You may have heard that there is an event coming up around August 1st that could affect the way Bitcoins are traded and held. The details are all quite technical, but here is an excerpt from a very good article written March 2017 by Paul Puey, CEO and co-founder of the wallet company, Airbitz:
As many have heard, the Bitcoin community is engaged a major debate which could cause the bitcoin network to split into two currencies. As a decentralized currency, Bitcoin achieves consensus by hundreds of computers agreeing on a set of transaction rules. These computers confirm transactions on a blockchain, a series of bundled transactions that have been validated by bitcoin miners who have put significant amount of computing power to confirm these transactions.
The current transaction rules put a limit of 1MB on the size of transaction blocks which creates an approximate limit of 3–6 transactions per second on the network. Due to the significant increase in global demand for bitcoin, the network has hit this limit and users are experiencing a noticeable delay in transaction confirmation times and increased mining fees from about $0.10 6 months ago to over $0.50 per transaction (possibly higher) as of this writing.
Two solutions are being proposed to help scale the network. Currently the majority of the Bitcoin network runs an implementation called Bitcoin Core which enforces the 1MB limit. Bitcoin Core proposes an upcoming scaling solution called Segregated Witness which will help decrease the size of transactions once widely supported by most wallets. A second proposal wants to simply increase the 1MB limit. Proponents of this proposal are operating an implementation of Bitcoin referred to as Bitcoin Unlimited, which provides a mechanism for the blocksize to grow beyond the 1MB limit.
Both of these proposals would change the network consensus rules and would activate once each achieves a significant majority of the network mining power.
OK, still pretty technical, but a better explanation than I could write. So what do we recommend? I wrote to Airbitz for further clarification, and here is what they said;
At Airbitz we plan to support the longest chain in the event of the fork by default. However, should the forked coin continue we would also eventually work on having support so that Airbitz would be able to support both coins but that would not happen immediately.
We are recommending users who wish to have both versions of bitcoin to keep their bitcoins on Airbitz and to keep it off the exchanges or you would potentially lose the coin that is not supported.
Next, users should not spend or send out the bitcoins out of Airbitz during the fork event on or around August 1st until the dust settles.
They go on to say that either way the forks and chains turn out, Airbitz will offer a way to support the new environment. But for now, that is good advice. We’ve never been holders of Bitcoin for the long term. We use them as required to get into the programs we want to use, and as we are paid, we either reinvest them or move them to actual cash using our Bitpay Visa card. So here is what we will be doing:
- We will continue to use the Airbitz wallet as our primary wallet. We believe that no other wallet offers the safety, security and flexibility of that product.
- We will continue to move the majority of our Bitcoins to cash up until a few days from the changeover on August 1st. From about the 28th of July until things settle down, we will simply allow any Bitcoins deposited in our wallet to stay there.
- We have copies of several of our previous Airbitz addresses and will take one further snapshot around that date and store them all offline.
- As a further precaution, go to blockchain.info and enter the most recent wallet address in the search box. This will generate a page showing your transactions and a QR code that you can print out and save in case of emergency.
This is going to be an interesting time, and there is a lot of fear out there – especially from those new to the Bitcoin community. But we believe the best solution will rise to the top and that this will ultimately strengthen the not only the cryptocurrency industry but ultimately the value of the Bitcoin.
