AP Explains: Threat of a bitcoin split avoided, for now

On the eve of a major change in bitcoin, a threat of a split in the digital currency has been avoided — for now.

A move by users to force a change in the computer code by Monday has worked. A majority of “miners” — the core bitcoin users who verify bitcoin transactions around the world — has signaled support. Though the change is designed to improve capacity on the increasingly clogged network, some miners had objected because it could reduce transaction fees they collect.

The show of support has helped reverse a slide in the value of bitcoin from around $1,900 two weeks ago to roughly $2,800 on Monday.

However, some uncertainty still remains. A May agreement between large bitcoin companies effectively pushes the threat of a split off until November. And one proposal to launch an alternative currency, Bitcoin Cash, is sowing confusion and fears of scam trades.

Here’s a look at the current dispute.

———

WHAT IS BITCOIN, AGAIN?

Bitcoin is a digital currency that’s not tied to any bank or government . Like cash, it lets users spend or receive money anonymously, or mostly so; like other online payment services, it also lets them do so over the internet.

The coins are created by miners, who operate computer farms that verify other users’ transactions by solving complex mathematical puzzles. These miners receive bitcoin in exchange. It’s also possible to exchange bitcoin for U.S. dollars and other currencies.

Bitcoin has been touted as a currency of the future, but so far it hasn’t proven very popular as a way to pay for goods or services.

———

WHAT’S BEHIND THE FUSS?

In a word, speed.

The bitcoin network is limited in how quickly it can shuffle around digital money. As bitcoin has grown, payment delays have become more common and worrisome.

Some software developers came up with a way to speed things up by reengineering bitcoin’s universal ledger, a file called the blockchain. Supporters of the new method include Microsoft, the bitcoin exchange Coinbase and a variety of other bitcoin proponents who would like to see the currency used more widely in commerce.

Reformers had threatened to stop recognizing transactions confirmed by miners who hadn’t adopted the upgrade.

———

WHAT WOULD A SPLIT MEAN?

Generally speaking, chaos — though mostly limited to those who use or squirrel away bitcoin. People who use bitcoin couldn’t be sure which version they held, or what might happen if they spent it or accepted bitcoin as…

Read the full article from the Source…

Leave a Reply

Your email address will not be published. Required fields are marked *