The last months were not the easiest for the cryptocurrency community. Bitcoin experienced two forks at once, after which the world saw two new coins – Bitcoin Cash (BCH) and Bitcoin Gold (BTG). How do they differ from the usual Bitcoin (BTC), what is the reason for their appearance and what to expect from the new cryptocurrency? Let’s try to figure it out.
Why do bitcoin forks happen?
The slang term “fork” (translated from English as “fork”) is used to mean a change in the program code of a particular network. If we talk about the blockchain, then at the moment of fork a single chain is divided into two separate branches. The initial chain may drag on in parallel with the new branch or even stop to exist. If it functions further, then its program code remains the same. However, the new branch already has a new program code, different from the main chain code.
Despite the huge popularity and high level of capitalization, users have repeatedly pointed out the weak points of the bitcoin blockchain. In particular, the maximum block size in a chain is only 1 megabyte. For carrying out a small amount of transactions of this volume was enough. However, with the growing popularity of Bitcoin and the increasing mining of cryptocurrency, the number of transactions has increased markedly, but the speed of their processing began to plummet.
1 transaction took 7 seconds at first, and already in May 2017, many miners started to receive complaints – they had to wait for a few hours or even days, to confirm the transaction. Because of this, entire queues were formed in the mining pools and those users who wanted to speed up the process had to pay an increased transaction fee.
The situation was aggravated and the only way out was to increase restrictions on the maximum block size. Most developers offered to bring some of the information beyond the blockchain and the size of the blocks themselves should be increased just to 2 MB. Such statements did not find a special response from the miners, since such an insignificant increase in block size would not greatly affect the speed of transactions. However, the developer Amori Sachat’s proposal to keep the blockchain’s current structure, but at the same time increasing the block size to 8 MB was met with a bang. From this point on, the history of Bitcoin Cash began.
Bitcoin Cash: when size matters
A group of developers led by Amory Sich (by the way, a former Facebook engineer) held a planned fork on August 1, 2017. The division of the Bitcoin blockchain fell on block No. 478,558 – it was the last common block for Bitcoin and Bitcoin Cash. The next block was already formed in two different formats: the first one – according to the SegWit2x protocol (adopted for the Bitcoin blockchain), the second one – according to the original Bitcoin Cash protocol.
An interesting moment is connected with this event. All users who had a certain amount of bitcoins in their accounts received a similar amount of new cryptocurrency at the time of the split. This explains the noticeable surge in user activity on the eve of August 1, 2017, knowing about the upcoming division and “split” of the last common block, users rushed to get rid of as many bitcoins as possible to get more BCH “on the ball”.
However, it was still difficult to say whether Bitcoin Cash could shoot in August. At first, it was only possible to extract a new cryptocurrency in the manner described above — to receive it in an amount equivalent to the bitcoins in the account. Some popular exchanges (for example, Exodus, BitMEX, Coinbase and GDAX) were generally so skeptical that they refused to accept BCH. However, Bitcoin Cash was recognized by others in September, not less or even more significant players of the cryptocurrency market. Thus, the new cryptocurrency was supported by the exchanges and exchangers Kraken, Bitfinex, Bitstamp, ViaBTC, Korbit, BTCBOX, BTCPOP, CoinFloor, HitBTC, etc.
Describing the new currency and its prospects, experts don’t have one point of view. Some call it a good alternative to the usual Bitcoin, others promise a speedy dumping. Let’s consider the main advantages and disadvantages of Bitcoin Cash to understand the situation.
Leading analysts point out that those users who have accumulated a lot of bitcoins at the time of Bitcoin Cash launch were in an unambiguously advantageous position. The user, who had 10 BTC on his account on August 1, received 10 BCH, for which he will now be able to negotiate about $ 6,000. A good profit out of the blue!
What will happen to Bitcoin Cash is unknown. However, while the exchange rate is growing, it makes sense to mine BCH and beyond. Moreover, by changing the block size, to mine the currency has become really easier and faster. You do not need to buy new equipment for the mining. You can use the same asiki and farms as for the extraction of conventional Bitcoins.
However, the emergence of Bitcoin Cash is not the main event that shook the miners. After all, just the other day there was another fork, which resulted in the emergence of a Bitcoin Gold branch.
Bitcoin Gold: The Golden Bitcoin
The initiator of the creation of this cryptocurrency was a certain Jack Liao, director of the Hong Kong mining company Lightning ASIC. His main task he called the solution to the problem of monopolizing mining. The essence of this problem is in the fact that for the extraction of cryptocurrency it is necessary to use special ASICs and farms the production of which is controlled by several large corporations (first of all, Bitmain, Canaan and Bitfury).
As an alternative, Liao suggested using Equihash algorithm, due to which mine Bitcoins can be done using video cards alone (the so-called GPU mining). Consequently, the extraction of cryptocurrency will become available to a wider range of users. Buying video cards is not as expensive as Asiki or whole farms.
Another fork of the bitcoin blockchain appeared in october 25 2017. The new branch was named Bitcoin Gold. As in the case of Bitcoin Cash, at the time of the split, users could automatically receive a new currency equivalent to the bitcoins in their account.
The created chain functioned in test mode for about a week. New blocks were not added at all. There is no detailed information about the structure of the chain either. The developers only report that with each new open block the complexity of mining will increase. You can follow Bitcoin Gold news, for example, on https // mining cryptocurrency.ru/bitcoin gold btg /.
Be that as it may, most experts are skeptical about the emergence of Bitcoin Gold. Here are some facts that raise doubts about the success of this fork.
At the same time, some experts tend to believe that Bitcoin Gold will find its investors. First of all they can be miner efirium. As it is known, now for the mining of this cryptocurrency graphic cards are used, but in the near future it is planned to switch to the same asiki and farm. That is ethereum miners can easily switch to BTG mining and thereby increase the value of the currency. After all, the value of cryptocurrency is largely determined by its popularity, the number of people who are ready to use it.
However, it is already clear that Bitcoin Gold will not be able to repeat the success of Bitcoin Cash. If the second one really influenced the optimization of the mining process by increasing the size of the blocks, the first one so far can not prove its superiority compared to the usual Bitcoin block-chain. Its only difference is the use of the Equihash algorithm, which allows mine to cryptocurrency using graphics cards alone. There are no other fundamental differences in the structure of blocks, their size and protection from attacks.
However, as for the Bitcoin itself, then there is success. On the eve of both forks, users hurried to acquire a large number of bitcoins, so the cryptocurrency rate jumped sharply upwards. Thousands of people bought bitcoins to get free BCH and BTG, as a result of which the price of bitcoin in a matter of days reached the highest point in its entire history.