In this article, our research team put together facts we think our readers need to know about the upcoming Bitcoin upgrade. Although our publications are usually focused on Ethereum, we believe this is an important event that will impact all cryptocurrencies and we expect some volatility during the upcoming weeks, specifically for Bitcoin.
1. The date and the event
August 1st, 2017
Bitcoin undergoes a Fork to improve scaling
2. What’s a fork?
In the Blockchain technology, every time you need to change the rules of the network a fork must take place. Until today, it’s still the only way to change the protocol. Depending on the required update and if a consensus is reached in the community, a soft or a hard fork might take place.
3. What’s the difference between a soft fork and a hard fork?
A Soft Fork is a backward-compatible change to the software protocol, used for instance to add new transaction types and only requiring the miners and users to understand the new transaction type.
A hard fork is a permanent divergence from the previous version of the blockchain, and nodes running previous versions will no longer be accepted by the newest version.
This article does a great job providing a non-technical explanation for specific terminology for words like nodes, ledger, blocks, mining, wallet, private key. It also gives some more info about the soft fork and hard fork.
4. The problem Bitcoin is facing
When using Blockchain, transactions are represented by Blocks. As more and more Bitcoin transactions are happening (Buying, selling) the weight of these transactions is causing processing delays in the verification and validation of transactions. Therefore, the network is getting slower and slower and the processing fees keep increasing.
To approve a fork, the Bitcoin community needs to reach an agreement. The community nowadays includes Bitcoin’s developers, Businesses (Exchanges and start-ups) and Miners. In short, we have different players, different agendas, capabilities and ideologies. Therefore, reaching an agreement on the next step for Bitcoin is no easy task.
The following wikipage provides updates on the status of the consensus among the Bitcoin community,
