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 limited the need for transactions to go through trusted 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. 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. 

RELATED TERMS
  1. Bitcoin Unlimited

    A proposed upgrade to Bitcoin Core that allows larger block sizes.
  2. Bitcoin Cash

    Bitcoin cash is a cryptocurrency created in August 2017, arising ...
  3. Bitcoin

    Bitcoin is a digital or virtual currency that uses peer-to-peer ...
  4. Bitcoin Core

    Bitcoin Core is software that includes a wallet, and helps keep ...
  5. Block (Bitcoin Block)

    Blocks are files where data pertaining to the Bitcoin network ...
  6. Block Reward

    Bitcoin block rewards are the new bitcoins that are awarded by ...
Related Articles
  1. Trading

    Bitcoin Cash: The New King of Cryptocurrency?

    Investors are wondering if the popularity of Bitcoin Cash poses a serious threat to the Bitcoin throne.
  2. Tech

    How Should Investors Play Bitcoin Price Volatility From November Fork?

    Here's a brief analysis of what's at stake and key indicators that investors should look for.
  3. Tech

    Bitcoin Price Finds Further Support in Scaling Agreement

    The scaling agreement is likely to provide support to Bitcoin’s price rally.
  4. Tech

    Bitcoin Is Dead? Not A Chance

    The price of the digital currency, Bitcoin, fell from around $450 to below $380 late last week following the departure of long-time developer Mike Hearn.
  5. Tech

    The Rise And Fall And Rise Of Bitcoin

    A look at the reasons behind the recent spectacular surge in bitcoin prices.
  6. Tech

    What's Fueling Bitcoin's Record-Breaking Price?

    Tracking the reasons behind bitcoin's price rally: "Halving" and China
  7. Tech

    Bitcoin Price Holds Steady But Future Spike May Be In The Cards

    Bitcoin's price remained steady even as bitcoin cash gained more than 11% in the last 24 hours.
  8. Tech

    Bitcoin's Main Stumbling Block: Navigating The Law

    Coders created Bitcoin to be decentralized and independent of governments and banks. Authorities are still struggling to create a legal framework.
  9. Tech

    If You Had Purchased $100 of Bitcoin in 2011

    Your initial $100 of bitcoin bought in 2011 is now worth $2,053,278.
  10. Tech

    The Outlook for Bitcoin in 2016

    A look at the forces behind the recent surge in Bitcoin price and how it stands entering 2016.
RELATED FAQS
  1. How does a block chain prevent double-spending of Bitcoins?

    Find out how double-spending is prevented in the Bitcoin server and how transactions are posted and verified on the Bitcoin ... Read Answer >>
  2. What Does the Bitcoin Blockchain Record?

    Read about the bitcoin blockchain, a public ledger shared among all bitcoin users that records the information of every single ... Read Answer >>
  3. Why do Bitcoins have value?

    Performing with transactional anonymity, Bitcoin has value as a private digital currency, investment tool and social networking ... Read Answer >>
Hot Definitions
  1. Yield Curve

    A yield curve is a line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but ...
  2. Portfolio

    A portfolio is a grouping of financial assets such as stocks, bonds and cash equivalents, also their mutual, exchange-traded ...
  3. Gross Profit

    Gross profit is the profit a company makes after deducting the costs of making and selling its products, or the costs of ...
  4. Diversification

    Diversification is the strategy of investing in a variety of securities in order to lower the risk involved with putting ...
  5. Intrinsic Value

    Intrinsic value is the perceived or calculated value of a company, including tangible and intangible factors, and may differ ...
  6. Current Assets

    Current assets is a balance sheet item that represents the value of all assets that can reasonably expected to be converted ...
Trading Center