The fratricidal war in the Bitcoin camp

It is paradoxical: The financial world is watching the digital currency Bitcoin with growing curiosity. The community of followers, however, sink into a bizarre fratricidal war. He could destroy the achieved achievements.

DüsseldorfWhat's going on at Bitcoin and Co.? For weeks, the digital currency had been slow but steadily uphill. At the end of September, the most important cryptocurrency was still trading at a good $ 3,500, and in early November it had hit the $ 7,000 mark. This trend is over now.

Since the Wednesday night's record high of more than $ 7,800, it has been down in ever new spurts. On Sunday morning, the price had hit its lowest point at less than $ 5,700, then rose again, only to reach a similar low at night. On Monday evening, he quoted a little higher at around $ 6,500.

Background of the unprecedented upswing in the recent history of the currency is a bizarre fratricidal war in the Bitcoin camp. This threatens to destroy the achievements so far achieved. Opposite are the followers of the Bitcoin and the spin-off Bitcoin Cash, which is rapidly gaining ground.

In less than 60 hours, their price rose from $ 637 to as much as $ 2,500 on Sunday morning before declining again. For a short time, it was more profitable for the producers (called miners) to maintain the Bitcoin cash network than the more than three times as large Bitcoin network. Many redirected computing power, which catapulted Bitcoin Cash into Ethereum's third largest cryptocurrency. In the meantime, more than 170,000 transfers were waiting for their processing in the Bitcoin original. The price continues to fluctuate and the community goes into blame.

The starting point of the schism is the question of how much reform the Bitcoin program code can handle to cope with the growing number of users, or how close the current scene should be to the 2008 disclosure of the crypto community: the "white paper" of the ominous Satoshi Nakamoto. In this, the unknown inventor (s) had developed the idea of an Internet currency that operates independently of banks and central banks - thanks to a worldwide, distributed database, the Blockchain.

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The idea was good, but the system has reached its capacity limits: the blockchain stores about seven transactions per second - far too little for the many new users. Sometimes it takes hours for a bank transfer to be made, and the costs have also increased. "In fact, one of the main problems with bitcoin is that it does not scale properly, now that more and more users are using it," says Daniele Bianchi, cryptocurrency researcher at the elite British university of Warwick. "This makes transactions slower and slower because the block size is fixed." All this undermines the benefits over other forms of payment.

In fact, the community had already agreed in July on a solution that should be implemented by November: a program code reform with the cryptic name Segwit2x. On the one hand, payments are saved more efficiently, on the other hand, the size of an information block in which transactions and other changes in the network are stored should increase from one to two megabytes. "This is a great relief," said Ingo Fiedler, who conducts research on cryptocurrencies at the University of Hamburg in July, told Handelsblatt. Fees should go down, transfers should be speeded up. All the snow of yesterday.

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Segwit2x has been canceled on Wednesday, at least as far as the more important part is concerned, increasing the block size. The reform was extremely controversial in the scene, their forced introduction could have led to a new split of Bitcoin (a so-called hard fork). Also because of this resistance, the makers behind Segwit2x have canceled the reform. Benefit from this was a spin-off of Bitcoin, Bitcoin Cash, started on August 1.

This has taken up the main point of criticism: Bitcoin Cash advertises with large information blocks, so with plenty of room for new transfer orders: The blocks are currently eight megabytes in size, could be increased even further. As the industry side BTC-Echo reports, that reduces the transaction fees massively: Bitcoin has therefore currently an average transaction fee of more than ten US dollars on Bitcoin cash, the cost is 20 cents.