Bitcoin is again mired in more controversy than ever.
All the while its rival, Bitcoin Cash, has seized on the opportunity and gained significant ground over Bitcoin in terms of its value.
So how much is Bitcoin worth now anyway?
Let’s just say that one Bitcoin will now fetch you a little less than $5900.
Of course, that is a lot of money considering that Bitcoin started with nothing.
But did you know that the $5900 current value of Bitcoin is actually a 25 percent drop from its highest value of $7800 just this past Wednesday?
Maybe you didn’t know that.
And we won’t fault you for it because Bitcoin Cash, Bitcoin’s rival, has swept up the headlines with its own sudden rise.
Bitcoin Cash is just a spinoff network that has taken advantage of the fall in the price of Bitcoin.
Right now, Bitcoin Cash has doubled its value to over $1500 per unit.
And that’s an increase that has happened in the last four days only.
As mentioned before, in these same last four days, Bitcoin dropped its value by around 25 percent.
But everything isn’t doom and gloom as far as Bitcoin is concerned.
There is indeed some good news.
At least for one side of the civil war that has hit BTC (Bitcoin) and shows no signs of stopping.
The side that will surely benefit from BTC’s lower price is the one that wants to see the community urgently boost their network’s capacity.
The reason is simple enough:
They want Bitcoin to deal with the increasing number of transactions along with growing congestion.
And of course, they also want to hold back the ever-rising BTC transaction fees.
People who belong to this camp have actually gone out and bought Bitcoin Cash in numbers.
Because the main plan which would have expanded the capacity of the original and main BTC network didn’t work out.
It fell apart just this past Wednesday.
Gavin Andresen tweeted this past Saturday that Bitcoin Cash was something that he started to work on back in 2010.
He also said that Bitcoin Cash represented a store of value along with means of exchange.
It doesn’t take a genius to figure out that Gavin Andresen had a bit of a dig to the original and the mainstream BTC network.
We all know that issues such as rising transaction fees and slow transactions have harmed the mainstream BTC network.
That has also made the mainstream BTC network very unappealing to a lot of people.
And the number of discontented BTC users is only increasing at the moment.
People want to make their everyday payments quickly and painlessly.
Not to mention, they want to do so without huge transaction costs.
The main BTC network isn’t doing any of these things at the moment.
And that is why it is losing a lot of users.
The endorsement from Andresen carries immense significance for Bitcoin Cash.
The founder of Bitcoin, Satoshi Nakamoto, actually chose Andresen to lead the original BTC Project.
This happened in 2011 when Satoshi Nakamoto started to fade away from the BTC scene altogether.
The powers that may froze out Andresen from the Bitcoin Core development team back in the year 2016.
Media reports later revealed that Andresen lost his position in the midst of a regrettable debate over the BTC network’s future.
There is no doubt about the fact that currently, Bitcoin Cash cannot compete with the mainstream BTC network.
In other words, Bitcoin Cash is the overwhelming underdog.
The conventional BTC, or the mainstream BTC, is around four times of more value than the value of Bitcoin Cash, or the cash of Bitcoins.
That, however, isn’t going to stop Bitcoin Cash’s supporters from hoping (and betting) that Bitcoin Cash will change this around.
Bitcoin Cash may eventually overtake BTC.
It is true that the demand for Bitcoin Cash has increased and the network continues to grow.
On the other hand, the mainstream BTC network, despite all its troubles, is growing as well.
So it would be interesting to see which one comes out on top in the end.
Currently, the Bitcoin Cash network no doubt has the greater capacity.
But that is only for now.
The one area where Bitcoin Cash has a significant advantage over the mainstream BTC is that it has a dedicated community.
The Bitcoin Cash community has worked tremendously hard to expand the Bitcoin Cash network as the requirements have increased.
Moreover, some Bitcoin Cash backers also believe that Bitcoin Cash will overtake the mainstream BTC because the mainstream BTC is too stubborn.
It has resisted capacity increases multiple times.
And that will only hurt the mainstream BTC network.
These are the advantages that Bitcoin Cash backers believe will make Bitcoin Cash the dominant player in terms of payment network in the entire BTC world in the very near future.
If Expanding Capacity Is Good Why Some Bitcoin Backers Have Opposed It?
Not taking into consideration recent developers, the Bitcoin software had a hard-coded limit.
That limit represented one megabyte per Bitcoin block.
This limited the mainstream BTC network to process no more than around seven BTC transactions per second.
One side of the BTC civil war (some call it the big-block faction) has recently argued that the community should raise the limit.
That would help the mainstream BTC network to accommodate more transactions and quickly.
This, in turn, would help the mainstream BTC network to grow further.
But since it is a civil war, there is an “other” side as well.
This side, in the past, argued that the mainstream BTC network’s main strength included decentralization.
They considered decentralization as the most important attribute of the mainstream BTC network.
Additionally, this side worried that if the community allowed or enabled the flood of transactions, it would make it very difficult for average online users to take advantage of and participate in the mainstream BTC network’s transaction-clearing process.
This side of the BTC civil war also promoted a unique hack.
They called this hack segregated witness.
This hack helped the mainstream BTC network to squeeze in more transactions into every one-megabyte Bitcoin block.
That’s about it as far as benefiting the average people is concerned.
Because this side has also argued in the past that they saw an increase in BTC fees as healthy.
Over time, an increase in BTC fees would help the mainstream BTC network from getting too cluttered with transactions that they considered of low value.
And this is where the source of the conflict lies.
It raised its ugly head a bit too much in the past couple of months.
Back in August, the big-block camp of the mainstream BTC network split off from this mainstream BTC network.
Then they created their own BTC Cash network to rival the mainstream Bitcoin.
Bitcoin Cash supported eight megabytes Bitcoin blocks instead of just one-megabytes blocks.
Moreover, Bitcoin Cash represented an alternative online platform for online users who had a frustrating experience with the mainstream Bitcoin network.
More specifically, its lack of growth in the last couple of years.
In late August, developers belonging to the main Bitcoin network activated their segregated witness hack.
What did this hack do?
This hack moved online cryptographic signatures outside the mainstream Bitcoin network’s one-megabyte block limit.
As a result of the hack, the mainstream Bitcoin network has doubled its capacity.
Needless to say, the hack has also brought much need but temporary relief from congestion.
As mentioned before, traffic congestion had plagued the mainstream Bitcoin network for many months before the hack.
And then we have the May compromise.
The terms of this compromise clearly state the activation of the new hack called segregated witness must be followed by the community increasing the block size limit.
This compromise suggests that the mainstream Bitcoin network’s block size should be increased to 2 megabytes.
Apparently this is also the position that the small-block faction of the mainstream Bitcoin network likes to take.
The change in the block size was meant to take place some time in the middle of November.
As you might have already guessed, it didn’t.
As it turns out, after the community introduced the segregate witness back in August, things got a little off-track.
In other words, the community could not maintain its consensus.
And whatever consensus the community had come to before slowly began to evaporate away.
Come to the start of November, and the mainstream Bitcoin network community showed more disagreement than ever before.
Now different sections of the community started to hotly contest the proposal which would have allowed the network to double its block size.
As we have mentioned before, the mainstream Bitcoin network is based on what we call consensus.
Hence the developers behind the network can’t make risky changes that don’t have broad support within the community.
Just this past week, the leaders of the group that wants to double the mainstream Bitcoin network block size threw in the towel.
This group announced that the much controversial block size change would indeed not take place.
Apparently, what had transpired before was enough to throw them off a potential compromise.
Bitcoin Cash Hasn’t Helped In Solving Problems. In Fact, It Has Deepened The Actual Polarization Within The Bitcoin Community
So Bitcoin won’t get any capacity increase after all.
What does that mean for the community?
Well, let’s first discuss what it doesn’t mean.
The lack of capacity increase doesn’t mean that the mainstream Bitcoin network will never get an official capacity increase.
There is no doubt that the congestion on the mainstream Bitcoin network will continue to get worse.
This may push the community to come up with a consensus.
And when it does emerges, it will probably address the issue of needing larger blocks.
Of course, no one can guarantee that.
The community may come to a different consensus which may not involve a capacity increase.
We’ll have to wait and see what develops in the future.
The problem right now are those small-block advocates.
They envision a different future for Bitcoin.
An alternative reality where Bitcoin transforms itself into a low-volume online settlement layer for all high-value transactions.
Think back to the days when banks used to ship gold bars in order to settle each other’s obligations.
The small-block section of the mainstream Bitcoin community and their fans have actually planned their future hopes on something called Lightning.
What is lightning?
It is a completely new type of online payment network.
Lightning enables people to make small and fast Bitcoin payments.
And they don’t have to go through the trouble of posting every Bitcoin transaction to the main Bitcoin blockchain.
Theoretically speaking, it is entirely possible that Lightning enables millions, if not more, of Bitcoin-denominated online payments to take place each day without ever having to change the limit of one-megabyte Bitcoin network block size.
The only problem right now is that Lightning isn’t quite ready.
It is actually in its development stage.
Moreover, there is no way to tell if Lightning would work as efficiently as some of its advocates hope it would.
But that matters little for some.
Small-block advocates have this excitement about Lightning which has basically convinced them that there is really no need for a block size increase.
In other words, they aren’t necessary.
Perhaps that is what has pushed so many big-block advocates to Bitcoin Cash.
And they have flown to the mainstream Bitcoin network’s rival.
Such developments will give opponents of the big-block supporters the upper hand when it comes to Bitcoin’s messy internal politics.
The more small-block advocates gain, the less is the chance that Bitcoin would move towards a point where it increases its capacity size.
Some believe that Bitcoin may very well never increase its one-megabyte blocks.
The other point we have to take into consideration is the section of the community that is supporting the big-block faction.
Media reports say that the Bitcoin business community primarily supports the big-block faction.
This business community includes many names from Silicon Valley startups that have great funding behind them.
Till now, most of these companies and startups have primarily focused on the mainstream Bitcoin network.
But now we know that all proposals and negotiations to upgrade the mainstream Bitcoin network have stalled.
No one is likely going to see it as a surprise if these Silicon Valley companies start to show a little change of heart.
Some believe that the mainstream Bitcoin network isn’t doing enough to convince these companies that Bitcoin Cash isn’t the future.
Readers have to keep in mind that the main way that user interface with services such a Bitcoin is via these companies.
If these Silicon Valley companies do something to make it easy for users to use Bitcoin Cash, as they did with mainstream Bitcoin, no one can say if Bitcoin Cash wouldn’t overtake Bitcoin in the near future.
Additionally, Bitcoin Cash may well continue to maintain its advantage over the mainstream Bitcoin in two key areas,
- Transaction speeds
- Transaction costs
Currently, the mainstream Bitcoin network has high fees and slow transactions.
This could lead users to start their journey to switching over to the new Bitcoin Cash.
Once it becomes the preferred network of the users, the conventional Bitcoin will slowly make way for Bitcoin ash.
These are all the reasons why it is entirely possible that the markets shifted so quickly and dramatically towards the new Bitcoin Cash.
And that’s just the story from the past four days.
The debate between Bitcoin Cash and Bitcoin is starting to sound like a presidential election.
There is the general information that most people are consuming.
And then there are the industry insiders who really know what is going on and what is the difference between the two candidates.