What the future of Bitcoin after the scaling forks will be like

Bitcoin has recently undergone a subtle but major change.

I previously discussed here on TNW the blockchain is already falling victim to its own popularity — with limited block sizes resulting in painstakingly slow transactions.

With the recent implementation of SegWit and the planned SegWit2X , we are now seeing some potential in Bitcoin Scaling.

However, it does not end there.

Some parties aren’t satisfied with how limited the proposed changes are, and they even made a “hard fork” to Bitcoin Cash . All said, something needed to be done, and with the blockchain’s distributed consensus mechanism , applying such changes also requires the approval of the majority if not all of the stakeholders involved.

What does the future hold for Bitcoin and its blockchain, then?

I asked some of the greatest experts in the field today about Bitcoin’s future and its current transitional phase — and they had great insights to offer:

Nejc Kodrič, CEO and co-founder of Bitstamp : “With the Bitcoin network now larger than ever and increasingly popular, congestion issues have arisen. But, it’s important to remember that there was actually no block size limit when Bitcoin was first released. It was only added later as a safety precaution that was presumably always meant to be changed.

Although increasing the block size can solve the congestion problems on the Bitcoin network, it also leaves the way open for other problems to arise because it changes the fundamental economics of the network itself. That’s why two different solutions have emerged: one involves the inclusion of side chain transactions and the other focuses on increasing the size of the blocks on chain transactions. They both solve the same problem, but it is ultimately the market that will decide which solution will be adopted.”

“KingsCrown”, a top crypto and blockchain influencer on Steemit : “I like the car analogy. First car created couldn’t be the best one right away. We can say all cars are forks of the original one, fixing some things. Speaking shortly about all the problems that we have now with adoption couldn’t be predicted while creating Bitcoin.”

Jeremy Epstein, CEO of Never Stop Marketing , advisor to OpenBazaar, IOTA, Zcash: “I think the question here is less about technology and more about philosophy. For Bitcoin, in particular, the issue is “is it a currency?” or “is it an asset?” If you think it’s digital gold and a store of value, you don’t care as much about block sizes, fees, or transaction times. If you think it’s a currency, you do.”

KingsCrown: “Technically it wouldn’t be really hard to update but there is politics. And politics in decentralized communities is not that easy to overcome. SegWit2X is a consensus between two camps — the one wanting SegWit and the one that wants bigger blocks.”

Epstein: “Ultimately, I think there are different tokens for different use cases. IOTA, for example, could be for the internet of things/machine to machine, Zcash for privacy, Ether is the commodity akin to oil/gas, etc.”

Kodrič: “Segregated Witness (SegWit) is an upgrade that fixes transaction malleability and clears the path for off-chain solutions. An example is the Lightning Network, which allows transactions between groups of traders to be dealt with swiftly in side chains outside of the Bitcoin blockchain, with only the end result of the side chain transactions being written to the actual blockchain. This is an example of a significant improvement to blockchain itself.”

KingsCrown: “Due to SegWit and then coming Lightning Network and RSK Bitcoin make other coins almost obsolete. It will have all functions that they have but with better scaling and more secure network — since BTC network is most secure in the world due to biggest amount of miners in it.”

Kodrič: “It might. But, if you create a fork, it’s crucial that it’s economically logical. In this case, the economic logic would be that the miners mine because it’s worthwhile to do so and the users buy because of that sense of safety. However, if that economic logic is not in place, the network will not survive.

The whole point of Bitcoin is decentralization. Therefore, if the mining of your fork stays centralized, then the economic fundamentals required for the fork to work over the long-term are not established. Ultimately, it all boils down to this: If the decentralization, robustness and economics of the system are not sufficiently established, then the fork simply will not survive.”

Epstein: “The beautiful thing about the tokenization of open source technologies is that forks are a feature, not a bug. So, innovation can flourish because the value that is created is not lost and new entrepreneurs can identify and exploit new opportunities.

Yes [this will happen again], and that’s a good thing. The wonderful part about tokenized open-source development is how entrepreneurs can see new opportunities to serve markets, fork the code, and build off of the value that was already established. For example, everyone who had Bitcoin immediately got Bitcoin Cash, so they had an initial interest it and could, if they want, participate in that network as well.

In my mind, this forking ability without losing past IP or value is a great feature, not a bug. And it’s a HUGE competitive advantage over close software.”

KingsCrown: “I believe that we will have SegWit2X fork because it seems “main chain” or called “core” doesn’t want to upgrade to 2X. I do not see problem in that, people should be allowed to do forks, and in the end markets will decide what works best and what is worth what. I wouldn’t be surprised if more forks with split-chains in the future.”

Kodrič: “It remains unclear as to what the future holds. First, let’s just see whether SegWit2X will even be implemented and then see what lies ahead.”

KingsCrown: “That we can’t predict, but I think non-technical ones, more like governance problems.”

Three types of cryptocurrency tokens explained as quickly as possible

Welcome to Hard Fork Basics, a collection of tips, tricks, guides, and advice to keep you up to date in the cryptocurrency and blockchain world.

Considering there are well over 2,000 cryptocurrencies on today’s market, the average blockchain investor faces being veritably overwhelmed by choice.

That certainly sounds like a lot, but pretty much all cryptocurrency falls into one of three token categories: c urrency, utility, or investment.

Each group requires different rules and regulations to ensure their issuance and exchange is above board with government regulators.

Depending on the country, cryptocurrency startups may have to register with regulators, and rules for investors may vary with each type of token.

So, let’s take a look at what each classification means, quickly.

Currency tokens

This is the original (and most straight-forward) form a blockchain-derived token can take.

Tokens can be classified as currencies if (and only if) they were created entirely as a means of payment for goods and services external to the platform running the token .

For example, Bitcoin is seen as a currency as it was created with the intention of replacing fiat money. As such, Bitcoin holders are able to use their Bitcoin to purchase goods and services from shops, online retailers, and other merchants.

It’s worth noting that the SEC has deemed both Bitcoin and Ethereum to be currencies, after both were found to be too decentralized to be anything but .

Utility tokens

These digital assets are built to provide investors with something other than a means of payment .

This typically comes in the form of access to a particular product or platform. For example, many cryptocurrency exchanges have issued their own native cryptocurrencies for customers to use to reduce trading fees.

The primary difference between a currency and a utility lies in the fact that holding a utility token gives access to a function provided directly by the businesses who issued it.

In our cryptocurrency exchange example, the holder is only granted access to reduced trading fees through the use of that token.

Most tokens created on blockchains (like EOS and Ethereum) are essentially utility tokens, as each one is intended to be used natively on a single platform, such as a decentralized app (dApp).

Investment/asset tokens

Investment tokens are perhaps the most complicated to classify. Inevitably, most become securities in the eyes of financial regulators like the SEC and FINMA .

Tokens found in in this group are the assets that promise a positive return on their investment (besides profits generated from rising market prices).

Such returns are usually distributed by the platform itself or the company that created it.

The most famous example is the The DAO – an autonomous, smart-contract powered blockchain organization that reinvested profits from its ICO to generate more profit for holders.

This was deemed to be the critical factor that allowed the SEC to retroactively classify the digital assets issued by The DAO as investment tokens (and by extension, securities).

Well, there you have it! The three major types of cryptocurrency assets. It’s worth mentioning that they can also come in hybrid forms, such as utility/investment tokens, but that’s for another day.

Japan gives Ripple and SBI the green light to launch new payment app

SBI Ripple Asia (a collaboration between Japanese tech giant SBI and popular blockchain tech developer Ripple) is getting closer to rolling out its mobile payment app, Money Tap.

SBI Holdings announced today that it has received certification from Japan’s Ministry of Finance to process electronic payments.

This approval from the ministry means that SBI Ripple Asia can go ahead and launch Money Tap.

While Money Tap doesn’t appear to process cryptocurrency-based payments, it does utilize Ripple’s distributed ledger technology (DLT) to manage payments between banks.

From June this year, the Japanese government requires businesses, seeking to handle electronic payments, be registered with local finance bureaus.

Japan made it a legal requirement that businesses wanting to handle electronic payments, to be registered with local finance bureaus.

As a result, SBI Ripple Asia had to follow the same rules and register Money Tap as a payment service.

Earlier this month, the payment app was teased to the public . SBI Ripple Asia has not given an exact release date for the app, but it can be expected this Fall.

If you’re interested in everything blockchain, chances are you’ll love Hard Fork Decentralized. Our blockchain and cryptocurrency event is coming up soon – join us to hear from experts about the industry’s future. Check it out!