After years of infighting over how Bitcoin’s software ought to change in response to the digital currency’s growing popularity, the community supporting the technology has suddenly split.
It’s not yet clear what this means for Bitcoin and its users in the long run. To have any effect, though, the new currency, Bitcoin Cash, needs to attract miners.
Miners are what make the Bitcoin world run. Their computers process the digital transactions people make using Bitcoin and add them to its cryptographic ledger, known as the blockchain. In return for this effort, miners are rewarded in bitcoins.
A group of investors and entrepreneurs, many based in Asia, are the ones behind the “hard fork”—not miners. Peeved by what they see as a harmful lack of progress toward increasing the number of transactions the Bitcoin system can handle (seven per second, compared with thousands handled by conventional systems like Visa’s), they have taken matters into their own hands, and launched Bitcoin Cash. It’s meant to run just like Bitcoin, but no one knows if the mining community will buy into the newly created currency.
For years, there has been agreement within the larger Bitcoin community that eventually the software would need an adjustment to handle the growing number of transactions. But it has struggled to find a way forward (see “Leaderless Bitcoin Struggles to Make Its Most Crucial Decision”). The programmers in charge of updating Bitcoin’s code have resisted campaigns to increase the “block size,” or the number of transactions that can be processed every 10 minutes. One argument against increasing the block size is that could shut out smaller players who can’t afford the hardware needed to mine bigger blocks, while making it easier for a few big players to gain control of the network.
Its stable community of miners is crucial. To get traction, Bitcoin Cash (which at the time of writing is worth $220, compared with Bitcoin’s $2,771) will have to attract its own critical mass of miners.
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