What is the bitcoin segwitz fork

Like Bitcoin XT, bitcoin classic saw initial interest, with about 2, nodes for several months during While your observation about bike shedding is a timeless one, what this tells us is how important it is to share a common goal. No significant miners run the new software, and the network continues to run the current rules.

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CoinSutra welcomes you to another Bitcoin hard fork mess! In a recently concluded Ia hard fork i. And now, again, the Bitcoin ecosystem, including every type of entity connected with it, is being tested because we have another Bitcoin hard fork scheduled for this November. I know some of you might wonder why this is happening because Bitcoin has already scaled, activated SegWit, and Bitcoin Cash supporters have already parted their ways with bigger block sizes. SegWit2X is segwits fancy derivative name given to a combo of scaling solutions i.

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Bitcoin gold was created when bitcoin forked again in October. Meanwhile, bitcoin continues to hit new record highs. We asked Nolan Bauerle, the director of research at CoinDesk , to come in to help explain what exactly happens when a cryptocurrency splits and whether it undermines the strength of the coin. Following is a transcript of the video. Sara Silverstein: So you’re here to help me understand what exactly a bitcoin fork is. Bauerle: So to think of these blockchains in a very simple way we can see them as cryptographic keys that move memory. The rules by which the memory is moved are set by the miners themselves.

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Some people think that this is going to revolutionize Bitcoinwhile some have been so disillusioned by it that they preferred going their own way with a whole new form of Bitcoin called Bitcoin Cash!

How do transactions in a Bitcoin work? Suppose Alice wants to send a certain number of bitcoins to Bob. How does the transaction system in Bitcoin work? Bitcoin transactions are very different from Fiat wallet transactions.

There are two sides to a transaction, the Input, and the Output. This entire Transaction will have a name that we will figure out in the end. Free Trial. In order to make this transaction happen, Alice needs to get bitcoins which she has received from various previous transactions.

Remember, like we said before, in bitcoins, each and every coin is accounted for via a transaction history. These three transactions will be added together and that will give you the input transaction which we shall call TX Input. Diagrammatically, it will look like this:. The output basically will have a number of bitcoins that Bob will possess post transaction and any remaining change that is left over, which is then sent back to Alice. This change then becomes her input value for all future transactions.

A pictorial representation of the output side looks like this:. Now, this is a very simple transaction that has just one output apart from the CHANGEthere are transactions that are possible with multiple outputs. This is what the basic layout of the transaction looks like. For this entire thing to go through, however, certain conditions must be met. The Input including the signature data and the output data is added together and hashed using the SHA hashing algorithm.

The output hash is the name that is given to this transaction. This is what the transaction looks like in the code form. Suppose Alice wants to send 0. This is what the transaction detail looks like:. See the input data? Now, remember that out input data was 0. This is greater than 0. The deficit of these two values is the transaction fee that the miners are collecting.

It is basically the first transaction data that is on the block, and it signifies the mining reward that miners get upon mining the block. As of right now, the reward is These transactions have no input data and they only have output data.

Remember this because this will become important later on. Now, remember, all the transactions that happen in the blockchain carry through because miners actually mine these blocks and put the transactions in the blocks to validate. But, there are only so many transactions that you can put in the block. When Bitcoin was first conceived there was no block limit. However, Satoshi Nakamoto the founder s of Bitcoin was forced to add the limit because they foresaw a possible DoS attack denial of service attack that hackers and trolls can inflict on the blockchain.

They may stuff the blocks with spam transactions, and they may mine blocks which could be unnecessarily big in order to clog up the. As a result of which the blocks were given a 1 MB size limit. This was workable in the beginning, but as its popularity kept getting bigger and bigger, a number of transactions started adding up. This graph shows the number of transactions that are happening per month:. As you can see, the number of monthly transactions is only increasing and with the current 1mb block size limit, bitcoin can only handle 4.

One of the biggest reasons why transactions are bulky and take up so much space is because of the signature data that is in it we did tell you to keep this in mind. As the number of transactions increased by leaps and bounds, the rate at which the blocks filled up increased as.

More often than not, people actually had to wait till new blocks were created so that their transactions would go. This created a backlog of transactions, in fact, the only way to get your transactions prioritized was to pay a high enough transaction fee to attract and incentivize the miners to prioritize your transactions. Basically, this is how it works. Suppose Alice is sending 5 bitcoins to Bob, but the transaction is not going through because of a backlog.

However, she can do another transaction of 5 bitcoins with Bob but this time with transaction fees which are high enough to incentivize the miners.

As the miners put her transaction in the block, it will also overwrite the previous transaction and make it null and void. In fact, here is a graph of the waiting time that a user will have to go through if they paid the minimum possible transaction fees:. If you pay the lowest possible transaction fees, then you will have to wait for a median time of 13 mins for your transaction to go.

A possible solution that was thought of to speed up the transactions was the introduction of Lightning Network. The lightning netwok is an off-chain micropayment system which is designed to make transactions work faster in the blockchain. It was conceptualized by Joseph Poon and Tadge Dryja in their white paper which aimed to solve the block size limit and the transaction delay issues.

That is, we have a new check that requires both parties to sign for it to be valid. The check specifies how much is being sent from one party to. As new micro-payments are made from one party to the other, the amount on the check is changed and both parties sign the result.

The network will enable Alice and Bob to transact with each other without the being held captive by a third part aka the miner. In order to activate this, the transaction needs to be signed off by both Alice and Bob before it is broadcasted into the network. This double signing is critical in order for the transaction to go. Since the double check relies heavily upon the transaction identifier, if for some reason the identifier is changed, this will cause an error in the system and the Lightning Network will not activate.

In case, you are wondering what the transaction identifier is, it is the transaction name aka the hash of the input and output transactions.

In the example we have given before:. Now, you might be wondering, what would cause the transaction identifier to change? Before we understand what transaction malleability is, it is important to recap one of the most important functions in the cryptoeconomics model …hashing. We have written an article before which covers hashing in. Just to give you a brief overview, a hashing function can take in any input of any length but the output it gives is always of a fixed length.

Any small change in the input data will drastically change the output hash. Check out this test that we did with SHA aka the hashing algorithm used in bitcoin :. One more thing that you need to understand about the blockchain is that it is immutable, meaning, once the data has been inserted in a block, it can never ever be changed. While this proves a safety net against corruption, there was one weakness that nobody saw coming.

What if, the data was tampered with before it even entered the block? Even if people found out about it later on, there was nothing that anyone can do about it because data once entered in a block can never be taken out! That in essence is why malleability of transactions is such a problem.

Turns out that the signature that goes along with the input data can be manipulated, which in turn can change the transaction ID. That is how transaction malleability can work and this is a serious problem. Check this out:. These are statistics from the malleability attack on Bitcoin. The red lines roughly represent malleated transactions on the network. Now, remember what we said in the beginning? Transaction malleability was happening because the signature data is temperable. So, not only was the signature data eating up block space, it was also posing a serious threat with transaction malleability.

Way back in people were exploring the idea of taking signature data away from the transactions. What is the bitcoin segwitz fork Back were working on a way to make this work, but they all were hitting a wall. They realized that the only way that this could go forward was to do a hard fork, and nobody wanted to do.

Sidechain as a concept has been in the bitcoin circles for quite some time. The idea is very straight forward; you have a parallel chain which runs along with the main chain. The side chain will be attached to the main chain via a two-way peg. What Dr. Wiulle thought of was simple why not add a feature to this sidechain? This feature would include the signature data of all transactions, separating it from the main chain in the process. This feature would be called Segregated Witness aka Segwit.

So by removing the signature data from the transactions, it was killing two birds with one stone, the block space got emptier and the transactions became malleable free. There was one more thing that needed to be worked on. Segwit activation was possible only via a hardfork, which is what everyone wanted to avoid. The developers wanted to look at soft fork alternatives. That was when Luke Dashjr hit gold.

To utilize segwit as a soft fork the developers had to come up with 2 ingenious innovations. They are as follows:.

The above diagram shows what a Merkle tree looks like.

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Your software doesn’t ever need big changes because they’re basically impossible to review. Though I wouldn’t say «only miners matter» nor «only users matter», the network really needs both to work. During a hard fork, software implementing bitcoin and its mining procedures is upgraded; once a user upgrades segwittz or her software, that version rejects all transactions from older software, effectively creating a new branch of the blockchain. If people stop buying BTC it will not matter because there will always be some level of trade where people are buying things with BTC and thus exchanging BTC for real value. There’s almost no risk associated, and reviews can be a rubber-stamp. If you actually cared you would have worked with. When will all this occur? Stupidity have nothing to do with it but yes it works.