What’s the Story?
You may have heard of ‘forks’ in the cryptocurrency space. Forks are updates to the blockchain software that change the way the code works. Hard-forks either a) have community consensus and everybody updates to the new blockchain or b) are contested and the blockchain hard-forks into two branches, effectively creating a new cryptocurrency.
Bitcoin has had a few hard-forks before
resulting in Bitcoin Cash and Bitcoin Gold. The newly proposed fork called Segwit2x represented a philosophical divide between two use cases for Bitcoin as a Store of Value
and Means of Transaction.
Currently, Bitcoin transactions take too long to clear (minutes, not seconds) and the fork was meant to improve this.
Segwit2x was widely expected to happen in the coming week. However, it was announced yesterday that the fork would be cancelled due to lack of consensus after some heavyweights spoke out against
What does this Mean?
Previous hard-forks in Bitcoin gave holders of the original coin a version of the new coin too. People saw this as 'free’ money. As a result, money flowed into Bitcoin ahead of the fork, pushing up the price at the expense of other coins. Now that the fork has been cancelled we are already seeing a rotation back into the other currencies with BTC dropping from an all-time-high of USD7,490 and coins like NEO and OMG jumping.
In the long-run, this gives more certainty around Bitcoin’s role as a cryptocurrency with the majority favouring it as a store of value, rather than a means of transaction. Now that the crisis has passed, developers can get back to working on other Bitcoin related projects