First of all what is SegWit?
SegWit stands for Segregated Witness. It was created to enforce new rules and fix issues with Bitcoins protocol. Arguably the main intention was to help resolve short term issues with the amount of transactions Bitcoin could do per block (which is tiny compared to the likes of VISA for example).
We actually already have SegWit activated today, it occurred a few months back roughly at the distracting time Bitcoin Cash was created…
So what is the full purpose of SegWit?
If we take a look into a Bitcoin transaction, we can see there are 2 main parts. The first is base transaction data which shows Bitcoin being moved and to the new location. The second part is the cryptographic signature data which can be referred to as the witness. By splitting the transaction into two the speed of transactions could increase.
This issue with the second part is that Bitcoin signatures can be altered by almost anyone. Meaning that Bitcoin transactions can be altered by those relaying transactions or by miners within the blocks.
While this isn’t necessarily a problem as transactions are still valid and Bitcoin is still moved around. The problem arises when creating newer transactions which are dependent on unconfirmed transactions. Any new transactions need to have a reliable identifier which slows down the process.
Cue SegWit, which proposed to increase the block size by altering the definition of a block. By splitting the transaction into two and redefining the block size to one million units instead of bytes the witness signature data can be safely separated. So the witness data is moved to the end and only counts as one quarter of a unit. Essentially changing the average block size to 1.8MB as opposed to the current 1MB making more transactions possible and significantly faster.
In addition to this by moving the witness or signature data it becomes impossible to alter and the transaction ID cannot be changed.
So what is SegWit2x?
So SegWit was activated on August 24th 2017 which was technically a softfork meaning it was backwards compatible (if there were any major issues it wouldn’t be the end of the world). SegWit2x is the hardfork which is going to occur in a little over a week (Novemeber 16ish) on block 494 784 and increase the block size to 2MB. This will decrease the cost of transaction fees, allow more transactions per block and for a short period of time have many people stop moaning about high transactions fees.
As a result of the hardfork there will be two blockchains. The first being the original Bitcoin and the second being the SegWit2x version. So which one will become the more widely accepted and used Bitcoin? That’s the question everybody is asking, with the futures market strongly suggesting SegWit2x will be another altcoin.
There are many debating what’s going to happen after the hardfork and it is definitely going to be interesting to see.
I don’t really care about SegWit, but how do I get the free $’s?!
The good news simply by having Bitcoins you will be given the exact same amount of the new Bitcoin2x coin (SegWit2x). How? Because the hardfork creates an exact replica of the existing blockchain – there is a record of who owns all the Bitcoins meaning you are automatically entitled to the new SegWit2x coin when it is forked. So if you have 3 Bitcoins before the hardfork, you will have 3 Bitcoins and 3 Bitcoin2x after.
Of course there is a little more to it with regards to claiming them after the hardfork but there is no time limit on how long you can wait to claim them. My suggestion would be to wait until Trezor releases a blog post about how to do it safely. Don’t get tempted by putting it on an exchange and letting them give you the new coin at the time of the hardfork (could be risky!).
Keeping your Bitcoins Safe
I have shared many great resources for Bitcoins that I trust but when it comes to keeping my Bitcoins safe, I am paranoid unless I have them sitting in my Trezor. This is by far the safest and user friendly ways to store your Bitcoins and I highly recommend using one. You can read the Trezor Review I wrote under the Resources page. A Bitcoin Trezor can be purchased in the banner below for around $100 worth of Bitcoin.
If you don’t have Bitcoin you can purchase a Trezor from Amazon here with this link – Buy Trezor at Amazon.
What to do with your new SegWit2x coins?
Once you get your new SegWit2x coins you will surely see some insane volatility with the price as people pump the price and others dump their coins. A large part of the community is very vocal about their disinterest for this coin (changing their twitter names and wearing hats saying NO2X) while some of the big Bitcoin businesses are extreme proponents of it.
I am still torn with regards to what I will do with my SegWit2x coins. So likely I will watch it over a week or so and slowly dump it if it becomes just another altcoin not adopted by the masses.
Overall the need for an increased block size is very important with the growing popularity and acceptance of Bitcoin globally. SegWit have come up with a solution to the issue and we can expect to see much faster transactions with Bitcoin. I’m very interested to see where it goes following the hardfork in a little over a weeks time!