The Split of the Bitcoin Blockchain
In three short hours, the leading cryptocurrency Bitcoin is going to undergo a permanent split of its network. Today is a big day for its investors and users. The Bitcoin network is facing what is said to be a hard fork – a split into two distinct digital currencies. Bitcoin Cash and Bitcoin Core will function to protect and stabilise Bitcoin.
With the potential to generate billions out of thin air, this is a topic worth monitoring. With the price of a single coin predicted to soar to a staggering $5000. Since cryptocurrency behaves differently to traditional currency, it is capable of rapid fluctuations over short periods of time. However, there is a risk that the forking of the currency could result in its doom.
One thing is certain, digital currencies are experimental, making them highly volatile in the best of circumstances. Unsurprisingly, the split has created a division between critics and users of the cryptocurrency.
Why does Bitcoin require stabilisation?
The network has been facing a block size issue. BTC is limited to 1MB of data per block on the blockchain. This determines the speed at which a transaction can be processed. The issue has emerged as a result of the globally growing popularity of Bitcoin. It has become the cryptocurrency of choice. It dominates not only the internet, but many shops and independent businesses accept payments in BTC.
This increase in number of transactions and trading volume will become problematic in the long run. A transaction on the blockchain must await available space on the next block until it can be complete. Resulting in significant delay.
Why not simply increase the block size?
Increasing the block size to 2MB would seemingly solve the problem. However, if block capacity is increased through the SegWit2x update, another issue will arise. A second-layer solution of this sort will move transactions off the blockchain. That is something that the community refuses to accept. The progressiveness of the network is grounded in its community and reaching an overall consensus to make decisions of this scale.
What does today mean for you?
Any party who owns a single Bitcoin before the split, will own one coin and one Bitcoin Cash after the split. One thing to remember is that the cryptocurrency economy is still in its infancy.
With thousands watching, we wait and see.