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Understanding Complicated Splitting of Bitcoin

Understanding Complicated Splitting of Bitcoin

Are Separate coins with different rules become the strategy?

In the mid of July, there has been a news from Bitcoin official encompassing a new announcement on Aug 1. There was nothing revealed on what would going to happen but investors had been advised to not trade via Bitcoin until the final announcement on 1st August.

Prior to Aug 1st, there had been great talk and debate by News journalist, Authors, Investors, and traders. And then a new currency emerged referred to as “Bitcoin Cash”. It is the first time in Bitcoin’s eight years history where original Blockchain network has gone through the “Hard Fork”. This is what a Blockchain network splits off with a small fraction – as Bitcoin Cash (BCH).

Why the Split?

One of the technical reason behind this could be “Block capacity”. If speaks broadly, it is essentially dealing with preserving decentralized nature of Bitcoin network. Alongside, independent control and hastening the transaction speed was another concern of the split. The key motto behind this was to create cryptocurrency process more viable for conventional e-commerce and payments.

Eth and Bitcoin – The Fork

Far-sighted Bitcoin Fork is the second biggest fork in cryptocurrency market after Ethereum’s announcement on “smart contract” in 2016. This fork created two coins; Ether (ETH) & Ethereum Classic.

Though, there can be a diverse reason for Bitcoin and Ethereum’s Fork, parallels between the split explains many interesting and complicated facts on reaching out the consent. This regards on major decisions within Blockchain network and when the standoff is cross, a Fork may follow.

Much awaited and interesting thing after Fork is to see the trading demand of those coins. As we can see, these 4 currencies are in peak demand after Fork. Even Bitcoin has surged enormous growth of $3500. And other 3 currencies are still on the top of cryptocurrency market.

Wow Bitcoin just gave birth to a $10 Billion baby

By Valkernburg. But in real practice, it is true until liquidity remains in the market. Enough people now trade BTC on exchanges and making transactions on the Bitcoin blockchain. It shows artificial scarcity is the bases of market capitalization, that seems bad economics.

A short guide on Blockchain Networks

Do you all familiar with Bitcoin Blockchain? If not here is a short guide

According to Valkernburgh

“The reality is, there are no Bitcoins, they don’t exist. They’re a construct of software and people’s imaginations. The only thing that describes the existence of Bitcoins is the blockchain, a ledger of all transactions,”

A Blockchain comprises of two components. One is peer-to-peer (P2P) Network of computers, often referred as Nodes. The collective batches of encrypted transactions will be added to the code block. At the end of a chronological chain, each block will be added and stored in synchronizes on each node all over the network.

Since blockchain is decentralized in nature, no party can control it (as to Financial institution, Bank or Government). Simultaneously, Blockchain provides consensus bond and time stamped along with tamper-proof data. This prevents requirement of third party to proceed the transaction.

The Blockchain records and marks every event happens in Bitcoin history. This shall also include New coins and evidence of transfer.

Computer on the network must have running compatible software to facilitate node view and validate transactions. Thereby, in case if your software is not compatible or if any consensus rules is not complying by you with Bitcoin code base, then the network will ignore the transaction. This speaks why a blockchain is essential and which speaks about the ability to broadcast and proceed valid transaction & then deal with balance.

These consensus rules include concepts like “Proof of Work” – A private and public key encryption here 1MB on Bitcoin block size. This was the point of debate among Bitcoin developers and Miners. And this has led to the conclusion, so called – Bitcoin Cash Fork.

Features that marks Bitcoin Cash

The major reason behind this concept is “consensus rules”. Here Network will ignore you if you break any of the consensus rules. In case, if the bunch of people breaks you in a certain way, then you will be compatible with a parallel network.

In contrast, under Bitcoin cash – with the frustration of precepting to scale the debate, a small minority of miners has created the modifications and forked Bitcoin.

Why there is increased Block size in Bitcoin Cash?

As the new currency, Bitcoin cash increases the block size to 8 MB.

Since there is huge demand of Bitcoin and with which network is facing heavier stress to process and further validate the transaction load. And also, a recent report of June states “completion time of transaction seems to be more than 40 hours than 10 minutes earlier”.

Breaking down the Bitcoin fork

Likewise, other public blockchain and cryptocurrency, Bitcoin is open source software. Modification and changes of how Bitcoins approval by consensus and every CPU gets a vote. “If a group of nodes customizes their software without consensus, those nodes then revoked a rule held by other networks and create their own fork of the blockchain”, explained by Valkenburgh.

He said, “If you break any of the consensus rules, then the network will ignore you. If you and a bunch of people choose to break it in a certain way, you’ll all then be compatible with a parallel network”. “What happened with Bitcoin Cash is, a small opposition of miners and enthusiasts unfulfilles with their approach to the scaling debate made those modifications and forked Bitcoin”.

Bitcoin cash upsurges the block size to 8 MB. The Bitcoin has grown in acceptance and network has come down massive anxiety to process and authenticate the transaction load. As a result, there was a backlogging of a transaction. The integration times had inflated from an average time of 10 minutes to a high of more than 40 hours during a strike this past June.

2016,2017 Bitcoin Network Transaction Speeds

Over more than 2 years, the debate in the Bitcoin community was on increasing the block size. Bitcoin cash forked it into realism and augmented the block size to 8 MB. Nevertheless, Bitcoin Cash actually stole another fork’s thunder.

In May, at the Consensus 2017 blockchain conference in New York, a prominent group of international Bitcoin companies declares the New York Agreement, which resolved to introduce a hard fork before six months called Segwit2X. This fork also implemented to change the block size but negotiate on the disputed issues by only raising the capacity to 2MB. Few communities felt that block size felt that block size shouldn’t be modifies as they think simply doubling the size wasn’t meant to be enough.

Presently, Segwit2X still has the sustenance of enormous majority of the Bitcoin network which makes the software update. Similarly, as the consensus of nodes upgrades to it. Jeff Garzik, CEO of enterprise blockchain company Bloq and a former Bitcoin core developer, is a foremost Segwit2X development. Despite the release of Bitcoin Cash, Jeff Garzik said that Segwit2X is pushing forward with its own fork to upgrade Bitcoin.

Author

Qadir AK

Qadir Ak - Co-founder of Coinpedia Blog - His interest as crypto Author, Editor, Speaker at cryptocurrency conference has made him known as passionate blogger and startup in Asia.