Bitcoin Under Threat Of Other Cryptocurrency Contenders

A competing version of Bitcoin – Bitcoin Unlimited – aims to dethrone the original, even at the risk of causing chaos. It’s a possible replay of the ealier scenario that had involved Ethereum.

It is an existential crisis for Bitcoin, which has been brewing for almost 2 years. A quarrel opposes two camps on how to improve the Bitcoin system and network to be faster. Victim of its own success, congestion and slowness, the network can today handle around 300,000 transactions per day. Not enough enough in the opinion of some for it to claim to be the preferred electronic currency of tomorrow and a means of payment that could eventually compete with Visa and others like Paypal.

Bitcoin and Cryptocurrency Competitors

Judging that the status quo and inertia have lasted too long, a group led by Roger Ver, “the Jesus of Bitcoin” and some other companies of “mining pools” (companies that validate transactions and are the heart of the system) like Antpool, and ViaBTC have decided to force change and promote a new version of Bitcoin, said Bitcoin Unlimited, which competes with the historical version called Bitcoin Core. Ver proposes a “hard fork”, an irreversible modification of the rules of the software that governs Bitcoin, to increase the power of the network, and to deal with the increase in transactions, Antpool will increase its mining capacity in the coming months.

For this change to occur, a majority of “mining pools” must be behind this idea: it must represent three quarters of the computing power of the network, for two weeks, in order to demonstrate that it is Well she who runs the machine and can impose this new standard in a legitimate way. Bitcoin Unlimited has already experienced two significant technical bugs this year, which have obviously delighted its opponents who see a manifestation of the risks they had warned the community about.

The earlier conflict: Ethereum

If this “coup d’etat” succeeds, which is still far from being assured, two currencies, Bitcoin Core (the original Bitcoin) and Bitcoin Unlimited, managed on two “blockchains” (open-source accounting registers where the transactions are recorded) within different rules, will fight each other in a fratricidal fight. And the most popular will win. A scenario that caused the rival currency Ethereum to split into two last summer, and caused its collapse before it may rebound. It is Ethereum that will indirectly benefit from the setbacks of Bitcoin today.

Risk of centralization of the network

This new “Unlimited” system would favor the major mining companies, especially Chinese, and thus the concentration and centralization of this activity into an oligopoly. Some even see a takeover in China under the bitcoin. More generally, this conflict illustrates the cultural opposition between mining companies and the people in charge of developing the Bitcoin network, which bring all the gray areas.

Some believe that mining companies today have too much weight and influence on the destiny of Bitcoin to the detriment of other players in the sector such as stock markets. They have supported the historic Bitcoin Core project, but they say they are ready for any eventuality in the event that the “coup d’etat” should succeed. Clearly, they will rate the two competing currencies, and ensure that customers will not be penalized. Today, Bitcoin Unlimited is worth less than its original version, around a third of its value, but the balance of power could quickly change.

Impact on credibility and trust

Torn apart, the community of Bitcoin users was saddened by the possible impact of this quarrel on the trust and credibility of this new currency. The community sees clashes of egos as being detrimental to the development of the currency. The price of Bitcoin, above $1,000, has thus far resisted this risk of a coup d’état but the currency’s volatility has increased.