Bitcoin broke into two different currencies after power brokers failed to resolve the dispute of how to handle the scaling aspects of the nearly ten-year-old cryptocurrency. The split created Bitcoin Cash, a “hard fork” of the original Bitcoin. It means that both groups get what they want – at least, somewhat. Business Insider explains what the whole ruckus was about:
On one side are the so-called core developers. They are in favor of smaller bitcoin blocks to protect it against hacks. On the other side are the miners, who want to increase the size of blocks to make the network faster and more scalable.
Because Bitcoin uses a peer network to verify transactions in a blockchain – instead of using a bank like ‘standard currency’ – as more transactions occur, the speed of those transactions slows down. Bitcoin miners use their computers to perform mathematical computations on the blockchain to process transactions – which creates more Bitcoins and nets them a little fee for their trouble. It’s in their best interest to have a fast, scalable network.
The developers, however, are more concerned with security than making money, so they’re not as worried about network speed, only that it’s safe from exploit. As the saying goes, ne’er the twain shall meet, and so Bitcoin split to allow for each camp to get what it wants.
The main bitcoin currency is adopting a system called Segwit2x that moves transactions out of the current blockchain, while Bitcoin Cash will use bigger blocks within the blockchain.
This means that Bitcoin Cash will be faster, but potentially less secure. The original Bitcoin will remain safer, but still not as fast.
While this sounds like a great idea, it’s not. Anytime that idealists get wealth, they suddenly become just like Republicans controlling the Fed. They will do anything to ensure they can keep that wealth, and that means forcing ‘solutions’ because they can – not because there’s a solid principle behind it.
Splitting Bitcoin means devaluing it. While Bitcoin Cash is trading in the futures market at $200-400, the original Bitcoin is already down over 5%.
Will Bitcoin fail? Time will tell – but so far it looks like yet another example of greed winning out over privacy and security.