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Bitcoin Cash’s Big Blocks: What it Means for Bitcoin

Vee Tardrew
18 October 2017

To fully understand the significance of the big blocks available on the Bitcoin Cash network, it is beneficial to know why they came about in the first place.  

Up until 1 August 2017, the Bitcoin network had suffered from a stall in development as a result of an impasse of developers and the community regarding a viable scaling solution. You see, Bitcoin had gathered significant adoption and with it came a substantial increase in the number of transactions taking place. Because the Bitcoin blockchain had a 1MB block limit, miners were not able to keep up with the demand and processing time became slower and slower, at a maximum capacity of 7 transactions per second. (The current rate is reported to be between 2 - 3 transactions per second.) Subsequently, fees increased as users tried to incentivise quicker transaction times by paying higher fees for priority processing. With a vision of rivalling the capacity of the likes of the Visa or MasterCard networks, with low-cost transactions, Bitcoin desperately needed a solution.

Development Difficulties for a Decentralised System

But being a decentralised technology meant that a majority consensus needed to be reached for any code changes to take place. And this is where the deadlock came about. With two different ‘camps’ presenting two different solutions, agreement was hard to come by.

One option called SegWit, proposed a solution that would enable off-chain scaling, while the second put forward an on-chain scaling solution which allowed for an 8MB block size. SegWit activation would see a change to the way that data within the block was structured, alleviating an issue called transactional malleability, and allowing for additional applications to run using the Bitcoin blockchain as a foundation. Essentially, this SegWit approach makes Bitcoin more akin to a multi-layered settlement system as opposed to a form of money. On the other hand, the bigger block supporters claimed SegWit was unnecessary and that Bitcoin would simply find itself in the same situation further down the line if it did not implement an increase in block size.

A New, ‘Original’ Bitcoin is Born

Ultimately, as a result of the conflicting approaches, those opposed to SegWit initiated a hard-fork, creating a new network and token - Bitcoin Cash.

Bitcoin Cash follows the original Bitcoin code (pre-SegWit) but diverges from the core network in that it does not support SegWit and the off-chain scaling solutions it enables. Instead, it has retained and improved the properties that made bitcoin ideal to be used for cash transactions; prioritising faster, cheaper and irreversible transactions.

Bigger Blocks Better for Bitcoin

Bitcoin Cash focusses on continuous on-chain scaling of the network by allowing the block size to increase to any size required to support the demand for transactions. The larger block size has a significant impact in that it alleviates the bottleneck of transactions, by allowing an exponentially greater number of transactions to be processed, not only faster, but more cost-effectively for users. This was true for the early days of bitcoin, where even micro-payments were viable. A utility that has been gradually lost as a result of the slowed network and the excessive transactions costs. So, in essence, the bigger blocks of Bitcoin Cash ‘turn back the clock’ for bitcoin, allowing it to once again become a reliable, cheap and almost instant payment.

In a recent experiment, a group of Bitcoin Unlimited developers together with researchers from the University of British Columbia and nChain, successfully mined a 1GB block on the Gigablock Testnet. This is monumental in that it proves, whilst not as yet required to be quite as large, a 1GB size block is entirely possible. 

“We are not going from 1MB to 1GB tomorrow. The purpose of going so high is to prove that it can be done — no 2nd layer is necessary.” - Andrew Stone, Lead Developer for Bitcoin Unlimited

The initiative, incidentally run on a network of high-capacity laptops and not bespoke computer systems, demonstrated results of 10,00 transactions per second being propagated to the mempool (a ‘waiting’ area for transactions to be processed and a leading cause of network congestion). It is also being reported that it is likely that any scaling improvements as a result of the Gigablock will be rolled out to Bitcoin Cash first, considering the support for big blocks.

All in all, this is certainly encouraging news for bitcoin enthusiasts who have been concerned about the future of the network and its ability to meet scaling demands. The fact that we now have healthy ‘competition’ in the bitcoin space, with developers collaborating on projects to enhance utility shows positive progression, and reminds us of the principles on which Bitcoin was founded.

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