Bitcoin XT

Bitcoin XT

Bitcoin XT is a digital floating exchange that is pegged to the U.S. dollar like in Forex exchange. 

First announced in 2015 Bitcoin XT, a new version of the Bitcoin software separate from Bitcoin Core has recently been released. The essence of the novelty is increasing the size of blocks from one megabyte to eight megabytes. This represents a so-called ‘hard fork’ in the system.

BREAKING DOWN 'Bitcoin XT'

Bitcoin was released in 2008 by an unknown person under the name Satoshi Nakamoto and described in the document called white paper as a “Peer-to-Peer Electronic Cash System”. This roadmap to Bitcoin 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 software, which referrers either to Bitcoin or Bitcoin Core. From the outset, 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.

Bitcoin Block

Bitcoin Block is a set of new unique transactions recently made in the Bitcoin network. Blocks connect all transactions together. Afterwards, transactions are combined into single blocks and are verified every ten minutes through mining. It means that miners – people who provide the computing power required maintaining records of Bitcoin transactions – enter the unconfirmed transactions pool, take this transaction and others alike and check their validity. Each time a block is completed it gives way to the next block in the blockchain, with blocks in Bitcoin Core 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.

The Bitcoin Core and XT programs

Some experts favor increasing the maximum block size limit from 1 MB to 8 MB or as much as 20 MB in order to allow the network to accommodate more transactions at a time. However, further, it may turn out that limit needs to be increased again.

Forking occurs when a new version of the Bitcoin client is incompatible with the previous one, producing transactions and blocks that are not accepted by the old protocol.

The Bitcoin Core and XT programs are currently compatible, operating on the same blockchain. This will remain true unless and until a supermajority (75%) of Bitcoin nodes adopt the XT protocol, which you can watch in real time. It will then be two weeks before XT begins increasing the maximum block size.

Bitcoin XT was released by Gavin Andersen and Mark Hearn as a marketing ploy to force members of the Bitcoin industry to choose between the two versions. For them, this would determine whether or not the majority of the stakeholders – from miners to exchangers – favor the technical changes.

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.

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2021-10-19 • Updated

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