Dec 21, 2018

4 min read

Fork is a Never Ending Meeting

We have noticed that when Bitcoin undergo structural changes, such as scalability and fork, it will have the greatest impact on prices. Today, we begin with an introduction to the debate over capacity scalability and Bitcoin fork.

Why reform? Because we must!

If Bitcoin block can only process 7 TPS but transaction data amount larger, it may not even reach. One consequence could be that Bitcoin transactions become crowded and slow. However, there are many in line waiting to be confirmed. This is why congestion happened.

According to data display, the number of unacknowledged transactions in Bitcoin blocks exceeded 490,000 at the end of 2017, about 600 times more than three years ago. Transaction processing time is further extended, users need to pay higher costs if they want their processed faster.

In this light, Bitcoin system reform is imperative.

The debate over scaling

As for the capacity scalability of Bitcoin, one might also ask why Bitcoin is unable to cope with all the transactions. As a matter of fact, the problem lies in a specific parameter called the Block Size Limit. The current limit is insufficient for the ever-growing transaction intensity.

Therefore, its core development team has been arguing for a long time. It is precisely intensification of the contradiction about the scalability that Gavin, Jeff and other developers left the team. And they set up a new team of Classic, XT, BU.

During this period, a number of options were put on the table, including on-chain protocols, side chain or lightning networks.

On February 21, 2016, representatives from the Bitcoin industry and the development community finally reached consensus on scalability for the first time, it is the Hong Kong consensus. The main content is isolated witness and hard fork 2M. But the Hong Kong consensus was opposed by the core development team and finally project failed.

The expansion then backed the BU team’s proposal. Bitcoin Unlimited is a direct evolution of the previous unsuccessful attempts to resolve the block size debate. Seeing how the ideas of increasing the limit, or making it incrementally adjustable, has failed to garner enough support, BU is aimed at abolishing the limit altogether. Instead, it makes it so that miners can create blocks of arbitrary sizes and broadcast them across the network, competing with each other for a place on the blockchain.

As a result, Bitcoin blockchain underwent a major hard fork on August 1, 2017.

Hard Fork vs Soft Fork

The Bitcoin divides into two branches: one is the main branch (BTC), and the other is a new, viable secondary branch, now known as the Bitcoin cash (BCH).

There are two main types of programming fork: hard and soft. Simply put, compatibility is different, soft fork is temporary, hard fork is permanent.

Hard Fork

A hard fork occurs when there is a change in the blockchain that is not backward compatible (not compatible with older versions) thus requiring all participants to upgrade to the new version in order to be able to continue to participate on the network. This results in the creation of 2 chains, the new one with the new rules and the old one, some participants might still be on the old chain depending on if the split was contentious or not.

For instance, if the block size limit were to be increased from 1MB to 4MB, a 2MB block would be accepted by nodes running the new version, but rejected by nodes running the older version. The only solution is for one branch to be abandoned in favor of the other, which involves some miners losing out (the transactions themselves would not be lost, they’d just be re-allocated). Or, all nodes would need to switch to the newer version at the same time, which is difficult to achieve in a decentralized, widely spread system.

Simple summarize hard fork:

It will split the blockchain into two, maintaining a common history;

It is not backwards compatible with the old version;

It is possible to change the core rules of software?

Soft Fork

A soft fork can still work with older versions. Just like hard forks, soft forks also result in creating two versions of a software, the old and the new, in this case, the old version is usually abandoned. Those who still run the old version can still participate in the network although they miss out on the new features added in the current version.

This is a soft fork, and it’s already happened several times. Initially, Bitcoin didn’t have a block size limit. Soft forks do not carry the double-spend risk that plagues hard forks, since merchants and users running old nodes will read both new and old version blocks.

Simple summarize soft fork:

It is backwards compatible with the old one;

It doesn’t result in a chain split.

No matter what kind of scalability plan, after the Bitcoin community parties’ game to form a consensus in line with the spirit of the value of its heritage, which is also a unilateral claim cannot be comparable. Bitcoin fork may seem like a conference that never ends, but that is the beauty of decentralization.

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