To begin with, Bitcoin has been the talk of every news channel, tabloid, website, etc. for a long while now. It’s increasing popularity might’ve caused a little problem for the network. Bitcoin is in a messy situation right now and something needs to be done. Fortunately, two possible solutions have been proposed as well, but only one can exist.
What’s The Issue?
In simple words, Bitcoin is unable to withstand the number of transactions taking place on the network.
The technical explanation is that the 1MB block size limit which is programmed into the system has become a problem and is causing delays in the processing of transactions. Basically, a purchase can take from a few minutes to hours to confirm.
Two techniques were proposed, which result in two different solutions: Bitcoin Unlimited, and Segregated Witness. They’re both proposed software updates to the Bitcoin network with the aim to completely change the way Bitcoin functions.
Obviously, the two can’t coexist, that would “fork” the Bitcoin network – splitting it into two different digital currencies.
A fork is known as a software update. Basically, updating a program from an old version to a new one.
It is a compulsory software update that is required in order for the program to function. It can be implemented to fix bug errors or any security issues present in the older version of the software. Also, a hard fork is irreversible.
The “hard fork” will split the blockchain, leading to the introduction of a new chain of transactions branching from the original one.
Starting off with Bitcoin Unlimited, this proposal is favored majorly by Bitcoin miners. To understand this, you must know the concept of Bitcoin mining. Bitcoin miners use specified powerful computers to solve complex mathematical algorithms in order to verify a transaction and be rewarded with newly issued bitcoins.
We are aware that there is a built-in block size limit of 1MB in the Bitcoin network, however, BU gives miners the permission to vote on increasing the block size whenever they want. This gives them control of the Bitcoin network, due to which they’re favored by miners.
On the other hand, SegWit is being voted by many Bitcoin enthusiasts and developers. Their aim is to optimize the Bitcoin coding in a way that allows them to decrease the transaction size and increase the transaction volume, all while sticking to the 1MB block limit. They suggest the use of a soft fork.
A soft fork is a software update that lets the network to adapt to the new functionalities and features implemented. The update doesn’t interfere with the existing software and the older version will still be usable.
Who Will Be The Winner?
Aha! Too bad we can’t answer this question because half the community goes for SegWit and the other half for BU. There’s not really much we can do, just voice out our opinion and educate others with whatever we learn and maybe help them come up with opinions of their own.
We’ll just have to patiently wait and watch how this turns out.
I’d like to point out that I have a very limited technical knowledge and only know my way around a few technical terminologies. This post is a compilation of weeks of research that I’ve put together myself. So, if you do find any errors, do let me know in the comment section below and I’ll be sure to check back on them.