Brief History of Bitcoin
Bitcoin was the first cryptocurrency, which was launched in 2009 by a mysterious developer, with a name “Satoshi Nakamoto.” Since the creation of Bitcoin, it has inspired thousands of other cryptocurrencies (generally called altcoins) and has gained an enormous acceptance across the world.
Though some altcoins have copied some aspects from the original concept of Satoshi, other altcoins also made significant development on the Bitcoin model. However, in some cases, some altcoins are just a copy of bitcoin and have the similar underlying program – but at the same time, they are a bit different from the original Bitcoin. In such cases, the bitcoin blockchain should undergo a procedure which is called “forking.”
- In forking process, Bitcoin blockchain divided itself into two distinct entities.
- Through forking, numerous cryptos with a similar name to Bitcoin were generated, including; bitcoin gold and bitcoin cash.
- It may be a bit difficult for a casual investor to differentiate amid these cryptos and to plan the dissimilar hard forks on a timeline.
What is Genesis Block?
- After Bitcoin was created, the first block was referred to as “Genesis Block.” It was mined on the Bitcoin blockchain by Satoshi.
- Satoshi made many changes to the Bitcoin network in this process and those changes have now become even more complex as the userbase of Bitcoin has fully-fledged.
- Not one can regulate when and how Bitcoin should upgrade, and this makes the entire process of changing/updating the system a little bit more complex.
- Even after the creation of Genesis Block, a number of hard forks still existed.
- Hard fork included the upgrading of software executing bitcoin and its mining processes.
- Once a software is upgraded by a user, that software version discards all other transaction from older software and generates a new branch of the bitcoin blockchain.
- However, users who use the older software are still going to continue to process transactions, henceforth, there’d be a similar set of transactions going on across two different Blockchains.
- This is one of the most notable Bitcoin hard forks.
- In 2014, Mike Hearn made the software for integrating some of the new features that he proposed.
- At that time, Bitcoin allowed only 7 transactions-per-second.
- Bitcoin XT was intended to allow 24 transactions-per-second.
- Bitcoin XT primarily experienced a great success after its launch, with almost 1,000 nodes running its software (back in 2015).
- However, just after few months, users lost interest in Bitcoin XT, making it ‘doomed to die.’
- Even though Bitcoin XT is officially available today, but it has visibly tumbled out of the errand of crypto community.
- After Bitcoin XT failed, few cryptocurrency community members demanded an increase in the block sizes.
To accomplish this goal, Bitcoin Classic was created in 2016.
- Unlike Bitcoin XT, Bitcoin Classic intended to raise block size to only 2 megabytes.
- Just like Bitcoin XT, Bitcoin Classic also saw initial interest with almost 2,000 nodes for few months in 2016.
- Bitcoin Classic still exists today and has gained a strong support from some developers.
- In 2015, Bitcoin core developer, Peter Wuille introduced the idea of SegWit (Segregated Witness).
- SegWit aims to reduce the size of all Bitcoin transactions, letting more transactions to come off at the same time.
- However, SegWit was officially a soft fork and might have assisted in prompting hard forks after it was initially proposed.
- Some community users and developers decided to introduce a hard fork in response to SegWit, as well as to evade the procedure-updates.
- This, at the same time led to the creation of Bitcoin Cash.
- Bitcoin Cash detached from the main blockchain in August 2017 – when Bitcoin transactions were excluded by Bitcoin Cash wallets.
- Up till now, Bitcoin Cash is the most effective and successful hard fork of Bitcoin.
- Bitcoin Cash is also the 4th largest cryptocurrency by market cap and allows blocks of 8 megabytes.
- After the creation of Bitcoin Cash, Bitcoin Gold was created.
- The creators of Bitcoin Gold intended to evoke the mining functionality with elementary GPU (Graphics Processing Units) since they experienced that mining became also particular – in terms of hardware necessities.
- Post-mine is an exclusive feature of the Bitcoin Gold and a procedure through which the developers mined 100,000 coins.
- In general, Bitcoin Gold follows the basic concepts of Bitcoin.
- Also, it is different in terms of ‘proof-of-work algorithm.’
As Bitcoin has been forked quite a few times within few years, there is a possibility that Bitcoin would still continuously experience both soft forks and hard forks in the future.
The trading price of Ripple on South Korean cryptocurrency exchange has been removed from the Coinmarketcap yesterday. Over past week, well-regulated South Korean cryptocurrency exchange market has been accountable for more 50% of global Ripple. The world’s second largest cryptocurrency exchange with $2.6 billion daily trading volume process $750 million worth of Ripple trades on a daily basis.
The decision of Coinmarketcap for suddenly removing South Korean rates is questionable though it has removed South Korean rates from all the other cryptocurrencies including Bitcoin, Ethereum, and other cryptocurrencies. The price of all the cryptocurrencies that are concerted in the South Korean market has decreased significantly.
For newcomers, the sudden removal of South Korean rates from Ripple’s global average price looked like a major correction. According to Ripple’s chief cryptographer, David Schwartz, Coinmarketcap’s decision to eliminate Korean prices from the displayed XPR price made the price appear to drop possibly triggering some panic selling. Look meticulously at the data and don’t be deluded. He also highlighted that the latest price of Ripple without the high premium rate of the South Korean market is more meaningful. Although it has triggered a minor sell-off as investors began to validate concerns over the short-term performance of XPR.
Is it a Good Decision?
Analysts and experts have conflicting viewpoints on the removal of South Korean rates from the global price of cryptocurrencies on Coinmarketcap. David Schwartz also said that the removal of South Korean rates is advantageous for the market and for every cryptocurrency that is listed on the Coinmarketcap since only a portion of investors is affected by the premium rates in South Korea.
It’s quite difficult for foreigners to trade cryptocurrencies in the South Korean market and also very much challenging for South Korean investors to take benefit of the arbitrage opportunity. The price of cryptocurrencies in the South Korean market is exclusive to local traders and investors.
The question about the rates from the South Korean market whether they should be imitated on the global price of cryptocurrencies still remains unanswered. Whereas some experts believe that it could make the ecosystem better. Others believe that the sheer trading volume coming from the South Korean market and strict rules imposed by the government to regulate the sector, South Korean rates should be considered in the calculation the global average price.
Eventually, due to the strict capital controls, it’s not possible for the foreign traders to move South Korean won out of the local cryptocurrency segment. Therefore, experts believe that the removal of South Korean rates is defensible.
Story credits: ccn.com
Image: Google images
I have been noticing on many online bitcoin districts that various users are unable to understand the concept of Segregated Witness. This post will clear up any doubts, uncertainties, and myths regarding SegWit.
So, what happens in SegWit?
SegWit is short for Segregated Witness and it’s a proposal presented by the developers of Bitcoin Core. Originally it was aimed to solve the transaction malleability, which is a well-known weak spot in the Bitcoin system. The idea behind SegWit is that the signatures in a transaction, also known as the “witness data” are skipped when calculating the transaction id.
Basically, SegWit will update the 1MB size block limit to 4-million unit block weight limit. This counts serialized
witness data and one unit and core block data as four units. This is an entirely new transaction format, meaning the block size is increased. SegWit counts each byte in a witness as 0.25 bytes towards the 1MB block limit, thus the maximum size of a block becomes just under 4MB.
It’s not that the data gets smaller, it’s just counted in a way that allows for the block limit to be increased.
The short/easy version
In simple words, signature related data is removed from bitcoin transactions, causing them to appear smaller in size. Also, making the block size smaller, further, allowing more transactions to take place.
Clearing up myths and rumors
Myth: SegWit as a soft fork is much more dangerous than a hard fork
A soft fork ensures that the backward and forward compatibility is under control. Also, when a soft fork is set up, old versions of Bitcoin software will be able to function without any faults. On the other hand, a hard fork requires every Bitcoin user to update to the new software to support the consensus rules. Any user that fails to upgrade to the new software might be under the risk of getting thrown off the Bitcoin network.
Myth: SegWit is more complicated than a super simple hard fork
Similar to a hard fork, SegWit proposes the same idea of increasing the block size limit. No doubt, it is pretty complex and introduces several changes, but it is a relatively simple conceptual change. Basically, SegWit ignores the signatures when calculating the transactions, but as a soft fork, some additional changes must be made to make SegWit transactions compatible with non-segwit nodes. These changes then have side effects which can be beneficial to Bitcoin. It also contains more functionality than a hard fork increasing the block size limit. The hard fork to increase the block size limit also appears simple, but additional changes need to be made to support the deployment and to solve the quadratic hashing issue with transactions.
Myth: Miners who don’t upgrade to segwit will be forcefully told to quit the bitcoin network
This is false since SegWit will be deployed using the BIP9 versionbits which uses a 95% threshold. A miner would not run into any trouble, as long as he follows certain rules. However, if he fails to follow these rules, he could end up with transactions including witnesses but he wouldn’t be having the witnesses nor the witness root hash in the Coinbase. This would be an invalid block that would be in the orphan pool.
What are the benefits of SegWit?
Besides the obvious benefit of having to increase the capacity, there are several other benefits that come with the introduction of SegWit. Some of those benefits are:
- Node performance is tested based on how weighting data
- Signature covers value
- Linear scaling of sighash operations
- MultiSig gets more security
- Script versioning
- Increased security to almost-full-nodes
Why hasn’t SegWit been activated yet?
If there is not enough support shown, it might result in a contentious fork. That means a part of the network switches to the new client while some remain to use the older version. This leads to two sets of cryptocurrencies with different rules, co-existing and competing for users and legitimacy.
In order to avoid such a situation, the developers of SegWit have programmed a specific rule in the software proclaiming that it will only activate once it reaches the 95% mark.
Currently, the support is hovering around 32-33%.