Do we really need another Bitcoin Hard Fork?

As Bitcoin grows beyond its roots from just being the world’s first cryptocurrency into mainstream form of currency, several problems arise with regard to its scalability as user adoption increases. One amongst the several proposed solutions in the making to solve the Bitcoin scalability issue is Segwit2x.

Not long ago we saw BIP 141 soft fork or Segwit that involved removal of signature data from blocks, adding more transactional capacity to each existing block, thereby addressing scaling issues to an extent without any explicit changes to the block size.

These were the first steps to ensure activation of Segwit2x as per the New York Agreement within six months from Segwit activation. This increase in block size to 2MB technically will not actually centralise Bitcoin but the actual issue here is the implied transfer of power away from the Bitcoin Core team.

Hence around mid of August, the core team made an announcement that the upcoming Bitcoin Core release 0.15 which is due anytime now, will not be accepting connections to sides running Segwit2x which definitely can pave way for the next hard fork.

With the earlier report claiming that around 83% of hashing power remains committed to Segwit2x with 58 companies located in around 22 countries amounting to a total transaction volume of US$5.1 billion monthly, tensions definitely have escalated again with regard to reliability of the core network.

Although the road ahead for the core team has the Lightning Network, the ultimate scaling solution well set in place, miner support is very crucial in the short run and with the majority of the miners opting for Segwit2x over core might end up with ugly repercussions for the core team leaving them dead in the water very soon enough.

Another lesser known problem with the explicit increase in Block size is the proportional loss of nodes that tend to occur as block size increases beyond. Centralisation is another issue considering the block size increase to match mainstream adoption of Bitcoin.

Apart from implementation of the lightning network, a sudden block size increase to 2MB or even beyond will not solve any real long term scalability issues but a split in community or a “political fork” might result in loss of trust for the general community.

So to sum things up, technically on paper, Bitcoin could survive another hard fork in the coming months if the core committee and Segwit2x supporters do not come to a consensus. But such political mishaps will have a profound impact within the community rooting for Bitcoin and as a result Bitcoin prices can see massive volatility in the upcoming months.