At the beginning of August 2017, some professional miners, companies and activists have forced a split of the most famous crypto currency Bitcoin. You have to know that now.
Through a so-called hard fork, the blockchain was split into the former Bitcoin blockchain and the newly created cryptocurrency Bitcoin Cash . As the two virtual currencies share their past, their future will be different. Instead of side by side they could fight against each other for the future – and for the support of the users.
Such a hard fork, an irreversible division of the blockchain, is by no means new. The code of Bitcoin has been split far more than a hundred times and has created a variety of legacy currencies. Also, the crypto-currency ether with the highly-traded Ethereum blockchain was split into two variants last year after a hacker attack and the resulting theft of many ethers to intercept the negative effects of the attack. The special feature of the current fork is not only the possibly great support of Bitcoin Cash, but also the upcoming doubling of all Bitcoin credit.
Another cryptocurrency based on the blockchain principle. Provides a platform for programmable smart contracts. The “ethers” are regarded by fans as a legitimate successor to the Bitcoins (see also above picture).
Microsoft Azure cloud-built service that allows users to put external data into a blockchain without destroying their security and integrity. As an individualized middleware, cryptlets can also be developed by Azure users themselves – in any programming language – and build the bridge from the blockchain to new business services in the cloud.
Azure Blog: Introducing Project Bletchley
Digital money, without coins and bills. Cryptography builds a distributed, secure and decentralized payment system. Does not require banks, but computing power and technical aids such as the blockchain.
A blockchain is a distributed database that maintains an ever-growing list of transaction records. The database is extended chronologically linearly, similar to a chain, at the lower end constantly new elements are added (hence the term “block chain” = “block chain”). If one block is complete, the next one is created. Each block contains a checksum of the previous block.
The blockchain technical model was developed as part of the cryptocurrency Bitcoin – a web-based, decentralized, public accounting system for all Bitcoin transactions ever made.
Blockchain – what is it?
A globally available decentralized payment system and the name of a digital monetary unit. You do not need a bank to handle Bitcoin payments – everything is done through a peer-to-peer network of computers and the blockchain as the central database.
The open source software validates the entire blockchain and was released in early 2009 by a certain “Satoshi Nakamoto” under the name “Bitcoin”. Bitcoin Core was in C ++ soon to be programmed especially for Windows systems. A little later the porting to GNU / Linux followed. Because the developers are divided, there are now some derivatives of Bitcoin software, including Bitcoin XT, Bitcoin Unlimited or Bitcoin Classic.
The “scalable blockchain database” can manage up to one million writes per second, store petabytes of data, and still have a latency of less than a second – all managed in a decentralized manner and with the highest data integrity. The technical basis is blockchain technology.
Financial term for “distributed account management”. Bitcoin is a completely new technical approach to distributing information about specific assignments. There is no longer a classic account managed centrally at a bank, but “account management” is based on a network of communicating systems.
A computer log that can depict or review contracts or provide technical support for negotiating a contract. Could in future replace the written contract.
The startup R3 CEV builds the blockchain-based “Global Fabric for Finance”. With around 50 financial partners, the largest block chain in the world to be developed – a first test run with eleven banks, including Barclays, Credit Suisse, HSBC, UBS and UniCredit has already been successfully completed. R3CEV has entered into a strategic partnership with Microsoft to develop blockchain infrastructure and technology in the Azure Cloud.
A free software with which every user can develop their own blockchain application.
An open source protocol for a payment network – currently under development. P2P payment method and foreign exchange market in one, based on the cryptocurrency “XRP”. However, ripple users are not set to this one currency, but can use any currency – including euros, dollars or yen, for example.
Bitcoin split: reasons and consequences
The biggest weakness of the previous blockchain is its block size. A block is a building block of the blockchain that stores all or the most recent transactions. The complete blockchain therefore contains all previous Bitcoin transactions. The rising popularity of the virtual currency also resulted in a massive increase in the number of transactions recorded in the blockchain.
However, a member of the blockchain currently has only one megabyte of storage space, so in practice, there are too few practical high transaction costs and delays. In the current flood of transactions, users had to wait hours or even days to create a new block. As a result, companies and users left the platform.
Larger blocks can remedy this problem. This is exactly where the recent Hard Fork comes in, because the new Blockchain of the Bitcoin Cash has eight megabyte memory blocks. Even after the update of the existing Bitcoin code to two megabyte blocks announced for August 2017, the Bitcoin Cash Blockchain offers four times the storage space and is correspondingly faster and cheaper.
By splitting the blockchain , each user first receives the same amount of Bitcoin Cash that he previously owns in classic Bitcoin. However, this only applies to users who also have control over private keys to a wallet. If you only have a balance on a Bitcoin exchange, you may not get any benefits from the fork. It depends on the respective stock exchange whether the new Bitcoin Cash are supported as currency. Since the position of each provider could not be more different, Bitcoin owners should closely examine the opinions of their suppliers.
The operation of Blockchain
Blockchain will become the key technology in IT in the years to come.
The transaction is the basic element of the blockchain. Two parties exchange information with each other. This may be the transfer of money or assets, the conclusion of a contract, a medical record or a document that has been stored digitally. Transactions work in principle like sending emails.
The verification verifies that a party has the appropriate rights for the transaction. The check is instantaneous or it is written to a queue which will later check. At this point, nodes, ie computers or servers in the network, are integrated and the transaction is verified.
The transactions are grouped into blocks, which are encrypted with a hash function as a bit number. The blocks can be uniquely identified by assigning the hash value. A block contains a header, a reference to the previous block and a group of transactions. The sequence of linked hashes creates a secure and independent chain.
Before the blocks are generated, the information must be validated. The most widely used concept for validating open source blockchains is the “proof of work” principle. As a rule, this method represents the solution of a difficult mathematical task by the user or his computer.
The term mining comes from the mining industry and means the “mining”. In this process, the block is generated and hashed. To get to the train, the miners have to solve a mathematical puzzle. Whoever has the solution first, will be accepted as a miner. The miner receives for his work a Honroar in the form of crypto currency (Bitcoin).
After the blocks have been validated and the miner has done his work, the copies of the blocks in the network are distributed to the nodes. Each node attaches the block to the chain in a steady and unmanipulatable manner.
When a dishonest miner tries to change a block in the chain, the hash values of the block and subsequent blocks are also changed. The other nodes will recognize this manipulation and exclude the block from the main chain.
Bitcoin vs. Bitcoin Cash: Investors should know that
The Bitcoin price is completely unimpressed after the split of the previous Blockchain and scratched now at the 4000 US dollar mark. Bitcoin Cash is currently (as of 22/08/2017) with a value of about 700 US dollars listed on the stock exchanges. Due to the stable performance of Bitcoin, many users have already announced in advance of Fork that they want to keep their faith in the classic cryptocurrency .
Although the Bitcoin Cash Blockchain with its larger memory blocks certainly has the potential to establish itself, however, its future is much more uncertain due to the still uncertain support of the network compared to the Bitcoin blockchain. Currently, the new cryptocurrency is supported only by the mining pool ViaBTC , which manages around five percent of the world’s Bitcoin revenue, and a few exchanges. And the advantage of the better storage option is only temporary. The more transactions are made here, the faster the capacities of the new blockchain are exhausted.
From Dahinsiechen or an extinction of the well-tried Bitcoin Blockchain can therefore be no question. The crucial question is, above all, whether the newly formed Bitcoin Cash can prevail and establish itself. Large investments in the new cryptocurrency are therefore currently not recommended due to the uncertain development. (Fm)