March 11th, 2018
Since the beginning of Bitcoin, there have been questions surrounding this digital currency. Every year, Bitcoin is becoming more popular and Bitcoin users are asking even more questions regarding Bitcoin’s ability to scale effectively. Bitcoin is a digital currency that exists within a network of computers, within a blockchain. This revolutionary ledger, records technology and is grabbing the attention of people across the globe. What’s even more interesting about this digital currency is that it is decentralized and exists on computers and smart phones around the world.
One of the problems with Bitcoin technology, however, is that it is slow. Especially when compared to traditional banks when dealing with credit card transactions. According to a report, Visa processes 150 million transactions per day, which translates to about 1700 transactions per second. How many can Bitcoin do per second? About seven. Each of these transactions takes around 10 minutes to process. Over time, the user base of Bitcoin has grown, making the waiting time for transactions even longer.
One of the latest concerns or the “debate” around Bitcoin technology, has been with the central problem of scaling, as well as increasing the speed of the transaction verification process. There are two major solutions for this issue, either make the amount of data which needs to be verified in each block smaller (making transactions cheaper and faster) or to make the block data block larger which would be able to process more information at one time.
In July of 2017, companies and mining pools that represent around 80 to 90 percent of Bitcoin computing power, voted in favor of the technology SegWit2z or segregated witness. SegWit2x helps to reduce the amount of data in each block by removing the signature date from a block of data which needs to processed in each transaction. Signature data is estimated to account for almost 65% of the data that is processed in each block. There has also been talk of doubling the size of blocks from 1mb to 2mb. Experts believe that this will help to improve Bitcoin’s overall scalability. Scientists revealed that they had mined the first 1GB block in October of last year, this block is 1000 times bigger than regular sized blocks.
However, Bitcoin cash is a different story. The concept of Bitcoin cash was started by several Bitcoin miners and developers who were concerned about the future of Bitcoin. As you read above, Bitcoin’s ability to scale effectively is a huge concern, especially for miners. They had reservations about adopting segregated witness technology and miners felt that SegWit2x was not capable to address the fundamental problem of the scalability issue, nor did it follow the roadmap that was officially outlined by Satoshi Nakamoto. The process of introducing SegWit2x was completely transparent adding concern that the technology undermined the democratization and decentralization of Bitcoin.
On August 1st, a few developers and miners initiated the processes of what is known as a hard fork, creating a new currency called Bitcoin cash. This “cash” was implemented to increase block size of 8mb, which will accelerate the verification process and ensure the transaction verification speed, regardless of the numbers of miners in support of it. This has raised concerns about security issues of Bitcoin cash in the digital currency community.
This latest development could mean many new things will be happening for cryptocurrency in the future. The situation is fluid and market values are constantly volatile. It’s tough to get a clear picture of the situation, since Bitcoin Cash hasn’t been on the market very long.
Improving digital currency as a transaction medium will depend on how well the levels of security are maintained (Bitcoin has never had a problem with security issues before) and if transaction speeds increase. Bitcoin Cash can process transactions within two and half minutes, making it the quicker option for Bitcoin enthusiasts.