The Bitcoin alternatives were born when Bitcoin showed its weaknesses. The two coins that have the most interest are Bitcoin Cash (BCC) and Bitcoin (BTC). In 2017, a hard fork was placed into the Bitcoin Blockchain.
BTC vs BCC
While Bitcoin Cash is run very similar to Bitcoin, there are some noticeable differences. The biggest difference is that Bitcoin Cash is faster and has lower fees per transaction.
Problems With Bitcoin
It became noticeable in 2015 that Bitcoin was restricted by the size of its block. Bitcoin has a block limit of 1 MB. While most transactions occur at .5 or 1 MB, the amount of transactions was slowing down the processing. Because of this limit, fees also started to increase.
This has only become worse over the past couple of years. Bitcoin started with a transaction fee of 5 cents and has gone as high as 50 cents.
Miners could be the deciding factor in how profitable Bitcoin becomes in the future. It is easy for miners to go back and forth between BCC and BTC. Whenever one they feel will end up making them more money will be the deciding factor in which one they will mine.
In times of extreme congestion, everything will move at a snails pace.
If the miners decide to focus on Bitcoin, and Bitcoin will see slower block times. People could se 1 hour transaction processing times.
Because Bitcoin Cash has a greater block size limit, it won’t be dealing with those issues any time soon.
Bitcoin is more sensitive to the cryptocurrency crash and has not rebounded back as quickly.
Bitcoin Cash Represents The Original Idea
Recently the papers were discovered that had Satoshi Nakamoto original ideas and goals for Bitcoin.
One of the most blaring differences between the Bitcoin today and his original ideas is that he wanted 50 KB of space in every block for transactions that are free.
This free space did exist when Bitcoin was first released. It has now since been removed.
If you made a transaction but did not pay any of the required fees, your transaction would sit there without being processed.
Bitcoin Cash History
August 21, 2017 marked a big point in history. A fork was put into the blockchain of Bitcoin and Bitcoin Cash was born.
Bitcoin Hard Fork
What happened with Bitcoin can happen to any cryptocurrency. There is a lot of software that runs Bitcoin. The software is known as Bitcoin protocol.
The Bitcoin protocol has all the rules that people agree with to use the cryptocurrency.
The rules include:
- How large the blocks are
- The fees and the calculation of fees
- Miner rewards
The good thing about cryptocurrency is that the software can be ever evolving. Bitcoin is not finished; it can be changed and expanded by the founders and dev team.
In fact, Bitcoin devs regularly update the system and make changes as needed. These changes have been small. The problem occurs when improvements will change fundamentally how Bitcoin works.
Certain people wanted changes made but the founders and dev team were slow to react or come up with a solution that made others happy.
This is what caused the hard fork.
When people are unhappy and no longer agree to the rules of a cryptocurrency, they can create their own protocol and place a fork in the blockchain.
Because we are so new to cryptocurrency, what we know now is very small to what we will know in 2 years. Developers and founders can anticipate needs, but it will only be through experience that we will know what truly works or is needed.
What Occurs During A Hard Fork?
There are two main pieces to Bitcoin:
- Bitcoin Protocol
- Bitcoin Blockchain
In order for someone to make a fork in a blockchain, they begin by making a copy of the Cryptocurrency protocol and code in the changes they want to make.
Because Bitcoin is open sourced and the code is freely available to the public, this makes copying the protocol easy.
To create a fork, there must be a point in time that is added to the block by way of a block number.
This would look like this:
The fork will be implemented when block 520,000 is published on the blockchain. When that block is accessed, there is a split that happens. The community is then divided. The people that want to go with the new cryptocurrency move to the new protocol or stay with the old.
In the new protocol, people create new blocks for the cryptocurrency they are supporting. The new and old blockchain no longer communicate. But all the coins that were held on the old blockchain are duplicated to the new.
Whatever you have in coins on the old protocol, you will have duplicated on the new one. It may look like you have just doubled your money but that is determined by the new cryptocurrency attracting more value on it’s own.
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Hard forks are becoming more common. The most talked about is the one in August 2017 when Bitcoin forked. But there have been multiple forks in the Bitcoin blockchain.
Ethereum is also had a hard fork on January 19, 2018. This was known as the EtherZero project.
The most prominent features of this new system are:
- Instant transfers
- No commissions
- Management from an offline community
- 2-level network (Dash master node architecture)
As with all splits, people will gain coin from the fork. EtherZero investors will take in 116 million Ether (ETZ) coins.
At the writing of this article, none of the coins are appearing on major platforms. EtherZero (ETZ) are currently trading on Yobit. ETZ coins are due to be released on January 22.
It could be that the community is acting swiftly on any cryptocurrency deemed a scam. The fact is that MyEtherWaller is warning people not to associate with this cryptocoin.
They cited the following issues:
- There is a question about the code not being clear.
- No one knows who created it.
- Proper licensing could not be established.
- Several of the .exe files are malicious leading people to think it is phishing.
A big part of the crypto community has rejected EtherZero.
However, the EtherZero team continues to say that there are fake sites that are designed to steal money.
They suggest that people wanting to buy ETZ, enter the private keys in a specially designated field.
The future for cryptocurrency is uncertain but also exciting. The best cryptocurrency will rise to the top with time. There is a lot of potential and it will be interesting to see how everything resolves.