For those of you who don’t know, the world’s first and most popular cryptocurrency Bitcoin split in half on August 1st, 2017. Now, there are 2 versions of it – Bitcoin and Bitcoin Cash. As for, Bitcoin Cash, it instantly became among the leading cryptocurrencies in among market capitalization.
Over the last couple of months, the international community has been discussing the ways to accelerate Bitcoin transactions. The thing is that along with getting more expensive, the system slowed down. There has been no consensus between the developers so far. That’s why some of them decided to quit and start Bitcoin Cash. This is how the world’ most popular and expensive cryptocurrency was split in half.
What was the reason for the conflict? Back in may 2017, Bitcoin users complained that their transactions took days to be confirmed. The thing is that the speed of adding bitcoins to the block chain is one BTC per 10 minutes. This limit was introduced in order to prevent DDoS attacks. However, as Bitcoin got more popular and liquid, this limitation turned into a major drawback for Bitcoin users.
The community offered 2 solutions – either canceling the 1Mb limit or letting some of data be stored outside of the block chain. The first scenario (Bitcoin Unlimited) was supported mostly by Bitcoin miners. However, the developers warned that this would require scaling up the capacities to process the increasing amount of transactions fast. This is not beneficial for small-scale miners and may result in monopolization, which contradicts the very essence of cryptocurrencies as a decentralized means of payment.
As for the advocates of storing some data outside of the block chain in standalone files (this is known as Segregated Witness, or SegWit for short), they promised to reduce the load and increase the speed of processing transactions.
As the results of those talks, the advocates of Bitcoin Unlimited and SegWit compromised and created something called SegWit2x (2Mb limit with storing some data outside of the block chain). This solution is now supported by 95% of Bitcoin miners, but a group of insiders started Bitcoin Cash. The limit is 8Mb, which is basically its only difference as compared to Bitcoin.
Most experts are now skeptical about the future of Bitcoin Cash. However, it is going to make rival to the classic version of Bitcoin. And this is happening now. After the split, Bitcoin saw a minor drawdown. At the same time, Bitcoin cash managed to gain enter the TOP3 digital currencies in terms of market capitalization with almost 8 billion dollars, which means the international community has been getting increasingly interested in Bitcoin Cash ever since it was launched on August 1st, 2017.
