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On May 23, Barry Silbert-led Digital Currency Group (DCG), arguably the biggest bitcoin and blockchain industry investment firm, announced that miners and businesses had reached a consensus to bitcoin’s seemingly never-ending scaling debate. Parties involved in the agreement represented 83.3 percent of the network’s hashing power, 20.5 million bitcoin wallets, and a 5.1 billion on-chain transaction volume.

The announcement read that 58 companies agreed to activate Bitcoin Core’s Segregated Witness (SegWit), and to the execution of a 2MB hard fork within six months thereafter. The proposal, now known as SegWit2x, needed an 80 percent threshold to be adopted.

Segwit2x’s code is being worked on by a working group led by Bitcoin developer Jeff Garzik. The proposal’s initial code release was only a few days ago and, since then, numerous mining pools including Antpool, BitFury, and F2Pool have started to signal support.

As reported by CCN, a Chinese bitcoin roundtable forum recently affirmed its support for SegWit2x, with one of its goals going being its activation by July 31. This led to a significant hashrate increase, and yesterday, support for SegWit2x was at 71 percent, after BW Pool started signaling for the proposal.

The proposal has even managed to gather support from pro-Bitcoin Unlimited pools such as Bitcoin.com and ViaBTC. Today, BATPOOL and BTCC also started signaling for SegWit2x, meaning the 80% threshold has been hit, as Barry Silbert himself announced on Twitter:

Note that the code isn’t actually ready for mining pools to run it yet. Until June 30, it’s still in a testing phase and as such these mining pools are merely adding text to their blocks in order to show support. The first mining pool to do so was BitFury, which on June 18 started using the letters “NYA” (for New York Agreement) in its mined blocks.

The code is expected to be ready tomorrow, June 21, and as soon as it is mining pools will be able to run the software. If 80 percent of the network’s hashrate keep running the code for roughly three days, SegWit2x will activate.

Security concerns

The proposal has been largely criticized, as the companies who signed the agreement didn’t consult the Bitcoin Core development team beforehand to guarantee there were no technical roadblocks that could delay the activation of the new SegWit proposal.

Bitcoin Core developer Greg Maxwell has in the past stated that SegWit, as proposed in the New York Agreement, can’t be activated by September. Originally, the Bitcoin Improvement Proposal (BIP) 141, that introduced SegWit as a soft fork, had an activation threshold set at 95 percent and was designed to expire at midnight of November 15 this year.

According to Maxwell, with an 80 percent activation threshold, SegWit’s current proposal must timeout or expire first. Maxwell stated:

“Redeployment of segwit basically can’t happen until the old deployment expires. The reason for this is because for simplicity and safety reasons all segwit supporting versions of Bitcoin only have segwit code paths for the most part… e.g. there isn’t separate handling for segwit and non-segwit txn. Segwit’s current non-activation is achieved by a very minimal set of tweaks on top of that.”

Moreover, it has been argued that the timeframe doesn’t leave enough time for sufficient testing to be conducted. Due to this lack of testing, some claim that there is potential for a replay attack to occur in the event of a hard fork, meaning that in the event of a chain-split, users could accidentally spend their coins on both networks – a situation comparable to the replay attack seen in the Ethereum – Ethereum Classic chain split.

Community Reactions

The community has been keeping a close eye on SegWit2x and even created multiple threads discussing the evolution of the network’s hashrate supporting it. One of the top threads on r/bitcoin yesterday read: “That escalated quickly: already 65% of the hashrate signaling segwit2x!”.

Today, users were quick to point out that “BTCC is signaling for Segwit2x”. Some redditors quickly started celebrating, while others still believe that the proposal is merely a way for some companies and individuals to push their agenda, and that bitcoin’s problems are still far from over as this changes nothing.

Others, however, keep an optimistic point of view, and dismiss these theories. As redditor tekdemon puts it:

It’s alright there will be extremists on both sides so we’ll never have everyone 100% happy.

Featured image from Shutterstock.

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Posted by Francisco Memoria

Francisco is a cryptocurrency writer and trader, who's in love with technology and focuses on helping people see the value digital currencies have. Twitter: https://twitter.com/FranciscoMemori