The cold war between Bitcoin users and miners and Bitcoin Cash

THE SIZE OF THE BLOCK CREATES THE DISCORD

By Alex Vallenilla / @alexvallenilla

In the developer community there is a cold war. It has its antecedents since the implementation of Bitcoin XT, with the purpose of modifying the original Bitcoin protocol to expand the size of the block that is 1Mb and that only allows seven operations per second to be carried out, through the verification process and approval made by the miners. By then, Bitcoin XT was launched and was expected by the consensus of the nodes to determine if the change was proceeded, the result was a failure, the miners were left with Bitcoin.

With this issue a sector of the Bitcoin community continued. The creation of Bitcoin Cash was then reached and they openly told the market that the bifurcation was occurring, even accepting that it was an alternative cryptocurrency to Bitcoin. The main problem is the size of the block, which affects the number of operations that are processed every 10 minutes and the cost of commissions for the verification process. The developers of both sides are right in the position that each one assumes, the problem is that in the middle of the war that has been unleashed, they leave the financial speculators aside, that in the middle of the battle they are opting to withdraw liquidity, one of the causes of the decline in the price of the best-known cryptocurrency.

Operating with Bitcoin has become expensive, after one of its strengths has been that the costs of transferring money using this technology, meant that a commission could not be more than one dollar, currently there are operations that are between 10 and 25 dollars, because as the price of Bitcoin rises, operations increase and miners select to approve and verify those that pay more commissions and there are investors who pay more commissions so that their operation does not get stuck by one, two and up to three days waiting for confirmation, especially with operators of the exchange market who do not accept using SegWit, a protocol that helps increase the size of the block by 1.8 Mb and accelerates transactions that was activated in October last year. In earlier times, only 10 minutes were enough. The problem is in the incentive, and is that the miners earn more with this situation, so there has been no consensus in the nodes to abandon Bitcoin and pass Bitcoin Cash allowing the first sink and be adopted to the second.

But you have to see then the Bitcoin Cash side. This cryptocurrency emerges from the same Bitcoin protocol, it is a copy, except that the size of the block was increased to 8Mb. It allows faster transactions and less costs in commissions for users. This is the key point. The incentive It is there where the key of the unleashed war is. Bitcoin Cash for users is better, because the costs of transferring money using this technology, are still low, as was Bitcoin at first, in addition transactions are made faster and do not show the bottlenecks that the Bitcoin network is suffering from . The problem then arises in that the miners lose the incentives, by charging less commissions for verified operations.

This situation generates uncertainty, from the point of view of the speculators, who at the end of the day are those who inject liquidity in the exchange of encrypted data, which both networks use to bet on the price, because the bifurcation is generating changes, in the In the case of Bitcoin, the implementation of the SegWit protocol to lower commissions, in addition to the creation of the Lightning Network, which allows micro-payments operations outside the block chain, with very low commissions, is perceived as a modification of the protocol Original Bitcoin, as criticized by the side that supports Bitcoin Cash, while the detractors of Bitcoin Cash, point out that it was a duplication of the original Bitcoin. In this there is a cold war between users and miners.

This war will hinder the price of both cryptocurrencies, on the one hand the users and on the other the miners, two sides that depend on each other, it can not be said that Bitcoin will disappear because of that, but if it will end up evolving, the positive is that the protocol is designed so that the consensus determines which of the two are the bifurcation. For speculators, who do not handle the intricacies of computers, have doubled Bitcoin, resembling a new issue of 21 million coins, which seek to suppress the other 21 million, which makes investors think that this war is just beginning . However, it must be borne in mind that the implementation of a 1Mb block, in the case of Bitcoin, has been to avoid loading large blocks with operations that could end up being fraudulent. 09/03/2017