An attendee arranges a display of casino gambling chips decorated with bitcoin logos at the CrytoSpace conference in Moscow, Russia. (Photographer: Andrey Rudakov/Bloomberg)

Bitcoin Developer Behind Failed Fork Begins Another Offshoot

(Bloomberg) -- A new version of the bitcoin system has been formed after some developers split the blockchain, the digitized ledger on which the cryptocurrency lives. Called UnitedBitcoin, the offshoot comes a month after an earlier effort failed to gain enough support.

Bitcoin core developer Jeff Garzik, a proponent of the failed network upgrade known as SegWit2x, is leading to effort to increase capacity by raising block size to eight megabytes, as well as adding new smart contract features and support for the Lightning Network, which is a way to run more transactions.

While independence from any central authority is part of bitcoin’s appeal, that’s also made it more susceptible to such so-called forks when there are differing visions within the cryptocurrency community. Bitcoin miners and developers have been embroiled in a debate lately over an upgrade of its protocol that’s aimed at speeding up transactions. A lack of consensus had led to the possible creation of at least a half dozen variations.

Bitcoin Developer Behind Failed Fork Begins Another Offshoot

About 10 percent of bitcoin’s mining has switched to UnitedBitcoin, Garzik said in an interview. The effort has gained support of Chinese miners with older gear, which doesn’t mine bitcoins as profitably any longer, particularly as difficulty of mining bitcoins just went up. Exchanges and Exx support UB as well, he said.

“This has come together very, very, very rapidly,” Garzik said. “This was put together by some miners and exchanges that were largely China-based that were facing this prospect we have this difficulty adjustment in bitcoin, and also we’d like to see innovation in bitcoin move much faster than it does.”

UnitedBitcoin also offers replay protection, so people won’t be able to spend their coins twice, Garzik said. The new coin also will use a sizable reserve to stabilize its price relative to fiat currencies -- effectively, competing with another service, called Tether, which recently reported that a hacker stole $31 million in tokens from it.

Every bitcoin holder will get some UnitedBitcoin coins. Past splits had driven more people into bitcoin, to get the extra coins. Following prior splits, bitcoin cash and bitcoin gold, the new coins have appreciated, and so did bitcoin. (Bitcoin also soared in November, after SegWit2x, was called off.) This split also has a new feature: Owners of ether, qtum and h-shares will get some UBs as well, Garzik said.

"That automatically brings people into the community," Garzik said.

©2017 Bloomberg L.P.