For a while now, there have been rumors of Bitcoin war. The two camps have been sparing for over a year, and the fight is scheduled on 31st July 2017 Midnight. The winner will be announced on August 2017. That whole month will be used to evaluate the winner.
This fight has been necessitated by a number of proposals for technical changes to Bitcoin – that is User Activated Hard Fork (UAHF) vs User Activated Soft Fork (UASF)
The User Activated Hard Fork (UAHF) is a proposal to increase the Bitcoin block size scheduled to activate on August 1. The UAHF is incompatible with the current Bitcoin ruleset and will create a separate blockchain. Should UAHF activate on August 1, there will be a new blockchain spewing out new coin associated with that Fork.
The User Activated Soft Fork (UASF) is a proposal to adopt Segregated Witness on the Bitcoin blockchain and could result in network instability. It is scheduled to activate at the same time as the UAHF on August 1.
If you have your bitcoins in any BTC wallet, be sure to find out which side your wallet is cheering, because that will decide the value of what you will be holding after the war is over.
Why have 2 different forks?
The problem that the Bitcoin platform is facing is that as more and more transactions are being conducted, more blocks have to be added to the chain. Blocks are generated every 10 minutes and are constrained to a maximum size of 1 megabyte (MB). Due to this constraint, only a certain number of transactions can be added to a block. The weight of the transactions, represented by the blocks, is weighing down the network and causing delays in processing and verifying transactions, in some cases, taking hours to confirm a transaction as valid. Imagine all Bitcoin transactions that have been carried out since the inception of Bitcoin in 2009 sitting on the blockchain and still piling up. Long term, the system would not be sustainable if a radical change is not made.
SegWit is the process by which the block size limit on a blockchain is increased by removing signature data from Bitcoin transactions. When certain parts of a transaction are removed, this frees up space or capacity to add more transactions to the chain.
Segregate means to separate, and Witnesses are the transaction signatures. Hence, Segregated Witness in short, means to separate transaction signatures.
SegWit is an update for Bitcoin Core. It is assumed that this update will solve the problems. But some users, mining firms, i.e. Bitmain, and companies, i.e. Bitcoin Unlimited, do not support this idea. So, the realization of SegWit can split the whole system of Bitcoin. Some users and miners will accept new standards, but others can use the older version of Bitcoin code. So, different variants are considered to avoid this and save the one Blockchain of transactions.