Bitcoin SV (BSV) performed a scheduled upgrade on February 3. The upgrade, named Genesis, was necessary since most nodes have not yet updated. After the event, it was discovered that there was a minor chain split that resulted in two versions of the BSV.
According to a BitMEX Research report, the upgrade took place at about 8:30 PM EST or block-height 620,538. The ensuing block was considered invalid by the old rules, which signaled the hard fork. Almost 25% of all the blockchain nodes are still on the old version. Therefore, it means that they cannot synchronize with the main chain.
Additionally, a chain split was proven to have occurred several hours later. The previous chain was extended by one block. Hence, some of the miners have now failed to upgrade to the new rules. The thorough analysis shows that the process does not appear in any way to have been a scheduled attempt to create a new chain.
With just a single block added in over 10 hours, only a tiny minority of the miners are left behind operating on the old chain. Daniel Connolly and Steve Shadders, the project’s lead and technical developers, categorized the intentions of Genesis hard fork into three main goals: improving scaling, restoring the original protocol, and ‘stabilizing the protocol.’
The developers also want to solve scalability challenges through the elimination of block size limits entirely. Thus, the general agenda of this change appears to enable Bitcoin SV to try to handle an:
“Array of data, tokens, smart contracts, content delivery, enterprise applications, the Internet of Things, and other uses”
Genesis is set to change many of the consensus rules for Bitcoin SV to eliminate all remaining limitations. Official reports reveal that it will comprise of a set of protocol restorations that will almost enable a return to the original Bitcoin protocol of August 2009.
Once the Bitcoin protocol is restored, it will be kept stable. That will allow it to scale by removing the limits that can be set in a block significantly. Genesis will completely change the way Bitcoin is used on the blockchain. Interestingly, the Bitcoin Association is convinced that Bitcoin SV is the real Bitcoin.
The block size is now effectively unlimited. As opposed to being hard-coded in the node software, the block size is now a significant parameter that miners can reduce manually. Removing these limits on a block and scaling up to 2GB per block, the BSV blockchain can support considerably higher transaction volumes translating to more transaction fees for miners.
The fees set for transactions across the blockchain will change as well. For any two parties that have trust issues, the fee rate is recommended to remain at one satoshi/byte until the Genesis upgrade is fully implemented.
These changes may potentially result in issues later if not all miners agree to a particular value. Any block that is bigger than the maximum allowed size for a certain group of miners will be considered invalid by them. Thus, this setting is unlimited by default.
Many other limits came up, including the maximum size of a transaction and the number of owners for a multisig wallet. The Bitcoin Script language now has a formalized grammar after the upgrade. The process happened in Bitcoin Improvement Protocol 16 (BIP 16). It will be checked extensively by the consensus participants.
The upgrade restored OP_RETURN, which is an instruction for storing custom data on the blockchain. While these changes appear minor, any modifications to the consensus rules always need a hard fork. Bitfinex joined several other exchanges in early support of the new BSV hard fork.
TAAL predicts that there will be an amendment of the default fee rate to 0.5 satoshis/byte and an adjustment of relay fee to 0.25 satoshis/byte. The small fees are predicted to attract enterprises to utilize this technology. It is cheaper to store data and transactions on the ledger than in the cloud or a data center.
As a result of the Genesis upgrade, Bitcoin usage may explode in late February since most network-wide limits will cease to exist on the network propagation rules and the scripting language. Large corporations may start to announce Bitcoin integration into their business models after the Genesis upgrade proves itself capable of scale.
Some of these merchants and enterprises may have hesitated to utilize the technology due to the ever-changing protocol and high transaction fees. They prefer a stable and locked protocol with a constant fee structure before they commit time and resources to launch their systems on it.
The Genesis upgrade could be the beginning of real large scale enterprise adoption. That may take Bitcoin SV into uncharted enterprise territory. It could also signal massive changes in the manner with which people use Bitcoin. Hence, there might be exciting times ahead for Bitcoin users and miners.