What Does SegWit2x Mean for Bitcoin Gamblers?
Anyone involved in Bitcoin will know that on August 1st, the blockchain split in two. This split generated a new alt coin called “Bitcoin Cash” which will now be taking a different development path to Bitcoin. Bitcoin Cash is determined to scale the network “onchain”, meaning that every transaction that occurs (no matter how small) will be recorded on the ledger itself. Bitcoin however, has decided that the best route to scale is to optimise transactions on the chain, and to take other transactions “offchain” all together. And this is where Segregated Witness (SegWit) comes in.
In the next 2 weeks, Bitcoin will implement the SegWit Bitcoin Improvement Protocol (BIP), allowing for more transactions to occur onchain (the size of each transaction will be reduced by approximately 50%). On November 1st, the protocol will then hard fork to increase block sizes from 1mb to 2mb, hence the name “SegWit2x”. So what do these optimisations mean for Bitcoin gambling, and what should you be made aware of following all of these hard forks?
SegWit2x For Bitcoin Gambling
The following scenarios will play out once SegWit2x is in place, and every Bitcoin gambler should be aware of them:
3 versions of bitcoin
By November 1st, there is a possibility that 3 versions of Bitcoin will be in use.
- Bitcoin – the coin with the majority hashing power. At the time of writing, this coin will be the one that implements SegWit2x (the others will not)
- Bitcoin Cash – the coin which forked on August 1st and hopes to scale Bitcoin “onchain”
- Bitcoin Core – the coin which will fork on November 1st, and chooses not to implement the 2mb upgrade but will use SegWit
For Bitcoin casinos, the only coin that will be accepted from November 1st will be Bitcoin. The other two coins, whilst sharing the same name, will be running on separate blockchains to the main chain. Transactions between chains is not compatible at this stage, and so Bitcoin gamblers must remember that they cannot use their Bcash or Bcore coins to bet.
With SegWit2x comes much faster casino deposits and withdrawals. SegWit allows for more throughput by reducing the size of each transaction, and the increase in block size to 2mb will further increase capacity of the network. Using Bitcoin for deposits today can take several hours, however once SegWit2x is fully implemented on November 1st, deposit/withdrawal times should be reduced back to 10 minutes. It is also more likely that “0 confirmation” Bitcoin deposits will be accepted – allowing for immediate transactions with casinos.
Casino payment channels
SegWit fixes a problem called “transaction malleability” where transactions can be invalidated but still processed. This meant that a deposit at a Bitcoin casino could go through, but would appear to have failed to the user, resulting in confusion and the potential for exploitation. SegWit fixes this problem, which conveniently also opens the door to offchain payment channels – the most well known being the “Lightning Network”. These payment channels – which have already been implemented on Ethereum – enable (effectively) unlimited transactions to occur offchain, with only 2 transactions required onchain; one to open the channel, and one to close/settle the channel. A lightning network like this, would enable rapid, zero-cost Bitcoin wagering and could also be a step towards smart contract gambling.
In summary, SegWit2x is an upgrade to Bitcoin that would dramatically improve its usability for Bitcoin casinos and players alike. Through faster onchain payments, and the possibility for payment channel and smart contract betting, SegWit2x could move the gambling industry forward in leaps and bounds.