Bitcoin2X collapses as future of Bitcoin is thrown into disarray
Bitcoin2X is no more. Intended to launch on 17 November as an alternative to Bitcoin and Bitcoin Cash, Bitcoin2X fell apart at the final hurdle, plunging the future of Bitcoin into uncertainty as users jump ship to invest in Bitcoin Cash instead.
The idea of Bitcoin2X was to create a more-useful Bitcoin fork that allowed for increased transaction size and speed, bringing costs down in the process. Unfortunately, a small group of Bitcoin users didn’t believe in it and strong-armed the decision in their favour, leaving Bitcoin2X to fail before it had even started.
What was Bitcoin2X and how did it differ from Bitcoin Cash?
Bitcoin2X was, like Bitcoin Cash, intended to be a “fork” off of the original Bitcoin blockchain. A fork means that previous transactions made in Bitcoin are replicated in Bitcoin2X, but all future transactions will be entirely independent of one another. It’s the same process that Bitcoin Cash underwent when it split from Bitcoin on 1 August.
Bitcoin2X was intended to be a brand-new cryptocurrency created from the original Bitcoin blockchain and Bitcoin technology. Like Bitcoin Cash, Bitcoin2X is designed to improve Bitcoin as a whole, unlike Bitcoin Cash, Bitcoin2X focuses on increasing transaction block size limit instead of simply speeding transactions up via something called SegWit. SegWit split the witness of the transaction from the transaction itself, allowing witness data to be compressed down and free up more space for transactional data in each block.
What Bitcoin2X proposed to use SegWit2X, a protocol that uses SegWit while also doubles transaction block size from the current 1MB limit to a 2MB limit. This means it would have created a hard fork from the Bitcoin Blockchain as Bitcoin continues to trundle along on 1MB transaction limits. Seeing as the price of Bitcoin was skyrocketing as more people started to use it, being able to process larger transactions quickly, instead of splitting them across lots of blocks, is a boon.
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If that rather simple overview is a tad confusing, I’ve got bad news for you, things get denser when you get into the pros and cons of Bitcoin2X. You can, however, read our basic guide to all things Bitcoin to help get you up to speed.
Why was Bitcoin2X needed?
The simplest way I can explain the existence of Bitcoin2X is that, basically, nobody knows what comes after Bitcoin.
Having placed a hard limit on bitcoin transaction sizes to curtail DDoS-style abuses of the Blockchain on fraudulent transactions, Bitcoin can’t scale as intended by its creator Satoshi Nakamoto. This means Bitcoin has to change to survive, but there’s no clear idea how this split will occur. Initially, it was looking as if Bitcoin2X wouldn’t really be a new currency, just a change to the rules of Bitcoin.
The intention of having faster transactions means that Bitcoin can go back to being instantaneous like it used to be. In its current form, Bitcoin transactions actually take longer than exchanging many global currencies. Some exchanges have overcome the speed problem by doing “off chain” transactions that exchange before they’ve been confirmed on the blockchain. As you can imagine, many do not believe this solution is suitable and therefore something needs to be done – enter Bitcoin2X.
What was the problem with Bitcoin2X?
Other than being a divisive measure to solve Bitcoin’s scaling problem, there are a handful of other worries around the forking of the Bitcoin blockchain into Bitcoin and Bitcoin2X. Because this is a “hard fork”, instead of the “soft fork” that was Bitcoin Cash, there are a plethora of new problems that need to be overcome.
One issue is the worrying rise of the “replay attack”. In the case of Bitcoin’s blockchain, replay attacks – which are also known as playback attacks – use information provided as part of one chain to recreate them on the other. This means that, when the Bitcoin blockchain is forked and the Bitcoin2X blockchain begins, both chains will share the same transaction information prior to the fork. This, essentially, duplicates all past transactions and means someone could use those previous BTC again – despite the fact they actually only exist once.
Because Bitcoin2X lacks replay protection, this is a very-possible threat that could see merchants out of pocket as people buy goods with non-existent BTC, while keeping the real BTC for themselves. Exchanges and startups are working on solving this problem, but it’s a lot tricker than it may sound so, until it actually happens, it could be a killing blow against Bitcoin2X.