Divorcio en Bitcoin: nace Bitcoin Cash (Published 2017)

SAN FRANCISCO – For two years now, rival factions have been vying for control of the virtual currency and its worldwide network of computers and supporters.

Now one of the major camps is preparing to part ways with a rival version of Bitcoin. A group of investors and entrepreneurs, the majority based in Asia, created Bitcoin Cash this week.

That confirms the divorce between the rivals in a lawsuit that has been brewing around what Bitcoin should be; thus there are two virtual currencies in competition, both with the same name.

“In fact, I think it would be nice if there was a separation,” said Roger Ver, a Tokyo-based investor who expressed preliminary support for Bitcoin Cash in late July. He assured that the differences between the sides have become too deep to think about resolving them.

Bitcoin Cash could easily dissolve into irrelevance – the extent to which it is supported is not yet known – but it has highlighted, once again, how difficult it is to govern a decentralized and open source technology like Bitcoin, in which there is no a single set of leaders or owners.

“In the long term, they will be forced to establish a real political structure to make these types of decisions, but they have not yet reached that, so the result has been chaos,” says Joseph Bonneau, who has studied Bitcoin and is member of the Fundación Frontera Electrónica, which is defined as a non-profit association to defend digital privacy, free expression and innovation.

The Bitcoin schism is part of a larger rift in the world that has arisen around virtual currencies. Many people who were initially enthusiastic about the technology behind Bitcoin took advantage of its public and open source nature to create their own virtual currencies, such as Ethereum, Ripple, and Litecoin. These other systems work with different rules than Bitcoin; some place more emphasis on speed and complexity, while others focus on anonymity and security.

But if the divisions have had any effect, it has been to increase the enthusiasm and value of all the virtual currencies in the world. Banks and governments have announced their own projects to master this technology.

The price of bitcoins has been at unprecedented levels lately, close to $ 3,000, while other currencies have grown to be worth billions of dollars on their own. In recent months, a whole new class of businesses have made money by creating and selling their own digital tokens.

Until now, Bitcoin has remained the most valuable digital currency of all and has kept its followers together through a single set of rules, despite all the skirmishes that go on behind the scenes.

The divisions, however, appear to have deepened so much that it is impossible to keep everyone on the same blockchain, as the ledger of all bitcoin transactions is called.

Roger Ver has been one of the leaders of the contingent that has long wanted to change the rules that govern the Bitcoin network to be able to handle more transactions and compete with other payment methods, such as Visa and PayPal.

Bitcoin Cash is going to have the effect of limiting the number of transactions that the Bitcoin network can process every ten minutes. Currently, the network can process only transaction blocks smaller than one megabyte, allowing for roughly five transactions per second.

However, the decision to increase the size of the so-called blocks has met with intense opposition from the programmers who maintain the Bitcoin software.

Those programmers, called core programmers, have warned that increasing the amount of data contained in each block of transactions would make it more difficult for users to process those blocks and easier for companies to take control of the Bitcoin network.

“That destroys the ethics of Bitcoin, which is open and without permission, where nobody tells us what to do,” said Samson Mow, chief strategy officer at Blockstream, a company that employs the most conspicuous core programmers.

Core developers have come up with their own solution to increase the number of transactions that move through the system, with software called Segregated Witness, for short SegWit. But Ver and others have said that SegWit is not expanding Bitcoin fast enough to keep pace with its recent growth in popularity. But the discussion gave way to cruel smears and cyberattacks against the leaders of both sides, prompting some prominent developers to abandon the project.

Those who propose to increase the size of the blocks, such as Ver, have presented proposals that have failed to receive majority support in the community, in part due to concerns about the sophistication of the programmers working on the projects.

But the field that defends the big blocks so far has not announced any definite plans to separate itself from the rest of Bitcoin.

A small number of exchanges have started trading forward contracts, tied to the expected price of Bitcoin Cash. As of July 25, it was trading at about $ 450, which is a fraction of the $ 2,600 a typical bitcoin is worth.

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Divorcio en Bitcoin: nace Bitcoin Cash (Published 2017)

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