The world’s most popular cryptocurrency heads for a minor split today with the launch of a spinoff—Bitcoin Cash. Despite this, a larger divide has been avoided after a broad consensus was reached to upgrade transaction speed.
When making transactions, Bitcoin users must wait for “miners”—who use software to generate, or “mine” bitcoins—to approve their purchases. Because miners favour transactions with higher fees attached (which they receive), low fee transactions languish at the bottom of the queue.
To speed things up, miners have agreed to download new software that will enlarge the “blocks” used to enable transactions, effectively doubling the system’s speed. However, there was concern that many miners couldn’t afford a big upgrade. In that scenario, Bitcoin would have essentially split into two different currencies. But, a compromise was reached to use a widely-attainable modest update.
A small group wants to go further and implement even larger block sizes; that group will launch Bitcoin Cash today, believing faster transactions are necessary to become a mainstream currency. Yet, it poses a minimal threat to the original.
However, a bigger split may only be delayed—the current upgrade will not be up-to-date forever, especially if the userbase expands significantly.
Nicholas is an Italian politics aficionado. Nick brings his knowledge of southern Europe to bear in The Daily Brief team, where he serves as a senior analyst and editor.