Bitcoin went from an idea in someone's mind to the world's most popular cryptocurrency in just a few years, turning into legitimate "money" that banks began to take seriously. However, it didn't take long for problems to arise within the community that maintains it and manages its future. For those of you who use Bitcoin on a daily basis, it may seem bitter to read that the community is in turmoil, especially if you have placed a significant amount of stock in the currency. The complex threads tearing the community apart actually have to do with a fairly simple topic, and I'll do my best to walk you through everything you need to know about the process.
Bitcoin as it is may cease to be relevant unless the maximum blockchain size is expanded in some way. At this point, the maximum blockchain size has a fixed value small enough to provide wallets to a particular number of users. If you're confused about this, here's a video that gives you an idea of what a blockchain is and why it's such a central part of how Bitcoin works.
The entire trust-based security system behind Bitcoin operates on this particular concept, which makes it totally destructive when not able to "keep up with the times". Developers discuss whether the size of each block should be larger or not, but there is no complete consensus on this.
If a block gets bigger, Bitcoin can be used on a much larger scale, capable of handling many more transactions. The services will be able to facilitate the use of Bitcoin and transact in a way that was previously rigid given the old style of accounting with paper and digital currency.
Other developers believe that the blocks should be small and no changes should be made to the current size. The reason for this is that they fear that Bitcoin will lose some of the security it offered in the past.
The prevailing idea is that a divorce must take place for the new currency to thrive, and its name will be Bitcoin XT. For a while there will be a separate ledger that will be incompatible with the old one.
In all likelihood, your Bitcoins will retain at least a large portion of their value. It is, after all, in the developers' collective interest to ensure that the move retains as much value as possible. However, you will probably need to convert your Bitcoins to the new platform. This is expected as new blockchain technology will create more demand.
What will happen, according to a post from Mike Hearn, is that your software will ask you to update. If enough people switch to the new blockchain limit, then a consensus will be reached, and this will be the new direction of the currency, making it impossible to use the software with the previous limit. If too few people upgrade, the blockchain will remain at its lower limit, but eventually that limit will be reached, causing transactions to stop completely.
Since this is a bit of a turbulent time, the value of Bitcoins in general should drop slightly. The currency has already lost value as a result of this dispute, but it will eventually stabilize. Bitcoin has always been more volatile than other currencies, so this is not something new. Once a decision has been made and all nodes are activated regardless of the final direction of Bitcoin, the value of the currency will stabilize and rise again as demand for new services increases.
Given all this information, what is your opinion? Do you think moving to a bigger blockchain would help Bitcoin as a currency? Tell us in the comments!
