Bitcoin Improvement Plan 91 has locked in this week. That is great news, right?!?
You are probably asking what the heck is BIP91 and why should we care…
There has been a struggle over many months as the companies, miners and engineers that work to make improvements to the Bitcoin network and technology have been “negotiating” the next code upgrade for the Bitcoin network. BIP91 is the set of code/rules proposed by engineer, James Hilliard, of Bitmain Warranty.
How does BIP91 become locked in across a decentralized network?
The threshold to lock in this set of rules/code was that 80% of miners had to place a “signal bit” in their software to show they support BIP91 and in the future would reject anything that is not compatible with the BIP91 standard.
BIP91 met that 80% threshold on 07/20 and this happened as the people rejoiced!
Well that does sound great…why is that important again?
The BTC network has grown over the last few years and the number of transactions per day have increased significantly. This has caused slower processing and verification of transfers at a higher cost per transaction (still much lower than what your average financial institution will charge). BIP91 is the first step of future improvements (Segregated Witness or SegWit) that will increase the size of the blockchain, will increase the speed of transactions and make way for the Lightning Payment Network. SegWit is already activated on LiteCoin (another digital currency).
What would have happened if the miners and engineers could not come to an agreement and the 80% threshold could not be met for signaling of the code upgrade?
Let’s say that only 50% of the Bitcoin Miners signaled support for BIP91 by August 1, 2017. This would cause what is known as a hard fork of the BTC blockchain as 50% used the old (non BIP91 blockchain) and the 50% used the new code and ignored any transaction that did not support BIP91. This would create 2 blockchains that would not share information and miners could continue to process transactions on both blockchains (think of the US Civil war when there was a US currency and a Confederate currency) and this would split the network into 2 different types of currency. It does not appear this will be an issue though as the Miners and Engineers were able to come to a compromise and have met the 80% threshold for BIP91. This will allow the BTC network to continue to grow and increase features to prepare for mainstream use and rapid development.
Comments or questions, post in the comments sections.