WORLDVIEW: Big day for Bitcoin as splinter may take cyber currency mainstream

Something really big happened in the cyber currency world yesterday with the launch of a splinter from increasingly popular Bitcoin. The intention is to speed up the processing speed to the point where it starts becoming a competitive alternative to existing payment systems..If that sounds a little complicated, fear not. My Biznews colleague Gareth van Zyl explains:."Bitcoin is facing a major fork in the road which could forever alter the cryptocurrency's prospects. Yesterday the climax of a debate over limited transaction speeds on the Bitcoin network led to the creation of a new, minor breakaway cryptocurrency dubbed 'Bitcoin Cash' or 'BCC'..___STEADY_PAYWALL___.At this stage anyway, the BCC breakaway is not expected to create major reverberations across the Bitcoin landscape. Nevertheless the event is crucial and will be closely watched..Ever since the establishment of Bitcoin as a cryptocurrency, a bogeyman has been stalking it. 'Satoshi Nakamoto', the unidentified mathematical genius who created Bitcoin, set limits on the cryptocurrency's distributed, digital general ledger, a concept known as the blockchain..Bitcoin 'server miners' – situated across the globe and increasingly in China – help verify transactions on the cryptocurrency networks using a series of complex algorithms to create uniquely identifiable 'blocks'..But there is currently a cap of 1 megabyte on each 'block' created on the Bitcoin 'chain' network. This means the number of transactions stand at about seven per second. This is an incredibly low rate when compared to card payments company VISA which handles on average 2,000 transactions per second (tps) and PayPal handles over 115 tps..The debate over Bitcoin's block size and scalability has been raging for some time, with some pundits using sensational language, like describing it as a 'civil war' within the industry..However, over 90% of the "Miners" – who have a key say in the cryptocurrency – have essentially decided to adopt a proposed solution called Bitcoin Improvement Proposal (BIP) 91 by including the update in their more recently mined 'coins'. The proposal doesn't increase the block size itself, leaving Nakamoto's invention intact. But BIP 91 will double the maximum number of transactions on the Bitcoin network by using what is called Segregated Witness, or "SegWit." The SegWit technology cleverly chops off bits of transaction data, resulting in faster transactions..A group within the industry still feels that SegWit is only a temporary solution and that a 'hard fork' is needed in which the blockchain size is dramatically increased..A small breakaway group (headed up by former Facebook engineer Amaury Sechet) is doing exactly this by creating BCC, which will increase the blocksize from 1 to 8 megabytes. This means people who specifically control the private keys of their Bitcoin wallets will also own BCCs today. If you own Bitcoin via South African linked exchanges such as Luno, you won't subsequently own BCC. This is because many Bitcoin exchanges, like Luno, don't plan to sell BCC, highlighting the mixed response to the new currency. The group behind BCC, though, is hoping that miners and consumers (a bit like voters in an election) will eventually get behind it. So far, the take up hasn't been too strong with the futures market for BCC. At this stage, one BCC costs approximately $300. Conversely, 1 Bitcoin or BTC 1 costs $2,776.".Thanks for the update Gareth. It is still very early days for cyber currencies, but their popularity is growing. New Bitcoin hawkers are springing up everywhere – including in Johannesburg. I got an email yesterday from one Ms Felicity Ndebele who describes herself as "Entrepreneur in cybercurrency" asking to meet/skype so we can discuss how to invest in Bitcoin. She is based in Rosebank.

WORLDVIEW: Big day for Bitcoin as splinter may take cyber currency mainstream

Related Stories