Bitcoin has a bit of a problem folks; it’s slowing down.
Specifically, the underlying system that bitcoin relies on – blockchain – is becoming congested, delaying transactions that should normally take ten minuets by hours and in some cases, days. Considering the currency’s key benefits are speed and reliability, this is not bloody good.
A blockchain is essentially a public ledger that keeps track of all transactions that happen across a network. Each cryptocurrency has its own blockchain, but they all pretty much behave the same. We have a dope explainer right here if you don’t quite get it.
This has all resulted from a kind of civil war within the bitcoin community. Congestion on the blockchain means that those who can afford it are able to pay fees to miners to have their transactions included on the next block, which effectively prices out small transactions like, say, a $4 coffee.
One side of the fence thinks this is just fine and are happy to allow bitcoin to become a currency for established institutions who can afford to pay the fees. The other argument is that bitcoin should be for everybody – and it should. It was, at least in part, created to take some power away from big finance.
To overcome the problem, a group of mostly China-based bitcoin miners (people or companies that are paid to to process transactions for the blockchain with a heap of computers) are planning to split the cryptocurrency’s blockchain ledger into two, with each one serving its own purpose.
It’s called a “fork” and will basically create a clone version of bitcoin called Bitcoin Cash. If you own bitcoin right now, great news – when the split goes ahead, you’ll have the same amount of money in both ledgers. In other words, your money could be doubled for free. Kind of.
See, it’s not yet known how much Bitcoin Cash will be worth and if the split will even work. If folks don’t use or mine it, it’ll shrivel up and die, so we’ll have to wait and see if the community gets behind it.
Some places won’t even accept the new branch of the popular cryptocurrency, including Coinbase, BitMEX, and Bitstamp.
“We do not want to support any behaviour whereby anyone can potentially split the bitcoin blockchain and effectively create free money out of nothing,” said the head of business development at BitMEX, Greg Dwyer.
The split is expected to take place sometime in the next 24 hours.
*The above article does not constitute financial product advice. You should consider obtaining independent financial advice before making any financial decisions
Image: The Patriot