Geek-on-Geek violence can be well and truly tragic.
That’s because virtually everyone else in the world has no clue — or wants one, really — as to why they all just can’t get along.
Now, they’ve come for our money. And make no mistake: they’re gonna win.
No one has to convince us. Over 80% of the business on our portfolio of sites is conducted in Bitcoin and other cybercurrencies. Our revenues literally exploded when we started accepting them for business.
Please note, though, that I said business. I did not say we invested in them. Big difference. They’re as much of a crapshoot as any other commodity for which there’s a market.
The hard fact is, we’re not even sure about Bitcoin’s future. It has a number of serious flaws — too many to detail here, but safe storage is one — the possible resolutions of which have spawned over 1000 other cybercurrencies.
Incidentally, Ripple is the cybercurrency of choice for many banks.
What we are sure about is the delivery system for all of them: the blockchain.
The Holy Grail of cybercurrencies will be the one to most effectively utilize the blockchain.
This is what’s led the Bitcoin influencers to the point of a cyber Civil War.
As the world’s first ubiquitous cybercurrency, it’s the first to experience growing pains. The issue at hand is the practicality of global transactions on a mass scale.
- In its current state, the original Bitcoin code can only process seven transactions a second, while banks can move fiat currency, credit card charges, et al at rates of tens of thousands per second.
- At this time last year, a Bitcoin transaction took 10 minutes to complete; now, it can take hours.
- In order to incentivize quicker transactions, fees have risen; where a transaction used to cost 11¢, charges can now approach $1.50-$2.00.
To better understand the issue, let’s take a brief look at the nomenclature of a block, which comprises 1Mb — one million bytes — of data.
The primary function in each block is to perform hashes, which are mathematical processes that take input data of any size, make calculations, and return output data of a fixed size:
This is what encodes the data transfer for each transaction in the blockchain.
Here’s a diagram that illustrates each transaction’s basic elements:
The witnesses are those cryptocurrency miners who perform the hashing calculations that verify and secure the transaction. It takes up about 65% of the data involved.
If that data can be placed more efficiently, more transactions would fit into each block. Thus, the processing would be expedited, and the miners — who have become segregated witnesses (SegWits) and are independent of each other — would make more in fees.
In turn, the transaction volume means the fees wouldn’t need to be higher to attract them.
The geeks in charge have offered two solutions, neither of which are currently compatible:
- The ‘classic’ crowd wants to re-locate the SegWit section within the block in a separate structure. This is known as a soft fork.
- The ‘cash’ crowd prefers even more volume, though, expanding each block to 2Mb and refusing to re-locate the SegWit section within the block.
Here’s the divergence in starker terms: in order to increase the block size, higher-powered hardware and software will be required. This is called a hard fork, as it will entail significantly altering the block code to accommodate the upgrade. That’s going to price many miners out of the game, leaving the SegWit roles to the larger operators.
The classic miners claim that’s not what the Bitcoin originator had in mind, at all. His goal was a dynamic, decentralized system that regulated itself.
The cash miners counter by saying that until Bitcoin is scalable, it’s nothing more than a good idea that isn’t capable of becoming anything more than the trendy investment that it is now.
Of course, trends come and go.
As a result, the cash crowd didn’t want to wait any longer and introduced a new, separate version of Bitcoin on Tue 1 Aug, called Bitcoin Cash:
It’s no surprise that an element of upheaval has ensued:
- Not all cybercurrency exchanges will immediately accept Bitcoin Cash, opting to see if it’s going to be sustainable.
- Users will have lasting choices to make. There’s no going back if they chose Bitcoin Cash.
- In less than 24 hours, Bitcoin Cash became the third-largest cybercurrency by market cap; however, its value collapsed back to original levels within a day.
All this may sound drastic — because it is — but sooner or later, some cybercurrency had to address the matter of scaling on a global stage. More shocks to the system will surely come, but in the long run, it’ll be for a good cause.
Through it all, the blockchain remains the constant. Currencies and contracts are merely its faceplates. This is what grounds our confidence that it’s the future of transactions.
As for enterprises like ours that are heavily suffused in Bitcoin, we stay current and we adjust. Business remains strong and, for early adapters evolving with the milieu, it will keep getting stronger.