Phronesis
Active member
Bitcoin Cash is not Bitcoin. However, their history is also the history of Bitcoin, because until August 1, 2017 they were the same cryptocurrency: Bitcoin Cash is the first direct fork of Bitcoin. This means that the original code of the first blockchain and its transactions were cloned up to a certain point - specifically, up to block number 478,558. From there, a new blockchain was created with different rules and therefore a new digital currency separate (and not instead of) from Bitcoin. The main offering of Bitcoin Cash is written in its name (cash): being a much faster payment method than the original Bitcoin. In order to meet this goal, its developers decided to make a significant increase in the size of the original network blocks, going from 1 MB to 8 MB and from there to the current 32 MB. To understand why exactly this was the chosen option and why a new cryptocurrency had to be created rather than the same measure being implemented in Bitcoin, we must review the background that led to that result.
Satoshi Nakamoto built the first blockchain with 1MB capacity per block, which would allow only around 7 transactions per second. From the beginning, it was known that this would be a rather temporary capacity because, as more people used the network under these conditions, the speed would decrease and the commissions would skyrocket. And that was exactly what happened. Already in 2016, the scalability (growth) problems in Bitcoin were becoming more and more noticeable. The adoption of the currency began to multiply, resulting in a significant slowdown in the network. During one of the busiest weeks in its history, there were even tens of thousands of transactions pending confirmation. This gave rise to the so-called “commission market”: many users had to pay a higher amount of commission to the miners, in order to see their transaction confirmed as soon as possible. If it was decided to pay the lower amount, the transaction could be on hold for days or not go through at all. Thus, small transactions became impossible, as each movement could exceed 15 dollars.
One thing was more than clear: Bitcoin had to scale, its capabilities had to be improved as soon as possible in order to continue working with a greater number of users. The whole community agreed on this, but how it was quickly divided. Larger or more efficient blocks Two groups emerged in 2017 with the same objective, but with different proposals to achieve it: those who wanted to increase the size of the blocks and those who preferred a different alternative, which would improve their operation without the need to increase their size. In the first group were the supporters of Bitcoin Unlimited, the organization that maintains the Bitcoin client of the same name, led by the entrepreneur Roger Ver. His proposal was to carry out a hardfork (hard fork) to eliminate the limit on the size of the blocks: this would be adjusted according to the needs of the network.
The second group was led by the developers of Bitcoin Core, the main client of Bitcoin. The solution they presented was Segregated Witness (SegWit), a method through which transaction signatures were relocated within the block, thus optimizing space and allowing a capacity of up to 2 MB. To activate it, you would only have to perform a softfork (soft fork), less drastic than a hardfork because it maintains compatibility with previous versions of the Bitcoin client.
However, to carry out either of the two options, as is mandatory in the Bitcoin system, it was necessary to reach a consensus in the community, made up of the nodes and the miners. The controversy began then. Divided community The developers of Bitcoin Core maintained their position, mainly due to two factors: the flexible blocks that Unlimited proposed had not been sufficiently tested, therefore, implementing the proposal would not be very safe for the network; and increasing the size of Bitcoin's blocks would lead to more centralization, as more sophisticated equipment would be needed to support them. That way, a few companies could come to control the cryptocurrency.
For their part, from Unlimited they also stood firm, claiming that SegWit would hardly be a temporary solution and not a definitive one. Everything pointed to a hardfork that divided the network, the miners and the Bitcoin nodes, creating an additional cryptocurrency with which price, community and credit would be shared, as happened with Ethereum. To avoid this scenario, around 58 companies in the ecosystem, including such important names as Blockchain, Bitmain, Coinbase and Circle, reached a new agreement in May 2017: activate SegWit, but followed by a hard fork that increased the block size to 2 MB. This proposal was SegWit2x and, in the end, it would not be realized.
Origins and history
Satoshi Nakamoto built the first blockchain with 1MB capacity per block, which would allow only around 7 transactions per second. From the beginning, it was known that this would be a rather temporary capacity because, as more people used the network under these conditions, the speed would decrease and the commissions would skyrocket. And that was exactly what happened. Already in 2016, the scalability (growth) problems in Bitcoin were becoming more and more noticeable. The adoption of the currency began to multiply, resulting in a significant slowdown in the network. During one of the busiest weeks in its history, there were even tens of thousands of transactions pending confirmation. This gave rise to the so-called “commission market”: many users had to pay a higher amount of commission to the miners, in order to see their transaction confirmed as soon as possible. If it was decided to pay the lower amount, the transaction could be on hold for days or not go through at all. Thus, small transactions became impossible, as each movement could exceed 15 dollars.One thing was more than clear: Bitcoin had to scale, its capabilities had to be improved as soon as possible in order to continue working with a greater number of users. The whole community agreed on this, but how it was quickly divided. Larger or more efficient blocks Two groups emerged in 2017 with the same objective, but with different proposals to achieve it: those who wanted to increase the size of the blocks and those who preferred a different alternative, which would improve their operation without the need to increase their size. In the first group were the supporters of Bitcoin Unlimited, the organization that maintains the Bitcoin client of the same name, led by the entrepreneur Roger Ver. His proposal was to carry out a hardfork (hard fork) to eliminate the limit on the size of the blocks: this would be adjusted according to the needs of the network.
The second group was led by the developers of Bitcoin Core, the main client of Bitcoin. The solution they presented was Segregated Witness (SegWit), a method through which transaction signatures were relocated within the block, thus optimizing space and allowing a capacity of up to 2 MB. To activate it, you would only have to perform a softfork (soft fork), less drastic than a hardfork because it maintains compatibility with previous versions of the Bitcoin client.
However, to carry out either of the two options, as is mandatory in the Bitcoin system, it was necessary to reach a consensus in the community, made up of the nodes and the miners. The controversy began then. Divided community The developers of Bitcoin Core maintained their position, mainly due to two factors: the flexible blocks that Unlimited proposed had not been sufficiently tested, therefore, implementing the proposal would not be very safe for the network; and increasing the size of Bitcoin's blocks would lead to more centralization, as more sophisticated equipment would be needed to support them. That way, a few companies could come to control the cryptocurrency.
For their part, from Unlimited they also stood firm, claiming that SegWit would hardly be a temporary solution and not a definitive one. Everything pointed to a hardfork that divided the network, the miners and the Bitcoin nodes, creating an additional cryptocurrency with which price, community and credit would be shared, as happened with Ethereum. To avoid this scenario, around 58 companies in the ecosystem, including such important names as Blockchain, Bitmain, Coinbase and Circle, reached a new agreement in May 2017: activate SegWit, but followed by a hard fork that increased the block size to 2 MB. This proposal was SegWit2x and, in the end, it would not be realized.
