Maybe it was the most critical moment in virtual currencies history in general and BitCoin history in particular. But, finally, this critical moment in August 1st has been passed successfully. BitCoin hasn’t stop raising from this time. In order to understand what’s going on we are going to review, high level, BitCoin operation.
We will review all these elements.
EXCHANGE AGENCIES
They allow buying BitCoins using real currencies and selling BitCoins to obtain the equivalent amount in real money. They use to charge a fix commission around 1 euro. BitCoin value is based on offer and demand in the same way than any other real currency.
WALLETS
Wallets are in charge of our BitCoin accounts. Any account have a private key, a public key and a visible address or key. Only the last one is visible for us but wallet manage the three keys and the relationship with miners in BitCoin network. We install this software in our computer or smartphone. Exchange agencies use to offer to their customer wallets managed by them. In this case it is not necessary to install any software.
MINERS
Miners are the core of BitCoin network. Each miner is a registry in the network in charge of the following tasks:
- Thery receive requests from wallets for a transaction.
- They confirm this transaction could be done. In order to validate a transaction it is needed 6 miners to validate it.
- They register done transactions.
- They distribute transaction information to other miners to register it as well. All miners have the informtion of all transations done in all BitCoin history.
- They supervise other miners are working according BitCoin rules.
Miners get profit from new BitCoins created in BitCoin network. But the number of new BitCoins is small and this profit is small as well. Wallet use to pay a commission to “speed up” transaction management. Currently miners have this two profit sources.
BITCOIN FOUNDATION
BitCoin Foundation is a non profit organization supporting BitCoin evolution. It is located in Washington D.C. and its members are people, enterprises and organizations supporting BitCoin. BitCoin Foundation is in charge of evolving both mining software and wallet software. Both programs are distributed in executable format but in source code as well allowing every people to revise and check.
Therefore software supporting BitCoin is highly secure not because secret algorithms or secret functionality. Source code is public and BitCoin is highly secure because it is designed to be secure even knowing source code. Additionally BitCoin rules are public and not possible to manipulate.
SEGWIT UPDATE
BitCoin crisis comes from software evolution. BitCoin foundation has developed a new update named SegWit. BitCoin Foundation decided to activate this update on August 1st. But a big group of miners didn’t like this update and they even threatened not to activate this update. It is needed to consider only 40% of miners use BitCoin software directly. Rest of them use source code even modifying it to get a more efficient software or to include new functionality (always under BitCoin rules).
This “insurrection” means a group of miners using a non official software could create a new BitCoin network. As one of the main tasks is supervising other miners operation, official miners exclude miners not applying SegWit update. In the other side non official miners not applying SegWit update exclude official miners. “Rebel” miners could create a new Bitcoin network starting from the same amount in accounts.
Fortunately BitCoin Foundation has impossed its criteria and this “insurrection” has been reduced to a small group of miners led by exchange agency ViaBTC. This “rebel” group have created BitCoin Cash cryptocurrency. It could be seen in the following chart that most of miners accepted, in last days, SegWit update.
However, at the end of August, it appears some miners are withdrawing SegWit support. Anyway BitCoin doesn’t appear to be affected and continue raising every day. In the other way BitCoin Cash future is less clear.
However we cannot assign original BitCoin as the winner because there is a new coming update named SegWit2x which has no relation with SegWit one. In fact it is developed by a different developer and official BitCoin developer (BitCoin Core) has announced they are not going to support SegWit2x. This point was confirmed in August 18th, 2017 announcement.
SegWit2x update, also known as New York Agreement or “btc 1” as well (name of software repository where this update is available). This update is being developed by Chinese miners covering more than 80% of BitCoin network processing. Activation is foreseen for next November 2017 but there are confuse announcements and it won’t be supported neither by BitCoin Foundation nor official developer BitCoin Core.
Therefore, for the time being, the first and most importan cryptocurrency, BitCoin, maintain people confidence supported by BitCoin Foundation. But we have to take care as much as possible about this new “insurrection” called “SegWit2x”, “New York Agreement” or “btc 1”.
