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Imagine that you have a dollar in your wallet, and you put it aside for a while and then you realize that a coin has split into two. Sounds strange? Not in the world of cryptocurrency.
Bitcoin money, the most successful bitcoin branch, is set to split into two distinct entities this week, just over a year in its existence. Behind the split there are longstanding disagreements, fundamental about how bitcoin should work and what purpose it should serve – arguments that are tearing apart the cryptocurrency community. It is an episode full of tension, public gaiters and wild price fluctuations that some have described as a "civil war crypt".
Here's everything you need to know about the next split, known as bitcoin cash "hard fork".
What's the bitcoin money?
Bitcoin works like a software program, but unlike Microsoft Office, there is no single entity that determines how it should be updated. In the last few years, bitcoin infrastructure has struggled to manage a wave of transactions and community members have come up with various options to resolve the backlog. Most of the time, these new updates coexist with each other. An analogy would be that you can use Microsoft Word 2016 or 2013 or 2000 to access the same document, although some features may not be available in previous versions.
But bitcoin cash is like a new version of Microsoft Word, which generates documents that can no longer be opened via previous versions. In August of 2017, the bitcoin money emerged from the original bitcoin in an event known as "hard fork". At the time of the fork, anyone who owned bitcoins also inherited an equal amount of bitcoin money.
What is the difference between bitcoins and bitcoins?
Bitcoin's innovation lies in its blockchain – a public ledger of every single bitcoin transaction that has ever taken place, with information being recorded in chunked chronological data blocks. But there is a limit to the number of transactions with which each block can be filled, seen as an effort to prevent attackers from breaking the network with more voices, even if it slows things down. Currently, the bitcoin network can process up to 7 transactions per second, compared to tens of thousands of Visa.
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At the time of its inception, bitcoin money offered an eight-fold increase in transaction capacity by expanding the bitcoin block size limit to 1MB 8MB. His name alludes to the broader thesis that the real bitcoin should be a payment system that ordinary people use to buy their coffee – rather than a deposit of technical value due to its limited supply such as gold, as others believe.
Bitcoin liquidity is now the fourth largest cryptocurrency in the world, with a total market cap of $ 7.6 billion, about 8 percent of the value of bitcoins, according to CoinMarketCap data.
Bitcoin liquidity advocates include some of the biggest names in the cryptocurrency world: Wu Jihan, co-founder of Bitmain Technology in Beijing, the world's largest cryptocurrent mining platform producer, Roger Ver, one of the first bitcoins in the world known as "Bitcoin Jesus" "And Craig Steven Wright, an Australian computer scientist and entrepreneur who in 2015 claimed to be Satoshi Nakamoto – the pseudonym creator of bitcoins – but failed to provide evidence.
Why does the bitcoin split again?
There will be two competing versions of bitcoin money updates with incompatible rules. The new "rigid fork" is scheduled for November 15th at 16.40 GMT (November 16th, 12.40 hours in Hong Kong).
One version is called Bitcoin ABC, favored by Ver and Wu. One of the key features of this update is moving bitcoin cash over money transfers to support smart contacts: digital agreements that are automatically executed when certain conditions are met. This will probably pave the way for developers to create applications on the bitcoin cash network, something they can already do on other blockchains, such as ethereum.
The proposal maintains the size of the 32-bit bitcoin money lock. But Team ABC, which stands for "Adjustable Blocksize Cap", is in favor of removing the block size limit.
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The opposite faction is called Bitcoin SV, which stands for "Satoshi & # 39; s Vision" and is led by Wright, the self-proclaimed creator of bitcoins. Wright argues that bitcoin money should only be used as a form of "stable global money", a true reflection of the ideals behind the foundations of bitcoin. It proposes to set the block size to 128 MB to scale the cryptocurrency.
Ultimately, miners – who process transactions in exchange for new cryptocurrency units as a reward – decide what they want to do with their computing power (sometimes called hash). In short, any version will have most of the hash powers probably will survive alone. Another result could be that the two coins exist side by side.
Who will win?
It's hard to say. Important exchanges and investors have widely considered Bitcoin ABC as the most legitimate update. But according to estimates made by the Coin Dance data tracking site on November 15, Team SV controlled 70-76% of the total hash power in the bitcoin cash network, while the ABC team only had 14-26%. To complicate things, Wright he threatened use its hash power to sabotage the opposing chain. It may take hours or even days to see who will be the real winner after the fork begins.
What is the reaction so far?
Things have become ugly in the bitcoin money community. Last week Ver shared in a YouTube video what he said was an e-mail from Wright. "You are my enemy," Wright wrote in the alleged email, declaring a "war" with Team ABC. Also Wu of Bitmain is engaging in a war of words with Wright, calling him "Fake Satoshi" chirping.
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Most of the major cryptocurrency exchanges have announced plans to support the imminent demerger, which means they will take a snapshot of all cash balances of customers' bitcoins in the event that they have to be credited with the same amount of the new spin-off. Cash withdrawals and bitcoin deposits will also be suspended just before the fork until the network resumes its stable operation.
Bitcoin money has reorganized at some point, as investors have bet the fork would leave them with two types of coins. But on the eve of the looming war of hash, the cryptocurrency market suffered a sharp fall, with its total value falling below $ 190 billion for the first time in two months, according to CoinMarketCap.
Bitcoin has plummeted by more than 10 percent in the last 24 hours, trading at $ 5,700 dollars on November 15th at 09:30, Hong Kong time. In the same period, bitcoin money fell by 15% to US $ 430.
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