Bitcoin is a cryptocurrency which has gained popularity over the past few years and has been increasing in value and use over that period. For the past year or so, notable individuals from the Bitcoin community were warning that the cryptocurrency’s system required major upgrades at its core software code to avoid a crash or being overwhelmed due to the ever-increasing number of Bitcoin transactions. At the time, there was some disagreement between the experts. Some were of the view that the problem would never materialise while others were looking for solutions to the upcoming problem.
This week, however, the dire predictions over the system’s failure came to pass. The Bitcoin network reached its capacity and caused transactions around the world to be massively delayed or even fail altogether. The average time it takes to complete a transaction jumped from a relatively fast 10 minutes to turtle-slow speeds of 43 minutes. Anyone who made a transaction was confused whether their transactions were going to complete or if they needed to do it again. Shops and retailers around the world stopped accepting payments in Bitcoins due to the slow processing times.
Why Did This Happen?
If we dive down to the technicality of it all. Bitcoin transitions are dependent on new blocks in the network chains, created by miners. Each block, holding 1MB of data, takes about ten minutes to be processed (mined). At the moment, the transaction data has topped 1MB and requires a bigger block size. The Bitcoin experts have suggested to increase the block size to 2MB, solving the bottleneck problem for good.
It’s not as easy as it sounds. Bitcoins aren’t processed like bank transactions, as there are no central owners of the accounts. A divide has been created between the original codebase team and a rival faction. The original codebase is called the Core. The rivals have pushed out their own version of open source code with an increased block size, called the Classic.
The winners of this divide will be decided by the number of Bitcoin nodes using each of the code variants. The miners provide the computing power and they will be the ones deciding which code will run the transaction from now on. Majority of the Chinese miners have chosen the Core as their software code.
The problem doesn’t end here, with both sides accusing each other of using dirty tactics. The Core team is saying that the Classic team is spamming their network with low fee transactions. The Classic team is saying that their nodes are being hit by DDoS attacks to cripple their computing power.
Many had hoped that once the crisis is played out, miners would quickly jump to adopt one of the two software code teams, depending on their interests. As of now, the debate is dragging out and thousands of consumers are being left stranded.
It looks like Bitcoin isn’t going to crash anytime soon, but the delayed processing is going to continue for the quite some time.