Become a fan of Slashdot on Facebook

 



Forgot your password?
typodupeerror
Bitcoin Businesses The Almighty Buck

Bitcoin Splits in Two Amid Feud (cnet.com) 204

Bitcoin is dividing in two. Disagreements about how to operate the cryptocurrency have led to a new strand called Bitcoin Cash, which is breaking off from the bitcoin system. From a report: Bitcoin Cash launches Tuesday in what is known as a "hard fork" from bitcoin, a virtual currency based on peer-to-peer transactions without any central authority or bank behind it. The new offshoot is a response to the increasing popularity of bitcoin, which is struggling to deal with massive numbers of transactions with its underpinning technology. The main bitcoin currency is adopting a system called Segwit2x that moves transactions out of the current blockchain, while bitcoin Cash will use bigger blocks within the blockchain. Bitcoin holders are set to receive the same amount of bitcoin cash as they have in bitcoin if the exchanges and wallets they use support the new coin, another report added. Exchanges including Kraken and ViaBTC have said they'll support both, while others like Coinbase and Poloniex have said they won't, citing uncertainty that bitcoin cash will have lasting market value.
This discussion has been archived. No new comments can be posted.

Bitcoin Splits in Two Amid Feud

Comments Filter:
  • by Last_Available_Usern ( 756093 ) on Tuesday August 01, 2017 @12:24PM (#54920509)
    I must be missing something. I assume everyone involved is working toward strengthening the currency as a whole and not trying to undermine it's success. With that goal in mind it would seem coming to terms over it's future would make a lot more sense than segmenting it's user base.
    • Re: (Score:2, Insightful)

      by timholman ( 71886 )

      I must be missing something. I assume everyone involved is working toward strengthening the currency as a whole and not trying to undermine it's success.

      My experience is that most people involved in BTC are doing it because they see it as a way of getting rich quick. There is very little idealism left in the BTC ecosystem. It's mainly a bunch of people scheming to become the next set of digital gold rush billionaires.

      • by H3lldr0p ( 40304 )

        It's mainly a bunch of people scheming to become the next set of digital gold rush billionaires.

        Which is chasing after nothing at this point. That ship has sailed, so to speak. If anything, this breakup sounds like someone wants to start over with part of the bitcoin brand.

    • by DanielRavenNest ( 107550 ) on Tuesday August 01, 2017 @12:46PM (#54920671)

      > I assume everyone involved is working toward strengthening the currency as a whole and not trying to undermine it's success.

      You assume wrong. Blockstream, Inc, a company financed by the second largest mainstream financial company (AXA), hired most of bitcoin's core developers, and drove off many of the rest. They have roadblocked bitcoin's expansion in order to force transactions "off-chain" onto private settlement networks, the kind that AXA can collect fees off of.

      A "block" is a set of bitcoin transactions secured with a cryptographic hash, so you can verify the contents are correct. Until now, the block size limit has been 1 MB. Since blocks are generated every ten minutes on average, this works out to slightly less than old 14.4K telephone modem speed. This is an absurdly low limit on transaction rate, but was not a problem until last fall, when the volume of transactions hit that limit. The core developers had refused to raise the limit, so that instigated the software fork.

      Bitcoin is open-source software, so it can be forked like any other OSS project. The split happening today is a simple change to the code, to allow up to 8 MB blocks. That amounts to 107 kbps, which is still well within modern broadband capacity. All the transaction up to this point is identical for both forks, but once the new fork generates a block > 1 MB, the other fork won't recognize it as valid. From that point forward their blockhains will have different histories. Any bitcoins you had previously will be represented on both ledgers, and it is up to the user to choose which software they want to use to handle future transactions.

      • by JaredOfEuropa ( 526365 ) on Tuesday August 01, 2017 @01:02PM (#54920773) Journal
        How will double spending be handled? If my BTC are represented on both ledgers and I spend mine on one ledger, how and when does the transaction show up on the other ledger?
        • The simple solution is for Bitcoin to halve in exchange value, relative to fiat currencies. then you can double spend, but get similar value.

          The real question is if double spending happens, and the fork is rejoined, what then? I don't think the fork can be rolled back or 'unforked'.

          Probably the hard fork will result in one chain attracting most of the volume, the other losing acceptance, and one survives.

          • The simple solution is for Bitcoin to halve in exchange value, relative to fiat currencies. then you can double spend, but get similar value.

            But why bother? Why not just use smaller units of one Bitcoin as they become more valuable? One Bitcoin can be divided to eight decimal places. 1 satoshi = 0.00000001 BTC. You don't have to spend one Bitcoin all at once.

        • Individual transactions are still valid on both chains, and the people who generate blocks (called "miners") of both types can include your transaction. There is still only one bitcoin network. But there are different versions of node, mining, and user wallet software which will track transactions in different ways.

        • If you had 1 BTC, you now have 1 BTC and 1 BCC.
          But because BTC is still the universally accepted gold standard, it will keep most of its value or more (because now the uncertainty has ended) while BCC is regarded more or less as a speculative alt coin like there are hundreds of others.

        • There are two distinct ledgers which are effectively entirely separate from the point at which they diverged. Effectively, at the time of inception of the 2nd ledger, every bitcoin in existence became a "bitcoin1" and "bitcoin2". Bitcoin1s only exist on the 1st ledger. Bitcoin2s only exist on the 2nd ledger.

          If you spend a bitcoin2 (more formally called "bitcoin cash" or BCH) then you still retain the bitcoin1 (bitcoin) that it was twinned with, and vice versa. At present there is a market for BCH, such t
      • TFA doesn't mention this, but http://www.businessinsider.com/bitcoin-price-war-amid-volatility [businessinsider.com] and other newer articles I read say things like:

        This, McNeal says, was done on purpose to protect the network from hackers and other cybersecurity threats.

        ("This" being the size.) So that sounds to me like increasing the size could increase those threats. Yes or no?

  • How does a thing like this even work? What I'm reading is that everyone with bitcoin will now have an equal amount of bitcoin cash, and from now on the value of each will be uncoupled. Does this mean in the short run after the split the value of bitcoin is halved (at least), until the market decides how this will play out? What if I don't have a wallet that supports both at the outset, am I locked out from getting my bitcoin cash issue?
    • by hord ( 5016115 ) <jhord@carbon.cc> on Tuesday August 01, 2017 @01:16PM (#54920901)

      Not really like a split. More like a clone. This doesn't happen in the stock or currency world. Basically you now have two chains that operate on the same history but are now divergent.

      I have no idea how the value of this will play out because it will depend on how strong the support is for each. If each gains equal support, I imagine a decline in valuation for both back to "normal". Otherwise you'll have one absorb the transaction space of the other and essentially just eliminate the loser's value overnight, probably. Depending on how long that plays out people are going to be trading on both which means potential volatility.

      Popcorn-worthy from my seat.

      • by jeremyp ( 130771 )

        This doesn't happen in the stock or currency world.

        Yes it does. Companies can issue more stock. Governments can issue more currency. Doing so reduces the value of the stock/dollars that already exist.

        • by hord ( 5016115 )

          Companies issuing more stock is usually backed by capital infusion. Governments issuing more currency happens but then you trade on the same currency. This is more like a single country split into two but both are retaining the factories and producing goods for two markets. If it does happen in the financial world, it's certainly rare.

      • I have no idea how the value of this will play out because it will depend on how strong the support is for each.

        Supply and demand.
        Silliest solution: I now have double the money at half the value.
        Most likely solution: I now have double the money, half of it is still worth what it was, and the other is worthless.

    • by ThePyro ( 645161 )

      Does this mean in the short run after the split the value of bitcoin is halved (at least), until the market decides how this will play out?

      Right now the total market value of BTC ($2770) + BCH ($215) is roughly the same as BTC's recent all-time high ($2999). Users who are aware of both chains haven't really lost or gained anything. If you weren't paying attention, though, then you could be oblivious to the fact that your BTC dropped in value but you have unspent BCH that could make up for it.

      What if I don

  • I presume only one fork will really survive. After a period of double-spend shenanigans, I expect the larger block size fork will be the sole survivor. Since it's effectively evicting all of the Chinese miners, some 40% of the mining power of the network, the block difficulty for the new, larger block chain should plummet, making mining far more attractive to individuals again. In addition, the new chain should have radically cheaper transaction fees, which will tend to push transactions to use it. Wher

  • WTF is the underlying value behind BTC (or Ethereum, etc.) other than its own artificially created scarcity? Gold, cars, jewelry and other "investments" have value whether it's aesthetic or whatever, so can usually be enjoyed in some fashion while you own it. And real American $$ have the advantage of being - you know - legal tender for all debts, public and private" so is immensely useful/valuable. BTC, from all I can see, is just fools gambling. What am I missing?
    • Gold as a material has value.
      But gold bonds or gold certificates are just pieces of paper with artificial scarcity, supposedly backed by something lying in a vault from which it will never return and which you will never be allowed to see. From where I am sitting, gold is EXACTLY like bitcoin.

    • The underlying value is an economic concept called "utility". People value food and houses because they are useful to us. Their "utility value" is what other things we are willing to trade for them (our labor, dollars, etc). The thing is, utility value varies per person and even for the same person at different times. If enough trades happen over a period of time, we can establish an average "market value" - what people are currently willing to trade for this item.

      The usefulness of Bitcoin is in transfe

      • OK, the use of BTC to transfer currencies from failing states like Venezuela I get. However, what I see is a lot more folks treating it as a gamble on its value rising inexorably - nothing more. With a hard limit of 21M BTCs and no underlying "store of value", I can't see it being anything but a scam. Having said that, the underlying blockchain tech has tremendous potential for "normal" purposes.
    • Not really. Most of those things you listed have also value only in its scarcity. If there was a massive oversupply of gold it wouldn't be worth what it is.

      Value of anything is determined by supply and demand. It doesn't matter where this scarcity comes from as long as it exists.

    • by hipp5 ( 1635263 )

      Gold, cars, jewelry and other "investments" have value whether it's aesthetic or whatever, so can usually be enjoyed in some fashion while you own it. And real American $$ have the advantage of being - you know - legal tender for all debts, public and private" so is immensely useful/valuable. BTC, from all I can see, is just fools gambling. What am I missing?

      But gold, cars, and jewelry don't tend to have intrinsic value anywhere close to equal their USD value. Sure, you can enjoy them in their own right, and gold does have some industrial uses. But the value of "enjoyment" doesn't reach anywhere near millions of dollars for jewelry, and there's no way industry alone could support a valuation of US$1200/oz. for gold.

      These things mainly derive their value because people say they have value. People buy expensive art and warehouses full of expensive wine partially

  • Just goes to prove you don't need a government or central bank to eff up a currency.

  • by FeelGood314 ( 2516288 ) on Wednesday August 02, 2017 @01:40AM (#54923963)
    If you had bitcoins before the fork you will have them in both branches. If you acquire them in one branch you will not have them in the other. Now one branch will have the ability to do 8 times as many transactions as the other and lower transaction fees. We now have 3 types of coins. Ones from before the fork and ones on each fork. The ones after the fork will have different values/exchange rates. The ones still unspent from before the fork will likely have a value that is the sum of the two. Now if one fork gains more traction than the other that fork will become more valuable. My bet is on bitcoin cash because it is more useful for me. I don't speculate on bitcoin, I don't use it as a store of wealth and I don't use it to measure the value of anything. I use it strictly for transactions, to exchange value with others. The old system was limited to a rather pathetically slow rate.
  • Bitcoin was mostly safe from a quantum computer since you only revealed you public key at the time you created an input to a transaction. Before that, all people saw was the hash of your public key. Now however when you spend a pre-fork bitcoin on one side of the branch you reveal your public key, someone with a quantum computer could then figure out your private key and spend the bitcoin in the other side of the fork. I would therefore recommend that everyone cycle their current bitcoin in both forks so
    • Agreed. At some point in the next 5-10 years, it should be feasible to hunt for 'lost' bitcoin wallets with unspent coins sitting in them.

  • I might be movin' to Montana soon
    Just to raise me up a crop of
    crypto coins

    [...]

    Movin' to montana soon
    Gonna be a bitcoin tycoon

    [...]

    By myself I wouldn't
    Have no boss,
    But I'd be raisin' my lonely
    crypto coins

    Raisin' my lonely
    crypto coins

Moneyliness is next to Godliness. -- Andries van Dam

Working...