SegWit vs BTU- How to Prepare for A Bitcoin Hardfork
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LINKS FOR ADDITIONAL READING FOR THIS VIDEO & ALL INFO IN TEXT DOWN BELOW
Bitcoin takes too long and costs too much to process transactions. The time it takes to process a transaction is a result of the current block size, if you want your transaction to process faster, you’ll need to pay higher transaction fees. Unfortunately this has led to both slower transaction times as well as higher transaction fees.
Segwit- Adjusts how much information is recorded in each block, this can be implemented as a soft fork, can be done quickly and will not split the blockchain. It is not a permanent solution, but some will argue that a permanent solution is not necessary at this time, rather we just need to improve transaction times.
If segwit is implemented, this opens the door for an additional improvement to the bitcoin protocol in the form of what is called the Lightning Network. You can learn more about this in my previous video titled “The Lightning Network- Opening the World to Streaming Money” I will provide a link to this video down in the description, so if you want to learn more about that please check it out.
Segwit Video: https://youtu.be/bKslHzOFex8
Lightning Network Video: https://youtu.be/kqwXEttuDg4
Bitcoin Unlimited- Increases the actual size of the blocks, thus allowing for more transactions to be recorded in each block. Since any increase of block size over 1megabyte would change the rules of Bitcoin, this would result in a hard fork. This would take much longer to implement and runs the very real risk of splitting bitcoin into two different coins, which will very likely result in a decrease of the price of each coin for quite some time before they can recover. When Ethereum hard forked, it took about one year for the price of ether to recover.
What are the ramifications if there is a hard fork of the bitcoin blockchain? There are many variables in this problem
First, will the online exchanges, hardware wallets and third party wallets support BTC, BTU, or both?
Will your BTC remain BTC? Will it be converted into BTU? Will you receive an equal amount of BTU for your holdings of BTC?
I should note that BTC stands for bitcoin core, which is the name of the long standing development team behind bitcoin. and BTU stands for Bitcoin Unlimited, the development team with Roger Ver at the head.
In order for you to make in informed decision as to what is the best way to prepare for this possible hard fork, I strongly suggest you investigate the stance of the company behind where you store your bitcoins. For example, if you keep your bitcoins on an exchange, your bitcoins will be subject to whichever side they choose to support.
If you store your bitcoins on a hardware wallet, you will also be subjected to whichever side they choose to support.
The Trezor and Ledger and KeepKey hardware wallets have all announced that they will support both BTC and BTU if Bitcoin Unlimited is implemented.
If you store your bitcoins on a local wallet where you control your private keys then you will receive an equal amount of BTU for your holdings of BTC. Which is exactly what happened when Ethereum hard forked and resulted in the creation of ether classic.