A number of Bitcoin companies and miners have agreed to run code that will implement a hard-forking increase to the non-witness data in blocks roughly three months after the activation of Segregated Witness (SegWit). According to some of its proponents, the proposal, known as SegWit2x, is said to be the only viable solution to the Bitcoin scaling debate.
However, agreeing to initiate a hard fork without knowing how speculators will react to such a change comes with risks. If there is not full support for the hard fork from bitcoin holders, the end result could be a split of Bitcoin into two separate cryptocurrency networks, which could cause extreme brand confusion among the general public (depending on the severity of the split).
In addition to the potential risks of a permanent split of the community, SegWit2x also ignores tools that could be used to get the intended benefits of this particular hard-forking increase to capacity without the possibility of a network split.
Perhaps most troubling, SegWit2x ignores the reasons as to why Bitcoin is useful in the first place.Speculators Call the Shots
While the original Medium post regarding the New York Agreement claimed the signatories accounted for $5.1 billion worth of monthly on-chain transaction volume (more than half of the entire network for April), the general view of SegWit2x from bitcoin holders is unclear at this time. Companies representing large amounts of bitcoin holdings (Digital Currency Group, Coinbase, Xapo, etc.) have signed onto the agreement as well, but we have yet to see speculators have the chance to set a price for the hard-forked chain.
As of now, the hard-fork portion of SegWit2x appears to be contentious, which means exchanges are likely to list both the original chain and the chain with a hard-forking increase to the block size limit. Companies that take custody of their users’ bitcoins will need to allow their users to withdraw both coi...