The first digital asset, Bitcoin, appeared in 2009. Its developer is considered to be Satoshi Nakamoto. In 8 years, by 2017, the number of users had grown significantly, and the load on the network became critical. Commissions for transactions went up, and the waiting time for their confirmation increased several times. To solve this problem, in May 2017 a council of the largest miners was organized, at that time controlling 80% of the network. During it, it was decided to make a hardforward of the protocol, and Bitcoin split into Bitcoin Cash (BCH) and classic Bitcoin. The split happened because of the unwillingness of most community members to make drastic changes to the protocol. As a result, two irreversible blockchain chains were formed.
What is cryptocurrency sharing
Algorithm updates are made to solve technical problems that arise during the operation of the system. Many digital currencies do not have a central governing body. To make global changes, an absolute majority vote of the community is required. If no compromise can be reached, then the existing blockchain can branch into 2 circuits that operate under different rules. This is what happened when BTC split into two cryptocurrencies. A group of miners who supported these changes switched to mining coins in the new network, while the majority remained to support the operation of the classic system.
Types of cryptocurrency forks
Each new block contains part of the information of the previous one, due to which the immutability of data and integrity of the whole system are achieved. The general consensus accepts the longest chain as true, and the shorter one “dies off”. However, due to scalability issues, changes in the operation of the protocol may be allowed.
Reasons for Bitcoin’s split
The algorithm in the network of the first cryptocurrency sets the time of finding a new block at 10 minutes, and its size is 1 megabyte. As the number of transactions increases, there is a queue to process the data and commissions increase. The user transaction that pays more for a cryptocurrency transfer will be included in the registry first.
To overcome the network load and increase transaction speed, a group of miners suggested raising the block size limit from 1 to 8 MB. However, not everyone agreed to such a radical change because of the loss of compatibility with previous chains and the need to update the software.
There were also concerns that organizers might start mining on the new protocol before others and take over most of the network. Because of these disagreements, Bitcoin was split.