The controversial birth of Bitcoin Cash on August 1 has created a fundamental crossroads for both the users of the popular cryptocurrency along with its underlying technology. What could amount to trillion dollar questions are now being asked about the future of Bitcoin that are as much philosophical in nature as they are practical in application.
What happened?
There has been widespread disagreement throughout the Bitcoin community for a few years now over the implications of the slow transaction time resulting from the 1 MB data limit imposed on each block of Bitcoin’s ledger. This is a problem that started to reveal itself once more players arrived at the table, and the dispute only continued to grow as Bitcoin’s user momentum skyrocketed. It is unclear as to whether the anonymous creator of the currency meant for the 1 MB data limit to be set in stone as an underlying restriction of Bitcoin’s core technology, or if this limitation was merely a default setting that can be adjusted to support the currency’s user base. The so-called fork in the road (or blockchain) can be thought of as the boiling point for several Bitcoin developers and miners who decided that they were done playing the waiting game. Instead of simply cloning the code and developing a new blockchain for Bitcoin Cash which has been the norm for forks such as this one, the developers and miners copied both of these elements from the original Bitcoin software. The result of this schism for Bitcoin holders at the time of the split was that their wallets now contained the same amount in Bitcoin Cash (BCC) as it did in Bitcoin Core (BTC). Users are either rejecting the BCC by ignoring it or selling it off to exchanges, or embracing the change (no pun intended).
Bitcoin vs Bitcoin Cash
While there is overwhelming agreement on both sides of the coin that the slow transaction time is a problem that is affecting Bitcoin’s scalability, the disagreement over a solution was contentious enough for some folks to create an entirely new currency altogether. Those in the BCC camp envisioned the future of Bitcoin to be a cryptocurrency that supports all types of daily transactions in real time, such as paying for lunch or purchasing a train ticket. Attempting to make this possible, the developers and miners that initiated the switch increased the data capacity for each block on the chain from 1 MB to 8 MB. This data increase does not come without limitations, however – some Bitcoin service providers refuse to support Bitcoin Cash integration while those who have agreed to do so complain of a rushed and difficult process.
Traditional Bitcoin loyalists believe that increasing block size goes against the basic principles of decentralization underlined by the cryptocurrency’s pseudonymous creator Satoshi Nakamoto. There is speculation that larger blocks will make it more difficult for small, individual miners to compete with larger entities, therefore placing the power in the hands of a few top competitors. Along with this, security is a concern as exchanges and wallet providers rush to familiarize themselves with the new coin in order to manage risk and operate business as usual. For these reasons, the majority of native Bitcoin authorities have decided that the answer to the problem is fitting more transactions on each block instead of dramatically increasing block size. Enter SegWit2x, a plan that won the support of many – except for Bitcoin’s Core developers, that is. This solution focuses on eliminating the signatures attached to each transaction in order to clear up space on the page for more transactions. The blocksize is also doubled to 2 MB of data per page. SegWit2x is controversial because some believe that it diverges even more from Satoshi Nakamoto’s original vision than Bitcoin Cash does. Regardless of this, SegWit2x was adopted shortly after the birth of Bitcoin Cash and is unsurprisingly already facing hurdles of its own.
While uncertainty looms thick in the air of the Bitcoin world, it is likely that another fork is on the horizon seeing as though many users are unhappy with SegWit2x’s performance thus far.
Article by Julianne Dardanes