Hello everyone, I've seen a couple posts in regards to the upcoming bitcoin fork due to happen August 1st. This thread will explain why this is happening and possible outcomes. This is not about price speculation. If you want to speculate about the possible effects on the prices.

Bitcoin Improvement Proposal (BIP) 148 is User Activated Soft Fork (UASF) that will move miners to upgrade to SegWit. A User Activated Soft Fork (UASF) is a movement to have the economic majority (exchanges, wallets, users, not miners) make a decision to activate an update in their bitcoin software client. This scheduled to take place on August 1st, 2017 and must have 95% miner approval in a 2016 block-long chain by November 15th, 2017. If it gets approved, there will be another 2016 block-long chain where it is pending complete activation.

SegWit was already implemented with Bitcoin in BIP141, but BIP148 will activate it. SegWit stands for Segregated Witnesses and was first proposed by the Bitcoin Core Team in 2016.

Bitcoin Core Team Wrote:“As transactions that use segwit features begin to be used, this change will allow more data to be included per block (with 100% of transactions using segwit features this is expected to be about 2MB of data per block, however in the worst case could be up to 4MB of data per block). In so far as it allows a greater transaction volume, it can be expected to increase the UTXO database more quickly (with 100% of transactions using segwit features, the rate of increase might be expected to approximately double; however because segwit is a soft fork, the worst case UTXO growth is unchanged).”

To understand this on a technical scale, we first need to understand the three key parts of a transaction: the sender, receiver, and the signatures (witnesses). All of these elements take up a large chunk of the data in a block. With SegWit, each witness will be 0.25 bytes which in turn raises the maximum block size from 1MB to 4MB. All other data will still be counted as 1 byte.

For additional reading and more benefits of SegWit.

SegWit2x

SegWit2x (or SegWit2MB) is a scaling agreement reached by a numer of Bitcoin companies and over 80 percent of miners (by hash power). You can view all of these companies and miners here. Segwit2x is incompatible with BIP148 but under BIP9 it will become activated and be compatible. The proposed date for this happening is July 21st.

Scenario 1 - Best Case

Remember that a User Activated Soft Fork (UASF) is a movement to have the economic majority (exchanges, wallets, users, not miners) make a decision to activate an update in their bitcoin software client. People that have initiated the said fork will only be able to accept blocks from miners that have also updated to BIP148 and will reject all others. If the economic majority has updated, this gives an incentive for miners to also update as well or they will be losing out on money. This is the best possible scenario.

Scenario 2 - Nothing is Accomplished

The next scenario that could happen would be BIP148 does not acquire the economic majority (95%) in a 2016 block-long chain by November 15, 2017. Nothing major would happen, but every node that was updated to include BIP148 would have to be rolled back and things would continue on as normal like it was before August 1st.

Scenario 3 - Chaos

Worst case scenario: There is no clear winner on the above two scenarios and the blockchain will become split. All coins created prior to the split will exist on both blockchains. If there is a greater demand for BIP148 blocks, the rest will move over to the BIP148 blockchain. When the BIP148 blockchain receives one more block than the legacy blockchain (other blockchain), the legacy blockchain will be completely erased, meaning everything disappears. If there is less demand for the BIP148 blockchain, then both chains will exist for an indefinite amount of time until either one will give up. If a decision is finally made, the losing blockchain would be erased. It would be extremely risky to hold any coins in this situation.

My Warning to You

Please read this carefully.

If you hold bitcoin, please make sure you control your wallet's private keys. Companies like Coinbase or wallets that hold your private keys may not be prepared for the BIP148 update or the possible chaos that could ensue. If you are deciding to hold onto your coins, I suggest you move them to a safe wallet where you control your own private keys. You never know if a company will screw up and freeze your account or just straight up lose your coins.

If you want to pick a better wallet, please read about the pros and cons of different wallets. Additionally, if you have any questions about this, please post and I will answer each question to the best of my ability.