Yet another mining pool has decided to pull support for the SegWit2X hardfork in November. This is quite significant as a hardfork can only be acheived if there is near unanimous miner support.
This is also probably why there has been such a rally in the price of Bitcoin over the past day. There is now a consensus view that the hardfork will not play out in November. Many of these “NO2Xs” are breathing a minor sigh of relief.
What is SegWit2X
Before we can cover the implications of the F2Pool decision, it helps to have a quick overview of what exactly SegWit2X is. The proposal was a compromise that was reached in New York in May of this year in order to achieve scaling.
The idea was to firstly implement Segregated Witness (SegWit) in August and then follow that up with an increase in the block size limit from 1MB currently to 2MB three months after that.
Many of the core developers did not support this agreement and were not present. They viewed the decision as merely a choice by the miners and a number of Bitcoin companies. They were against it because of the risk that a chain split could do to the network.
Why is this Important
F2Pool is currently mining about 10% of the blocks on the Bitcoin network according to statistics at coindance. You can see the below image of a snapshot of the total blocks that were mined today.
The result has been to drop the number of mining nodes signalling support for SegWit2X from 94% last week to about 85% today. This has been one of the most contentious hardforks in Bitcoin’s history which pitted miners squarely against the developers and majority of users.
Although there are still many of the miners that support the hardfork, the defection of F2Pool means that the hashpower of the NO2x miners has increased by 3 times.
Many are happy with this outcome as they viewed the hardfork as damaging to the public’s perception of Bitcoin. It would have created a competing coin which many inexperienced investors could not have been able to distinguish. This was not made any easier by the decision of exchanges such as Coinbase to not take an official position.
Where to From Here?
Although the miner support has dropped substantially, there is still a possibility that the hardfork can be pushed through. Yet, it has become increasingly unlikely as it seems that the tide of public opinion is impacting on miner decisions. There have been a number of other miners prior to F2Pool who have reneged on the agreement.
Other important players in the Ecosystem such as exchanges have also taking a stand. BitFinex, one of largest Bitcoin exchanges came out with a statement in support of the legacy chain. They claimed that the legacy chain would retain the “BTC” ticker. This obviously weakened the position of any forked chain and cryptocoin should it be traded.
Traders should keep a keen eye on if there will be any more miner defections over the coming 2 weeks. This will be the best indications of likelihood of the hardfork going ahead. Of course, if there are defections you can expect the price of Bitcoin to keep rallying.
Featured Image via Fotolia