2017 has come and gone, shaking up the cryptocurrency world with a swathe of newcomers interspersed with stellar highs and some sobering price corrections.
Bitcoin ended the year having grown over 1,000 percent in value over 12 months. However, that didn’t stop the community forking away from the preeminent currency.
These forks had varying degrees of success, as they looked to solve some of the major shortcomings of the original Bitcoin protocol.
This mainly comes down to the size limit of Bitcoin’s blocks. As it stands, the size of each block on the Bitcoin Blockchain is 1 mb, which limits the amount of transactions processed each second.
Over time, that limit has caused transaction speeds to decline, while payment fees increased as users were forced to pay more to miners to prioritise transactions.
The cryptocurrency community as a whole grew increasingly frustrated with the issues plaguing the Bitcoin protocol and different solutions have been proposed over the past two years.
Segregated Witness grabbed headlines in 2017, proposing two-fold changes to the Bitcoin network. The soft-fork, which was activated in August 2017, cuts a Bitcoin transaction data in two, moving the signature or ‘witness’ data to the end of the transaction, effectively reducing the size a transaction takes on a block which speeds up the network.
The second proposed change, which was ditched at the eleventh hour, is known as SegWit2x. This is a hard-fork, which would see block sizes increased from 1 mb to 2 mb to allow a greater number of transactions to be stored on the Blockchain.
Many of the original signatories of the New York Agreement, which comprised of the world’s largest exchanges, miners and wallets, weren’t comfortable with the hard fork coming so soon after SegWit’s activation. That led to the eventual postponement of SegWit2x.
The decision to drop SegWit2x inevitably caused a rift between two parties. The ‘big blockers’ who were adamant that an increase in block size would further solve scalability, and ‘Core’ who strongly opposed the hard fork solution.
This led to the creation of Bitcoin Cash, which forked away from the original Bitcoin Blockchain on Aug. 1, 2017.
Bitcoin Cash has been the subject of much debate, as the literal fork has been mirrored by unending debates by parties for and against.
Nevertheless, Bitcoin Cash is nearing six months of existence and fears of a pump and dump situation have subsided.
There are clear differences between the two cryptocurrencies, nevertheless it’s support on exchanges like Coinbase prove that the cryptocurrency is growing in popularity - even amid controversy of it’s launch on GDAX in December 2017.
It seems increasingly clear that Bitcoin Cash is here to stay and it’s survival could well end further debate of a proper SegWit2x revival on the Bitcoin Blockchain.
The other forks
Bitcoin Gold champions the cause of the everyday mining enthusiast, who dreams of making a steady income mining cryptocurrency with high powered graphics cards (GPU). As their website states, Bitcoin Gold aims to making ‘Bitcoin mining decentralised again.’
By simply diverging from Bitcoin’s proof-of-work algorithm SHA256 to equihash, individual miners using GPUs can mine Bitcoin Gold easily, with mid-range GPUs. The fork took place in October 2017.
Bitcoin Diamond is another hard fork from the original Bitcoin Blockchain which took place in November 2017. Created by mining pools Team EVEY and Team 007, BCD will have a total of 210 mln tokens, 10 times as many as Bitcoin and Bitcoin Cash.
Bitcoin Diamond mining uses the X13 hashing algorithm, which favors mining using GPUs much like Bitcoin Gold, opposing ASIC miners needed to mine Bitcoin, which are expensive.
Almost tongue in cheek, Chinese Blockchain investor Chandler Guo announced the launch of Bitcoin God in December. Claiming charitable intentions, holders of Bitcoin would receive their holding of 17 mln tokes, while the remaining four mln tokes of the 21 mln cap would be donated to charity, according the the website. It was ironically due to fork on Dec. 25, 2017 - Christmas Day. We’re taking this one with a pinch of salt.
Another intriguing, albeit sketchy fork is the so-called revival of SegWit2x. A completely new set of developers have reworked the original SegWit2x code, and the hard fork was announced on Dec. 28.
The group have admitted that they have no affiliation to the original developers, and the new fork has made some outlandish promises to supporters of the fork. As this writer reported, the project seems far-fetched and it’s progress will be monitored with skeptical eyes over the next couple of weeks.
The list goes on
While we’ve narrowed our focus to the four major Bitcoin forks of 2017, namely Bitcoin Cash, Bitcoin Gold, Bitcoin Diamond and Bitcoin God, there are many more hard forks to mention.
It’s hard to believe that many of these forks will survive or provide any real value to the wider cryptocurrency community. However, the discourse and ideas generated by developers looking to improve cryptocurrency protocols will inevitably benefit the community and drive the evolution of Blockchain technology into the future.