After squabbling for years over how to fix the growing pains of the world’s first decentralized cryptocurrency, one of the sides in the ongoing Bitcoin Geek War has finally made a bold move. This week, on August 1st, a small number of the “big blockers” performed a “hard fork” and broke away from the main Bitcoin blockchain, creating a new currency, “Bitcoin Cash“. This had the added benefit of giving everyone who already held Bitcoin an equal amount of the new Bitcoin Cash! Ever heard the phrase, “there’s no such thing as a free lunch”? Bitcoin’s first fork into two has proven that statement wrong. Read on to learn more about this historic week in Bitcoin.
Bitcoin has Forked into Two!
The blockchain is the distributed, decentralized ledger that contains every transaction that has ever occurred on the Bitcoin network. It’s approximately 150 GB in size. Since the hard fork, there are now two “Bitcoin” blockchains competing for market dominance. Both of them have the exact same transactions from the beginning of Bitcoin nearly a decade ago, running until August 1st, 2017, when at just after 2pm Eastern time the first “Bitcoin Cash” block was mined into existence, at greater than 1 MB – in fact, its size was about 4 MB.
Since the original Bitcoin blockchain has a 1 MB limit per block, it was at this point that the one blockchain became two. The supermajority of miners are still mining the original Bitcoin chain, let’s call it “Bitcoin Core” or BTC. However, a small portion of miners have joined the mining of the new “Bitcoin Cash” or BCH. If you thought Bitcoin Core’s growing pains were challenging, take a look at how Bitcoin Cash had to start:
In Bitcoin, there’s a thing called mining difficulty that is basically designed to increase as more people enter mining and compete to discover scarce Bitcoins. However, should people leave the mining game, the difficulty will decrease. In BCH’s case, when they started their fork, their network was at the same difficulty level as BTC, but with a fraction of the total mining power. That’s why it took six hours for the BCH miners to find their first block! Normally Bitcoin blocks are expected to be found every ten minutes. So, this means BCH transactions were, in the beginning, taking hours to confirm! They are as of this writing, still taking longer than BTC transactions.
Bitcoin mining doesn’t actually look like this.
Worse still, no one who wanted to sell their newfound BCH was easily able to do so for at least the first couple days of its existence. Due to concerns about certain technical attacks that are possible in the time after a fork, cryptocurrency exchanges were extra cautious before allowing BCH deposits to trading accounts. However, while they weren’t allowing people to deposit BCH, they WERE allowing them to trade it. Huh? How can one trade something on an exchange to which one can’t deposit? Remember, after the fork, the people with BTC in their exchange accounts were given a balance of the same amount of BCH. (Except at the Bitfinex exchange, who screwed over their customers.) So, since trading was happening but no one could deposit, the price of the new BCH trended upward, even reaching as high as $800-$1,000 on some exchanges. (more…)
What’s that? You say Bitcoin has not been the front page feature story your local newspaper where you live? You must not live in Keene, New Hampshire – the capitol of real-life business acceptance of the world’s first cryptocurrency!
Front Page, Above-the-Fold, Twice!
About one month ago, the Monadnock Shopper News featured Bitcoin and the regional businesses that accept it on their front page, above-the-fold! Not to be outdone, the Keene Sentinel’s business section had a massive article in today’s paper that was not only the front page feature but was also promoted above-the-fold in the headline of the front page of the century-plus old newspaper. You can read it online here at the Keene Sentinel’s site. (Here’s a PDF of the piece.)
Reporter Paul Cuno-Booth did a thorough job interviewing various owners of the local bitcoin-accepting businesses about their reasons for backing the amazing decentralized currency, including Monadnock Makerspace founder Johnny Bolster, area computer tech Michael Gordon, Bob Maibusch of Pine Springs Golf Course, Ken Urbanski of Kirby’s Q, and Steve Wilder of Wilder Automotive. Cuno-Booth also focuses on the Shire Free Church’s media outreach along with our local meetup group for Bitcoiners and other cryptocurrency users and newbies, the Monadnock Decentralized Currency Network.
As we have reported here at Free Keene, according to CoinMap, Keene is the number one city in the world for bitcoin-accepting businesses per capita. Obviously not all businesses have the same results, of course. Though the golf course has yet to have a customer with bitcoin, Wilder Auto reports approximately a dozen customers regularly using bitcoin. Bolster, who also is the creator of the Portal Map, reported that he was able to sell ads to some new customers on his yearly map of area businesses, because he is accepting bitcoin as payment! That’s money that otherwise would have been left on the table had Bolster decided against accepting the cryptocurrency. (more…)
Monadnock Decentralized Currency Network Meetup at Rick’s Ice Cream
Bitcoin Vending Machine Adds DASH!
With all the Bitcoin drama going on, it’s easy to get distracted from what is important. What is important, whether Bitcoin stays on top or not, is the idea of cryptocurrency, of which Bitcoin was the first. While I personally believe Bitcoin can survive its internal turmoil, I could be wrong. After all, no one buys the Model T these days, even though it was the first car. The Model T is a clunker compared to what we have now.
Though there isn’t much mainstream media coverage of its alternatives, Bitcoin is far from the only cryptocurrency. There are hundreds of them, most based off of the original code for Bitcoin released by Satoshi Nakamoto, its anonymous creator.
One of those competitors that libertarian cryptocurrency enthusiasts in NH have been using recently instead of Bitcoin is DASH, or “Digital Cash”. Due to the growing pains Bitcoin has been experiencing, people here have been looking hard at other alternatives. DASH has started to appear in use at various libertarian market days across the state. Its fees are much lower than Bitcoin’s and DASH has an interesting governance structure that really sets it apart from many of the “me-too” cryptocurrencies out there vying for Bitcoin’s #1 position. (more…)
In a recent, in-depth article, I discussed the out-of-control fees to send bitcoin. The executive summary is that Bitcoin is somewhat broken due to the high fees that have been caused due to the Bitcoin network not being able to scale to consumer demand. The reason for this is because there has been an ongoing “geek war” for a couple years now behind the scenes that centers over some fundamental disagreements over how Bitcoin should handle its growing pains with scaling up. Meanwhile, the fees have been rising over the last six months and have killed off the previous usefulness that Bitcoin had for microtransactions, or even small dollar transactions. Again, see my original piece for more about the fee difficulties.
Will Bitcoin “Fork” on August 1st?
Now the ugly Bitcoin not-so-civil war that has been playing out behind the scenes on message boards, reddit, and social media for months and months is going to come into public view on August 1st. Here’s my non-technical explanation for what’s happening and how, if you’re a bitcoin holder or bitcoin-accepting merchant, it could affect you: (more…)
Charlie Shrem, COO of Jaxx, stumbled onto the lower fees, he told Free Talk Live.
I saw the headline in Coin Telegraph and couldn’t believe it: “Bitcoin Transaction Fees Significantly Decrease, Charlie Shrem Pays $0.25 Fee”. Even though I know and trust Charlie Shrem, I still thought this news was a fluke.
For those who haven’t been following the ugly geek war happening behind the scenes of Bitcoin, here’s a recap, oversimplifying a complex situation:
As little as two years ago, Bitcoin’s median transaction fee was as low as $0.02 worth of bitcoin. That means half of all bitcoin transaction fees cost less than $0.02 and the other half cost over $0.02.
With Bitcoin, there are fees to send, not receive. (This is the reverse of credit cards, where the merchant pays a fee to receive.) In the past, if one wanted, one could send bitcoin with no fee and it would go through, just without any priority. As you can see from this chart, the median transaction fee has shot up mostly in the last six months or so, and it has risen has high as $3.00 worth of bitcoin!
That means that had I wanted, in the last few months, to go buy a $2.00 drink at Corner News with bitcoin here on Main Street in Keene, NH, it might cost me $3 just to send the $2, making it a $5 drink! No sane customer would pay a crazy fee like that. This dramatic rise in fees has destroyed bitcoin’s previous usefulness for microtransactions. No more bitcoin-operated snack machines, no more using bitcoin for small online tips, no more Watch-my-Bit micro-donation video streaming service. (more…)
Since 1958 the Monadnock Shopper News has been connecting the people of this region with local businesses on a weekly basis. They deliver to over 40,000 households via postal mail – basically every home in Cheshire county. How exciting to see a feature article about local bitcoin-accepting businesses here in the Keene area as their headline, front cover story in this week’s issue!
Bitcoin Front Page Article Delivered to 40,000 Homes!
The Shopper News’ reporter went to visit with Chris Rietmann, one of the proprietors of Route 101 Local Goods, a unique store featuring locall-sourced products that’s also where bitcoin (and other cryptocurrencies) can be spent, plus bitcoin can be purchased from the region’s only Bitcoin Vending Machine, and you can even buy delicious Vietnamese food from the “Bon Vivant Gourmet Street Food” truck parked just outside at 661 Marlboro Road in Keene. (more…)