cancellation dashed hopes of “free coins,” causing traders to rebalance their portfolios to include more altcoins.
As a result, altcoins registered gains on Thursday, as multiple top-tier coins posted double-digit price increases and capital flowed back into their markets from bitcoin.
Cancellation Points To Consensus
Several observers believe the cancellation is in the cryptocurrency’s best interest.
“When 2x was called off, it became immediately clear there’s greater consensus for a single bitcoin blockchain, and therefore there is greater value retained in the bitcoin ecosystem,” Ned Scott, CEO of Steemit, a blockchain based social platform, said in a prepared statement.
Many cryptocurrency advocates see forks as problematic.
“While occasional forks due to deep philosophical differences are inevitable, habitual forks damage the network effect of any blockchain and undermines security and faith in the system,” said Bharath Rao, CEO of Leverj, a platform for crypto derivatives. “Cryptocurrency is still experimental and repeated forks can fracture the community into tiny siloes and undermine the very concept of non-governmental money.”
Cancellation Mitigates Risk
“Every small mitigation of a risk enhances value, and this event is no different,” Rao said. “We hope to see a continuous stream of risks eliminated and value enhanced over the next several years.”
“Canceling SegWit2x is a step in the right direction, and it looks like Bitcoin Core’s roadmap will prevail for now,” said Abhishek Pitti, CEO of Nucleus Vision, a provider of sensor technology. “While the intent behind increasing the block size was to make the bitcoin network more efficient, going ahead with the fork without broad community consensus would have caused more harm than good for bitcoin.”
Long-Term Outlook Positive
Guy Zyskind, CEO and co-founder of Enigma, a coin mixing system, expressed a long-term view.
“Indefinitely postponing the fork is a healthy move for crypto assets,” he said. “The ability of the bitcoin community to self-correct and avoid a contentious fork inspires confidence and shows how the ecosystem is entering a more mature phase. We look forward to seeing how on-chain scaling and other important improvements to the protocol will be addressed going forward.”
The hard fork would have split bitcoin into two competing blockchains, and the fight for supremacy could have been ugly. Bitcoin services expected to undergo serious disruptions, and there was a high probability that some users would lose funds due to replay attacks and other exploits.
That bitcoin avoided fracturing in this manner is positive for its long-term prospects and will encourage so-called “hodlers” — investors with extended investment horizons — to increase their positions.
Featured image from Shutterstock.
Last modified: March 4, 2021 5:01 PM