For those of you lovers of Bitcoin and Blockchain, surely it’s no stranger to hear the word “hard fork” which lately keeps popping up in the news and is becoming a hot debate among users. But how far do you understand the vulnerable Hard Fork events that occur in the world of digital assets?

Instead of giving definitions that are difficult to understand, maybe we should learn directly through the Bitcoin case study. Have you recently felt that Bitcoin transactions have taken so long to get 1 confirmation? You have already given a relatively high standard miner fee, which is 0.0005 BTC in your transaction. Your transaction should get 1 confirmation within 10-30 minutes. But now 1 hour has passed, and your Bitcoin transaction hasn’t been confirmed by the Blockchain network. Why does this happen?

You surely know how many Bitcoin transactions have happened lately. In mid-2009, there were only about 100 Bitcoin transactions processed per day. From the chart you can see how rapidly the number of transactions has increased from year to year. On March 2, 2017, the number of Bitcoin transactions even touched 329,428 in 1 day. But what’s the problem?

The problem is that one block, which appears every 10 minutes, can only hold Bitcoin transactions up to 1 MB, which means that there are only about 3 transactions that can be processed every second. If we count, it means that within 10 minutes until the next block is created, there are 1,800 transactions that can be processed. But keep in mind not necessarily in one block can actually load 1,800 transactions. Sometimes a block contains a smaller number of transactions because the capacity of each transaction data entered into the block is greater than average. So it’s possible, one block can only load 1,500 transactions, instead of 1,800 transactions.

At present, every 10 minutes there are around 2,300 transactions waiting in line to be processed. Since one block can only load 1,800 transactions, it means that there are 500 transactions that are still waiting in line to be entered into the next block to get 1 confirmation. When the next block appears, the number of transactions that are waiting in line is 3,000 transactions and the new block can only hold 1,800 transactions. That means there are now 1,200 transactions waiting in line and so on. Transactions that will be prioritized to enter the block are transactions with a high priority. So if your Bitcoin transaction has a miner fee of 0.0005 BTC, whereas other 1,000 miner transaction fees reach 0,0009 BTC, then you will wait for hours until your transaction is processed and put into a block.

In mid 2009, the size of one block of Bitcoin only reached 0.001 MB, but on March 10, 2017 yesterday, the size of one block reached 0.992 MB – already almost 1 MB! Over time, Bitcoin transactions will increase. What happens in the future if the block’s maximum capacity is almost fulfilled now? The more transactions that are waiting in line to be put into the block, the more transactions that need to be confirmed, and the miner fee will be more expensive. Bitcoin will lose the characteristics that make it far better than the current bank or financial system, namely: transaction speed and cheap money transfer fees.

So what to do?

Simple You just have to upgrade it.

Unfortunately, the ‘upgrade’ process isn’t as easy as imagined. Bitcoin, since it is not controlled by a country, government, or any party, relies on a consensus system to upgrade the system. If the size of the Bitcoin block is to be changed from 1 MB to, say, 10 MB, then there must be at least 51% of the miners worldwide (who are running Bitcoin technology) who agree with the change. Convincing 51% of the hundreds of thousands of miners in the world is certainly not something easy. Even if 51% of them agree, it doesn’t mean the Bitcoin upgrade process has been successful without problems. If there are 51% of miners who agree, there will be a new Bitcoin network with a capacity of 10 MB per block. But 49% of other miners can also continue to run the old Bitcoin network, which has a capacity of 1 MB per block. If 49% of these miners do not agree to upgrade to the new Bitcoin network, and still choose to run the old Bitcoin network, then there will be two Bitcoin networks running at the same time. This is what is called Hard Fork, where the Bitcoin network becomes branched, like the tip of a fork.

Means, there will be two different coins.

Remember the Ethereum case that was split into Ethereum and Ethereum Classic? Yes, this case can also occur in Bitcoin.

At the moment there are two camps which are debating the issue of Block Size of Bitcoin, Bitcoin Core and Bitcoin Unlimited. Bitcoin Core is the Bitcoin network that we use today, represented by the BTC symbol. Broadly speaking, Bitcoin Unlimited has the same concept but the block capacity is different, no longer 1 MB like the one in Bitcoin Core. Bitcoin Unlimited came up with a reason to fix deficiencies in the Bitcoin Core network so that Bitcoin transactions can be confirmed more quickly. Let’s just say in the Bitcoin Unlimited network, one block of capacity reaches 16 MB, meaning one block can load up to 28,800 transactions! Much more than Bitcoin Core which can only process a maximum of 1,800 transactions per 10 minutes.

But unfortunately, not everyone considers Bitcoin Unlimited as the best solution. Many are debating the negative side of Bitcoin Unlimited. For example, many assume that creating large block capacities will require large computing resources too, so there will only be a few miners that can do it. This will later lead to centralization in the Bitcoin network. In addition, there were still several bugs found during testing of Bitcoin Unlimited which certainly made a number of parties hesitate to upgrade. Not to mention if we think the risk of Bitcoin being split into two coins after the Hard Fork occurred. Unlike in the usual forking case where the forking time has been planned beforehand, the activation of the Bitcoin Unlimited network can happen at any time without being predictable. There is an opportunity where the separation of the two coins does not proceed completely.

Until now the debate is still ongoing and there is no certainty whether Bitcoin will experience Hard Fork or not in the near future, and the possibility for Hard Fork is actually still relatively small. But if indeed the Hard Fork case occurs, at least this time you already understand what is meant by the Hard Fork event and why this is needed.