How to earn bitcoins fast
Rumours that bitcoin miners managed to reach an agreement and avoid a "civil war" have proved exaggerated. On 1 August at 15:50 Moscow time, the bitcoin blockchain will split. An alternative cryptocurrency, Bitcoin Cash, will emerge. Ethereum World News writes about what investors should be prepared for.
"The hardfork (fork, split) will happen because a pool of Chinese miners disagreed with the parameters of an update known as SegWit2x, which will increase the compute block from 1 to 2 megabytes. The dissenters are numerically outnumbered, but behind them are giant Chinese bitcoin mining "farms" - hangars lined with racks of GPUs "mining" the cryptocurrency. The computing power of the "rebels" is great, and it is simply not profitable for them to float in the same boat as the masses of small miners. The new blockchain-based currency, called Bitcoin Cash, will increase the maximum block size to 8 megabytes. However, the size of the block may vary depending on the needs of the individual miner.
Also, the creators of the new system claim that it is better protected against replay and wipe attacks on the blockchain authentication system.
Finally, Bitcoin Cash promises more frequent recalculation of complexity. Due to increasing computing power, the complexity (the probability of calculating a block, i.e. generating another "coin") is recalculated every 2016 blocks, or about every fortnight. The probability of finding a block each time becomes smaller and requires more computing power. The more frequent recalculation of complexity also plays into the hands of large miners, who may eventually just monopolise the bitcoin "mining" process.
So what happens after 3:50pm tomorrow? Most of the bitcoin community suggests that Bitcoin Cash should be considered an "altcoin", that is, an alternative cryptocurrency to bitcoin. However, this is not entirely true. The new cryptocurrency has the same story as bitcoin. It's just that at X hour, the blockchain will bifurcate and two alternative bitcoin lines will emerge. The result could be chaos.
Active participants in the "civil war" reassure ordinary investors: Bitcoin owners, they say, will receive a corresponding number of Bitcoin Cash tokens, while keeping their old bitcoins. In other words, they will double their cryptocurrency capitals in an instant. However, in reality, money will not fall from the sky on everyone. Only those users who control their own private keys will be able to get the new cryptocurrency. As well as those who use intermediaries (bitcoin exchanges and e-wallets) who supported the introduction of Bitcoin Cash. However, these are a minority. Exchanges such as itBit and Bisq, BitPay wallets, Coinbase, Electrum, and most others believe that there is only one bitcoin and do not recognise a new cryptocurrency based on it.
Consequently, there will be fierce competition between the two camps. Those users whose e-wallets do not support Bitcoin Cash may start withdrawing bitcoins en masse to competitors' accounts to get new "coins". This would provoke a war between old and new bitcoin and could lead to a collapse of all cryptocurrencies altogether.
On 14 November, the Taproot update, the first network update since 2017, was activated on the bitcoin blockchain. It will allow "smart contracts" and make transactions more private and cheaper, CNBC writes.
Taproot includes the implementation of so-called "Schnor signatures", which should make bitcoin transactions more confidential, efficient and cheaper. It also, perhaps most importantly, allows for "smart contracts" on the bitcoin blockchain.
Smart contracts
The most important thing that Taproot brings to the table is the ability to enter into 'smart contracts', argues Catherine Dowlin of Bitwise Asset Management. She recalls that this feature has long been considered the biggest advantage of Ethereum and other second-generation cryptocurrencies.
"Smart contracts are digital agreements backed by software code and stored on a blockchain. It is because of them that the sectors of decentralised finance, or DeFi, and non-exchangeable tokens, or NFT, exist. Most of the associated activity happens on Ethereum, making it the most used blockchain.
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"While bitcoin is unlikely to ever be as flexible as Ethereum in terms of smart contracts, with Taproot the distance between the two will narrow," says Dowlin. This is likely to expand the scope of the first cryptocurrency.
Multi-signature transactions
Taproot also makes certain categories of transactions more private. Schnor's signatures will allow multi-signature transactions, that is, those involving many addresses, to stand out in no way.
They will appear as standard, single-signature transactions, which should ensure anonymity and confidentiality for their participants. Multi-signature transactions are used, inter alia.