Over the past few years, Bitcoin has been embroiled in a number of disagreements regarding scalability and transaction cost issues, with stakeholders struggling to reach a general consensus on the most viable solutions.
This resulted in the New York Agreement, which saw an influential group made up of miners, exchanges, and wallet providers come together in order to push through a hard fork that would produce a version of Bitcoin that integrated Segregated Witness (SegWit) and utilized a 2MB block size.
Early Reactions
The hardfork was expected to take place during the middle of November; however, it was suddenly called off, with the news of its cancellation spreading across the internet on Wednesday. The fork had been an extremely contentious issue and managed to generate both a significant number of supporters as well as those in opposition. A good number of the community took to twitter to share their thoughts and opinions on the cancellation.
Charlie Shrem, who was one of the proponents of the fork tweeted the following
I will be among the first to admit I was wrong. When I was told #SegWit2x I thought there would be consensus in everyones best interest, but over time learnt this wasnt the case. In the long term, I hope you all can see my (and most of our) intentions were good. I <3 #Bitcoin
— Charlie Shrem (@CharlieShrem) November 9, 2017
Others supporters such as Erik Voorhees were more optimistic looking rather towards the future of Bitcoin
For the avoidance of doubt, Core won this battle. Congrats to them. I'm glad SegWit activated at least, and I will not advocate further scaling upgrades. Regardless of the path, I'll continue building Bitcoin into the financial platform so desperately needed by the world.
— Erik Voorhees (@ErikVoorhees) November 9, 2017
On the other hand, those in teh NO2X category was not shy in disclosing who won this round of the scaling debate
In light of winning the #NO2X battle, spending rest of the night with an old college friend & flying back to NYC in the AM… I am Disconnecting from #Bitcoin & Social Media next 24hrs… see you all tomorrow! pic.twitter.com/auUCogutKp
— Tone Vays (#EndLockdowns) (@ToneVays) November 8, 2017
Keeping with the NO2Xs, this tweet by Francis Pouliot managed to sum up how many in the community felt about the SegWit 2x movement.
Segwit2X died the same way it was born: an edict signed by an elitist group of distant CEOs following a closed-door agreement.
If a grassroots Segwit2X community had existed imagine how betrayed and stupid they would feel right now.
— NAKED FACE (@francispouliot_) November 8, 2017
The Effect on the Market
Bitgo CEO Mike Belshe, posted an online letter that confirmed the halting of the SegWit2x fork. The letter was also signed by industry heavyweights and SegWit2x supporters such as Jeff Garzik, Jihan Wu, Peter Smith, Erik Voorhees, and Wences Casares.
The news caught the entire community off guard and the proposed fork had prompted investors to pour funds into BTC. Prior to the announcement, a large number of investors had looked to gain an additional payout in the form of the SegWit2x coin. In the period preceding the shock news, BTC had been trading at around $7300 to $7500 and was expected to rise as mid-November approached. However, at the beginning of the week, Bitcoin began to drop in price and fell as low as around $7000 on both Monday and Tuesday.
On Wednesday, Bitcoin saw an unexpected surge in demand with the price increasing rapidly, BTC went from trading at a price of approximately $7100 to trading at over $7700 on the same day. However, as news regarding the cancellation began to spread, BTC fell to a price of around $7200 and still continues to fluctuate at around that price. Both Wednesday and Thursday also saw a flurry of activity and BTC attracted 24 hour trade volumes of over $4B.
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The shock news had further implications as traders who had chosen to speculate on B2X futures were left out of pocket as its price crashed. Exchanges such as Binance, Bitfinex and, HitBTC had opened up futures markets which allowed for the trading of futures tokens linked to the creation the SegWit2x version of Bitcoin.
B2X became tradable around the end of October and generally fluctuated at a price of around $1000. A spike in activity at the end of last week saw the token reach as high as $2000 before pulling back to around $1500. When the news broke, B2X was still trading for well over $1000 but eventually fell to a price of around $200, this represented a massive loss for a number of speculators.
Surprisingly, since dropping to a price of $151 on Thursday, the price of B2X futures has picked up as speculators continue to purchase the tokens. Rumours that a fork may still go ahead had led to B2X selling at around $500. Over 30 companies and 75% of miners are still in support of forking Bitcoin and Civic front man Vinny Lingham seemed to confirm the rumour with this tweet.
Dammit. I spoke too soon. Apparently a bunch of miners are going rogue and are going to execute the S2X fork regardless, with 30% hashpower… #wakemeupwhenitsover https://t.co/I22n0Ox8p6
— Vinny Lingham (@VinnyLingham) November 9, 2017
Where to From Here?
The shock announcement has left the community with just as many questions as it does answers. Bitcoin still has scalability issues to address and the greater community is still divided regarding the best way to deal with the issues.
Meanwhile, investors who purchased BTC in order to receive the SegWit2x coin are also unsure what to do next, though some have already opted to trade some of their BTC for a number of altcoins. The next few days will see many in the community tread water while they try to regain their thoughts and formulate new strategies.
The price of BTC may experience a slight decline, and go on to increase steadily over the Christmas and New Year period, as the path is now clear for institutional investors to move in and take up significant positions in BTC. Bitcoin Cash has emerged as a slightly surprising winner, as the uncertainty regarding the Bitcoin network prompted some investors to purchase BCH.
Despite trading at just under $600 on Wednesday, BCH has since jumped to a price of over $850, an increase of around 35%. Interestingly, Bitcoin Cash seems to have enhanced its reputation during this drama with some now viewing BCH as a viable alternative for sending low fee transactions.
Featured Image via Fotolia
