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Bitcoin Splits in Two Amid Feud (cnet.com)
Bitcoin is dividing in two. Disagreements about how to operate the cryptocurrency have led to a new strand called Bitcoin Cash, which is breaking off from the bitcoin system. From a report: Bitcoin Cash launches Tuesday in what is known as a "hard fork" from bitcoin, a virtual currency based on peer-to-peer transactions without any central authority or bank behind it. The new offshoot is a response to the increasing popularity of bitcoin, which is struggling to deal with massive numbers of transactions with its underpinning technology. The main bitcoin currency is adopting a system called Segwit2x that moves transactions out of the current blockchain, while bitcoin Cash will use bigger blocks within the blockchain. Bitcoin holders are set to receive the same amount of bitcoin cash as they have in bitcoin if the exchanges and wallets they use support the new coin, another report added. Exchanges including Kraken and ViaBTC have said they'll support both, while others like Coinbase and Poloniex have said they won't, citing uncertainty that bitcoin cash will have lasting market value.
BTC "wins" because some Chinese mining pools are making money hand over fist from transaction fees. Obviously they don't want that to end. It also "wins" because many people holding BTC don't want the supply to effectively double with a hard fork, as that devalues their "investment".
The ultimate problem with Bitcoin is that it involves multiple parties who are strongly motivated to operate at cross-purposes for their own personal gain. Bitcoin Cash won't be the last hard fork.
> I assume everyone involved is working toward strengthening the currency as a whole and not trying to undermine it's success.
You assume wrong. Blockstream, Inc, a company financed by the second largest mainstream financial company (AXA), hired most of bitcoin's core developers, and drove off many of the rest. They have roadblocked bitcoin's expansion in order to force transactions "off-chain" onto private settlement networks, the kind that AXA can collect fees off of.
A "block" is a set of bitcoin transactions secured with a cryptographic hash, so you can verify the contents are correct. Until now, the block size limit has been 1 MB. Since blocks are generated every ten minutes on average, this works out to slightly less than old 14.4K telephone modem speed. This is an absurdly low limit on transaction rate, but was not a problem until last fall, when the volume of transactions hit that limit. The core developers had refused to raise the limit, so that instigated the software fork.
Bitcoin is open-source software, so it can be forked like any other OSS project. The split happening today is a simple change to the code, to allow up to 8 MB blocks. That amounts to 107 kbps, which is still well within modern broadband capacity. All the transaction up to this point is identical for both forks, but once the new fork generates a block > 1 MB, the other fork won't recognize it as valid. From that point forward their blockhains will have different histories. Any bitcoins you had previously will be represented on both ledgers, and it is up to the user to choose which software they want to use to handle future transactions.