There's a civil war in the bitcoin community over the digital currency's future.
Developers, miners, and other stakeholders are locked in a heated debate over how best to scale the network, with chances steadily rising of irreconcilable differences causing a so-called "hard fork" that would split Bitcoin in two.
Bitcoin is in crisis, and while there's broad consensus that something needs to be done, there's little agreement on what.
What's the problem?
To put it simply: Bitcoin is too popular, and can't handle the weight of transactions going through the network.
To put it less simply: Bitcoin transactions are processed in so-called "blocks" that involve complex cryptography to verify and set the transactions. But as the currency grows and more and more transactions take place, the one megabyte size limit on blocks that is built into the system is becoming an issue, causing delays in processing transactions. A purchase might take hours to confirm, making it unwieldy for real-world use.
"This has also caused companies to change the services they provide," Charles Hayter, CEO of data provider CryptoCompare, said in an email. "Bitpay, for example, increased their invoice minimum by 2400%, while Coinbase has recently announced that users will now be required to pay on-chain fees."
Long-term, this is untenable if bitcoin wants to keep growing. The community recognises this — but it is split over how to respond.
What are the options?
There are two camps in the debate, pushing two different possible solutions: "Bitcoin Unlimited" (which we'll henceforth refer to as BU), and Segregated Witness (SegWit).
They're both proposed software updates to the bitcoin network that would change how it functions. They can't both coexist: Their implementations would "fork" the bitcoin network, effectively splitting it into two competing digital currencies.
For context: Bitcoin transactions are stored in a shared ledger called the blockchain, which is a series of blocks of transactions linked together. The entire transaction history of all bitcoin can be viewed on the blockchain.
his "hard fork" would split the chain in two, producing a new chain of transactions splitting from the original one.
But the difference between the two isn't just an arcane technical debate. This is an ideological battle over Bitcoin's future.
Who's going to win?
Nothing in the world of bitcoin is ever simple, so the outcome to this debate isn't clear right now. It's possible that bitcoin will fork and then both rival currencies will continue to coexist side-by-side, competing for users and legitimacy.
Another digital currency, Ethereum, hard-forked in 2016 over in response to a hack of the DAO (a decentralised organisation — it's complicated), but some miners disagreed with this decision and chose to continue to follow the original Ethereum blockchain — creating two competing currencies.
Something similar may happen with bitcoin. In their contingency plan, the exchanges said they will list BU as an alternative cryptocurrency, so people are publicly preparing for that possibility.
Or, everyone may all come to a happy compromise! But at the moment, a fork is sounding more and more likely.
What does this mean for the value of bitcoin?
Bitcoin has been hitting record highs recently, and if the fork problem is resolved in a timely and satisfactory manner, then it could make the market even more bullish.
source : http://www.businessinsider.com/bitcoins-hard-fork-bitcoin-unlimited-segregated-witness-explained-2017-3
Developers, miners, and other stakeholders are locked in a heated debate over how best to scale the network, with chances steadily rising of irreconcilable differences causing a so-called "hard fork" that would split Bitcoin in two.
Bitcoin is in crisis, and while there's broad consensus that something needs to be done, there's little agreement on what.
What's the problem?
To put it simply: Bitcoin is too popular, and can't handle the weight of transactions going through the network.
To put it less simply: Bitcoin transactions are processed in so-called "blocks" that involve complex cryptography to verify and set the transactions. But as the currency grows and more and more transactions take place, the one megabyte size limit on blocks that is built into the system is becoming an issue, causing delays in processing transactions. A purchase might take hours to confirm, making it unwieldy for real-world use.
"This has also caused companies to change the services they provide," Charles Hayter, CEO of data provider CryptoCompare, said in an email. "Bitpay, for example, increased their invoice minimum by 2400%, while Coinbase has recently announced that users will now be required to pay on-chain fees."
Long-term, this is untenable if bitcoin wants to keep growing. The community recognises this — but it is split over how to respond.
What are the options?
There are two camps in the debate, pushing two different possible solutions: "Bitcoin Unlimited" (which we'll henceforth refer to as BU), and Segregated Witness (SegWit).
They're both proposed software updates to the bitcoin network that would change how it functions. They can't both coexist: Their implementations would "fork" the bitcoin network, effectively splitting it into two competing digital currencies.
For context: Bitcoin transactions are stored in a shared ledger called the blockchain, which is a series of blocks of transactions linked together. The entire transaction history of all bitcoin can be viewed on the blockchain.
his "hard fork" would split the chain in two, producing a new chain of transactions splitting from the original one.
But the difference between the two isn't just an arcane technical debate. This is an ideological battle over Bitcoin's future.
Who's going to win?
Nothing in the world of bitcoin is ever simple, so the outcome to this debate isn't clear right now. It's possible that bitcoin will fork and then both rival currencies will continue to coexist side-by-side, competing for users and legitimacy.
Another digital currency, Ethereum, hard-forked in 2016 over in response to a hack of the DAO (a decentralised organisation — it's complicated), but some miners disagreed with this decision and chose to continue to follow the original Ethereum blockchain — creating two competing currencies.
Something similar may happen with bitcoin. In their contingency plan, the exchanges said they will list BU as an alternative cryptocurrency, so people are publicly preparing for that possibility.
Or, everyone may all come to a happy compromise! But at the moment, a fork is sounding more and more likely.
What does this mean for the value of bitcoin?
Bitcoin has been hitting record highs recently, and if the fork problem is resolved in a timely and satisfactory manner, then it could make the market even more bullish.
source : http://www.businessinsider.com/bitcoins-hard-fork-bitcoin-unlimited-segregated-witness-explained-2017-3
