The Cheat Sheet

Forking and the future of cryptocurrencies

JINOY JOSE P | Updated on January 09, 2018 Published on August 02, 2017

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Forking?

Yes. In the world of computing, forking occurs when differences arise among developers and other crucial stakeholders of an open source software on its character and function. As a result, one camp of participants splits the software’s source code and creates a new product. If the changes are smaller and smoother, it is called a soft fork, while big-ticket changes are called hard fork.

Interesting, so what’s the new product here?

Meet Bitcoin Cash, a new digital currency like bitcoin (BTC) which can be mined and used in transactions. The world of cryptocurrencies (cryptoland as the geeks call it) has seen a heated debate in the past few months over several characters of the bitcoin. The main issue was the ‘need’ to scale up transaction support over the bitcoin blockchain. A section of the community felt bitcoin blocks (the units that make up bitcoin’s blockchain technology) should be bigger in size for user convenience. Currently it is 1 megabyte. The debate was so intense and widespread that it was termed the Bitcoin Civil War. And Bitcoin Cash emerged as the solution.

So, what are the new features of B-Cash?

This new project increases bitcoin blocks to eight megabytes in size. But there is one curious fact: as the blocks get bigger, they also get harder to mine. Experts say the increased data size means larger blocks favour users and miners with more powerful computing networks.

Who’re the supporters of Bitcoin Cash, I’m curious…

This lot includes those who have always supported bigger block size for bitcoins. In fact, Bitcoin Cash is not the first of its kind to introduce such changes. The examples are Bitcoin XT, Bitcoin Classic, and Bitcoin Unlimited. These alternatives tried to bring in similar tweaks but they didn’t go forward. These developers also support Bitcoin Cash, including entrepreneurs, researchers and users.

So, what will happen to bitcoin now?

Well, it’s business as usual for the world’s most popular digital currency. Cryptocurrency watchers say the best currency will win the race. Bitcoin Cash has a long way to go to prove that the ‘hard’ fork (a major change, against minor tweaks or soft forks) was worth the time and effort. The market for digital currencies are run by rules of economics. Which means, how Bitcoin Cash is going to behave on the exchanges will determine its fate.

Currency miners and users will be so confused now, I bet.

Yes. They have to pick a side in this split now. It will take some time before a majority of the users make up their minds. In theory, Bitcoin Cash is now worth about $315 per token. But this will soon be subject to extreme fluctuations. Bitcoin is currently valued around $2,726 per token. Mind you, not all forks turn out beneficial for the software. Some resolve on their own, but others, triggered by ideological rivalries and other serious rifts in the software community, can permanently damage the network. Experts, however, don’t think bitcoin is going to drop to around $2,400 and equal Bitcoin Cash soon, but the days to come will be crucial for this cryptocurrency.

Oh! Bitcoin, after all, has been a great experiment...

Indeed. The fact is among the alternative cryptocurrencies only the likes of ethereum and ripple have made the cut , most other competing cryptocurrencies have faded away. Bitcoin Cash faces the same challenges. Also, its critics say that it’s easy to make spin-offs but what matters is protecting and growing bitcoin’s value in ways that benefit the entire ecosystem of decentralised online currencies. That’s a big ask.

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Published on August 02, 2017
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