Bitcoin cash, the salvation of virtual currencies?

soyjorge (41)in #bitcoin • 7 years ago

The cryptocurrency, created following a disagreement in the bitcoin community, promises to accelerate transactions and boost the currency.

To understand the operation of bitcoin it is enough to imagine how a transport company works. "Bitcoin blocks are like a delivery company's trucks and, just like with vehicles, they have a certain capacity," explains Leif Ferreira, founder and CEO of Bit2Me, the Spanish bitcoins trading company. Thus, when a user performs an operation with cryptocurrency to, for example, pay a dinner in a restaurant or a hotel room, his or her wallet prepares and sends a bitcoin information packet to be included in the Carrier who, in this case, is none other than the miner who processes the payment.

"It does not matter how much you are worth in the package, but what it occupies, and according to that the miners charge you. Again, just like in a transport company," Ferreira says. Thus, if a transaction occupies 1 kilobyte and each block has a 1 megabyte capacity, these are limited to 1024 operations per block. "As there are more transactions than the miners can process, they prioritize the ones that give the most leave," continues the responsible Bit2Me.

For Jorge Ordovas, co-founder of NewTrace, Spain's first blockchain lab, the conclusion is clear: "The bitcoin network has reached its performance limits, which means not only that cryptocurrency payments take longer to complete , But also a substantial increase in the commissions that users must assume to make these payments. In practice, this makes it unfeasible to use low payments on other alternatives such as credit cards or Paypal.

For years, the Bitcoin community has been discussing how to overcome these limitations and give a definite boost to the currency that makes it the hegemonic payment medium on the Internet. And is that although its value has multiplied exponentially in recent months - in March the price of virtual currency exceeded for the first time the ounce of gold -, its use does not stop taking off and fewer establishments accept it as payment method. "From the point of view of the user it is still too complex to use cryptocurrencies and there is no incentive to do so. The number of merchants that accept this payment is very limited, so that who acquires bitcoins usually does it as a high risk alternative investment to speculate With the increase of the price ", emphasizes Ordovas.

CLEAVAGE

In this context, last Tuesday took place a movement that can forever transform the future of virtual currencies. Bitcoin, the most used cryptoneon in the world, split in two resulting in bitcoin cash. This new digital currency aims to accelerate transactions and streamline their use. What is the difference? Returning to the simile of the trucks, each block of bitcoin cash allows to transport loads up to 8 times bigger than those of his sister.

Moreover, it maintains the two main features that make the coin created by the unknown Satoshi Nakamoto so attractive: security and anonymity. And is that bitcoin is based on the existence of a large and unique book. When a transaction occurs it is automatically registered in that book and copied to the thousands of computers that make up your network, so it is impossible to carry out a fraud. In addition, and since transactions are carried out without intermediaries, there is no record of any part of the identity of those responsible. This explains why hackers responsible for cyber attacks such as the recent WannaCry require bounces on bitcoins.

In just one week, bitcoin cash has positioned itself as the third cryptocurrency market with a value of 228 euros per unit, according to CryptoCurrency data. First is the bitcoin, with a value of 2,774 euros, followed by Byteball, which yesterday quoted at 488 euros the unit. Despite what may seem, the emergence of new virtual currency is not something new. After the birth of bitcoin, in 2008, other virtual currencies like ethereum or zcash were created.

Now it remains to be seen if bitcoin cash achieves what the other cryptocurrencies have not yet achieved: attracting users and consolidating itself as a means of payment more. "In the coming months, bitcoin will face a process of technological evolution that will finally allow it to overcome performance limitations. When this happens, expect a surge in interest from users and companies," concludes NewTrace co-founder.

Image taken from GOOGLE.