DEFINITION of Bitcoin Classic
A fork from Bitcoin Core that proposed increasing the size of blocks. Despite early successes, Bitcoin Classic failed to be adopted by the wider bitcoin community.
BREAKING DOWN Bitcoin Classic
Bitcoin was jumpstarted by Satoshi Nakamoto, who published a paper in 2008 called “Bitcoin: A Peer-to-Peer Electronic Cash System”. The paper described the use of a peer-to-peer network as a solution to the problem of double-spending (using bitcoin for more than one transaction), with transaction details added to the end of block chains. Because of the computational power needed to attack and decode a block chain, bitcoin is able to retain a high level of security. This has limited the need for transactions to go through centralized third parties, such as financial institutions.
At the heart of bitcoin is its reference software. The software standard for bitcoin was released by Satoshi Nakamoto in 2008, and is referred to as Bitcoin or Bitcoin Core. Since its launch, a number of improvements to the software have been proposed. These proposals often focus on increasing the number of transactions that the system can handle, either by speeding up processes or by increasing the size of bitcoin blocks.
Blocks are files where bitcoin data is permanently recorded. They are created when miners – people who provide the computing power required to maintain records of bitcoin transactions – add new transaction information through a hashing algorithm. Each time a block is completed it gives way to the next block in the blockchain, with blocks in Bitcoin Core are limited to one megabyte. As the number of transactions have increased, this size limit has resulted in the development of bottlenecks that have slowed down transaction processing speeds. Bitcoin Classic sought to address this capacity issue by increasing the size of the blocks.
In 2016, Bitcoin Classic proposed increasing blockchain sizes from 1 megabyte to 2 megabytes. In effect, this would double the number of transactions that could be processed per second. The proposed increase was less aggressive than what was proposed by Bitcoin XT, which in 2015 proposed increasing the size of blocks to 8 megabytes.
Because bitcoin is not controlled by a single entity, decisions concerning changes are made through consensus. Any changes proposed have to receive substantial support from the greater bitcoin community. One of the primary reasons for this approach is that any organization that pushes forward with a change that other groups have not agreed to can result in “forking”, which means that the network that runs bitcoin splits between different standards. Ensuring that a proposal receives majority support reduces the possibility of conflicting standards being used by different bitcoin nodes and miners. Once a new standard is accepted, previous software standards become obsolete.
Despite the number of overloaded blocks and transaction fees increasing, the number of nodes using Bitcoin Classic never reached critical mass and the platform has since ceased operation. By the end of 2016, Bitcoin Classic shifted its stance from increasing block sizes to 2 megabytes to allowing nodes and miners to set their own block sizes, a similar approach taken by Bitcoin Unlimited; by November of 2017 it had closed down altogether. However, the Bitcoin scaleability problem remains pressing for developers and users, and many still see increasing blockchain sizes as the best way to speed up transaction times as the number of transactions increases. Another Bitcoin hard fork called Bitcoin Cash still operates on this principle, and as of May 2018 had expanded their blockchain size to 32 megabytes; however, Bitcoin Cash's total number of transactions still dwarfs that of Bitcoin.