Can Bitcoin Unlimited stand on its own without limits?

22 April, 2017

Within just the last few years, the financial industry has transformed significantly with the arrival of digital currency. Launched in 2008 bitcoin has received a tremendous amount of media coverage. Although not all of that attention has been positive, proponents of the cryptocurrency have been quick to point out the many advantages it offers.

At the most basic level, bitcoin is basically a decentralized computer network. Whereas large credit card companies like MasterCard and Visa utilize their own data centers for powering their networks and confirming payments and transactions, bitcoin works a bit differently: There is no central network, and this currency is instead powered by individual miners.

Bitcoin miners generate the computing power necessary for the operation of the bitcoin network. In order for the network to be powered, complex mathematical equations must be solved. Miners solve those problems in exchange for a fee which is then paid out in bitcoin. While the bitcoin industry as a whole first seemed as though it would be nothing more than a passing fad, it has quickly become apparent that it's anything but, with venture capitalists around the world having raised more than $1 million for the burgeoning industry.

Over the course of the last several years, the bitcoin industry has evolved rapidly. It was not long ago that bitcoin miners could easily operate from home. Fast forward a few years, and now multi-million dollar organizations are operating massive bitcoin farms. In fact, the changes that have taken place in the bitcoin mining industry within just the last five years have been nothing short of revolutionary. Today, only a small fraction of the Bitcoin mining market is handled by at-home miners. The vast majority of those at-home miners typically pursue mining as a hobby or because they are passionate about supporting the network. It is no longer possible for at-home miners to compete with the large-scale operations now taking advantage of scalable resources.

In the past, miners were often working toward the goal of a short-term profit strategy. Today, that has changed to a more focused strategy; while the return might not be as immediate, this approach does provide massive potential for a high profit yield. This is a trend that is expected to continue over the next several years, particularly as new technology development grows more expensive.

One element that could prove to be a challenge within the bitcoin mining industry is the presence of internal conflicts. Recently, there has been significant speculation about whether bitcoin could actually split into two completely different currencies. Despite the fact that the value of the digital currency has continued to reach record highs, the real issue is that the infrastructure supporting the cryptocurrency could be on the brink of destruction. The blockchain system responsible for verifying bitcoin transactions is now extremely backlogged; in fact, the number of bitcoin transactions waiting to be verified has increased significantly in just the last year. That bottleneck has forced users to pay ever-increasing fees in order to speed up transaction confirmations. As a result, bitcoin has, in some cases, become more expensive to use than credit cards or PayPal. This is a serious issue, given that one of the primary advantages of bitcoin is that it's supposed to be less expensive than using a credit card or PayPal.

After a couple of years of vicious internal arguments regarding the best way to resolve the issue, some of the most influential members in the bitcoin community have now launched a solution: Bitcoin Unlimited. Extremely controversial, the solution does have the potential to reduce congestion in the industry. Conversely, if the solution fails, bitcoin could eventually be split into two currencies.

In order for Bitcoin Unlimited to become activated, at least 60 percent of miners would need to be on board. Essentially, Bitcoin Unlimited is a software upgrade for the currency's blockchain technology. When bitcoin was first created, a cap was imposed on the amount of data that could be processed. This cap did slow the network but was believed to be necessary as a safety measure to prevent hackers from potentially overloading the system. Today, proponents of Bitcoin Unlimited believe the blockchain technology is strong enough to stand on its own without any limits.

Whether a sufficient number of miners will take the risk and gamble on Bitcoin Unlimited remains to be seen. However, one thing is certain: The future of bitcoin mining may never be the same.