[BITCOIN]: AUG.01.2017 - Soft Fork vs Hard Fork; simplified and to the point.

Two types of Bitcoin? Yes.

UASF vs SegWit2x

UASF (user activated soft-fork, aka BIP148) is set to start on August 1st 2017, that's right, in a few weeks. The Bitcoin community, as well as its core developers, prefer UASF which would enable SegWit (Segregated Witness) which in turn would split the transaction data when a Bitcoin is sent into two parts. The data being sent is known as a block. This block contains a part called the transaction identification. SegWit separates the identification from the rest of the transaction data. Because SegWit splits the block in two it shrinks the size of the transaction data and therefore speeds everything up.

SegWit will also be able to use the Lightning Network which when users send smaller payments allows them to send almost instantly and without a fee. Awesome!

However, unfortunately many believe that UASF is only a temporary fix and in all reality, it is. If the Bitcoin community decides to go with UASF and if more people start using the Bitcoin network then a Hard-Fork solution will have to be implemented down the line when SegWit will simply not be enough to keep up.

SegWit2x is a solution that the Bitcoin miners came up with.

SegWit2x will also implement the SegWit technology to speed up transactions BUT would also increase the block size to 2MB (currently 1MB) which allows more transactions to fit into each block. 

EXCEPT...

SegWit2x would centralize the Bitcoin network and give huge mining operations more control. To many, this goes against the core principles laid out by Satoshi Nakamoto himself presented in his original white paper. 

In any case, when and if a fork, soft or hard, is implemented, and IT WILL BE implemented, it will create two different types of Bitcoin. Wait, what? That's right, two types of Bitcoin will be circulating the network. One using the old code and one using the new code. 

The irreversible split in the blockchain of different nodes using two types of Bitcoin code is a Hard Fork. All users who have Bitcoins at this moment in time will receive two different types of Bitcoin. 

In the much more preferred scenario, a soft fork, the code would allow for nodes to still mine blocks on the new blockchain. Yay! 

That's pretty much it. Simplified. I hope you understood these new Bitcoin technologies and the impact they WILL have on the Bitcoin community.

Cheers.

-Erik