DEFINITION of 'Bitcoin XT'

A fork from Bitcoin Core that proposed increasing the size of blocks from one megabyte to eight megabytes. Bitcoin XT gained first attention in 2015.

BREAKING DOWN 'Bitcoin XT'

Bitcoin was started by Satoshi Nakamoto in the 2008 paper “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, with transaction details added to the end of blockchains. Managing the blockchains required substantial computational power in order to maintain security.

At the heart of bitcoin is its reference software, first released by Satoshi Nakamoto in 2008. This release is referred to as Bitcoin or Bitcoin Core. Since inception, the bitcoin community has proposed a number of improvements to the software, often focusing on increasing the size of blocks in order to improve transaction speed.

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 increased, this size limit resulted in the development of bottlenecks that slowed down processing speeds. Bitcoin XT sought to address this capacity issue by increasing the size of the blocks.

In 2015, Bitcoin XT proposed increasing blockchain sizes from 1 megabyte to 8 megabytes. In effect, this would increase the number of transactions that could be processed per second eightfold. After the initial block size increase, the blocks would double in size each subsequent year. This approach was considered aggressive, though did gain initial support because increasing block sizes was considered one of the primary ways to improve bitcoin transaction performance.

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”, meaning that a different standard is being used from the previous one. 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.

By early 2016, the number of nodes using Bitcoin XT began to decline. Other proposals, such as Bitcoin Classic and Bitcoin Unlimited became more popular.

RELATED TERMS
  1. Bitcoin Classic

    A fork from Bitcoin Core that proposed increasing the size of ...
  2. Bitcoin Cash

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

    Bitcoin block rewards are the new bitcoins that are awarded by ...
  4. Satoshi

    The satoshi is the smallest unit of the bitcoin cryptocurrency. ...
  5. Bitcoin Exchange

    A bitcoin exchange is a digital marketplace where traders can ...
  6. Bitcoin Misery Index

    The bitcoin misery index measures the momentum of bitcoin based ...
Related Articles
  1. Tech

    A History of Bitcoin Hard Forks

    Bitcoin, bitcoin cash, bitcoin gold and other variations can be hard to keep straight.
  2. Tech

    Bitcoin vs. Bitcoin Cash: What's the Difference?

    We break down the difference between bitcoin and bitcoin cash, and what it might mean for the future of cryptocurrencies.
  3. Tech

    What's Bitcoin Cash And Where the Heck Did It Come From?

    Here's a look at Bitcoin Cash and how its arrival has impacted the market dynamics.
  4. 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.
  5. Tech

    Bitcoin Price Finds Further Support in Scaling Agreement

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

    Bitcoin Prices Undergo Wild Swings Over The Weekend

    Bitcoin Cash almost replaced Bitcoin until it didn't.
  7. Tech

    What Determines the Price of 1 Bitcoin?

    There are several factors that affect bitcoin's price, including supply and demand, forks, and competition.
  8. Tech

    How Did Bitcoin Cash’s Price Perform in 2017?

    2018 will likely see bitcoin cash’s legitimacy echo its growing maturity in a rapidly developing market.
  9. Tech

    Ways To Earn Bitcoins

    There are many ways to earn and own Bitcoins other than just buying them on a Bitcoin exchange.
  10. Tech

    Bitcoin Predictions for 2017

    Bitcoin reached a 3-year high; does 2017 herald a continued bull run?
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. Is Bitcoin legal in the US?

    Learn about the legality of Bitcoin as a form of payment in the United States, as well as how it is produced and concerns ... 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 >>
Trading Center