What Is Bitcoin Unlimited?
Bitcoin Unlimited was a proposed upgrade that would allow Bitcoin to process more transactions. Bitcoin Unlimited was designed to improve transaction speed by increasing the block size.
- Bitcoin Unlimited was designed to improve transaction speed through scale.
- It proposed that the size of blocks should be increased and that miners would step up to increase capacity.
- The upgrade was rejected over fears that it would cause the Bitcoin network to split.
Bitcoin Unlimited Explained
The development of 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.
The Bitcoin network solves this problem by recording transactions on a shared ledger, called a blockchain. Instead of a single database, the ledger is stored on thousands of different computers, where it can be independently verified by any observer.
This system is less efficient than legacy systems because it can handle fewer transactions than a centralized database. As Bitcoin payments became more popular, the network began to reach its limits, causing transaction times and fees to increase. Bitcoin Unlimited was one of several proposed software upgrades that would reduce network congestion by increasing Bitcoin's transaction limits.
How Bitcoin Unlimited Would Work
Blocks are files where Bitcoin transactions are permanently recorded, like a ledger page or record book. Each time a block is completed, it gives way to the next block in the blockchain. In the Bitcoin network, each block is limited to one megabyte of transaction data every ten minutes.
Bitcoin Unlimited proposed that the size of blocks should be increased and that miners—individuals and companies that provide the computing power to record Bitcoin transactions—would step up to increase capacity.
The proposal was controversial and ultimately was not adopted by the majority of Bitcoin users. Because Bitcoin is not controlled by a single entity, decisions concerning upgrades require broad consensus among all the participants in the network. This is because if an organization pushes forward with a change that other groups have not agreed to, the network can “fork,” or split according to the different version of the software. A consensus-driven approach can reduce forking, but it also makes it harder to tackle issues for Bitcoin adoption.
Bitcoin Unlimited Concerns
Concern over forking is one of the reasons why Bitcoin Unlimited is not the new standard. Another concern over Bitcoin Unlimited was that allowing bigger blocks could increase the amount of storage space required to run Bitcoin software, thereby restricting the network to well-funded actors.
Proponents of Bitcoin Unlimited believed that raising the block size limit would accelerate Bitcoin adoption, by making it easier and cheaper to make payments on the network.
Although Bitcoin Unlimited failed to reach wide adoption, the block size dispute ultimately caused the Bitcoin network to split in August of 2017. The majority of miners and users remained on the old network, which kept the block size limit at 1 MB. A second cryptocurrency, Bitcoin Cash, was created by those users and miners who changed their software to allow for larger blocks.