In business and economics, a network effect is defined as the positive effect that an additional user of good or service has on the value of the product to others. If there is a network effect, the product or service’s increase in value depends on how many are using it. For cryptocurrency, network effect is “terribly important,” according to Bitcoin Unlimited President Andrew Clifford.
To solve the Bitcoin network’s scalability problems, Bitcoin Unlimited set out in 2017 to enable larger blocks and achieve significant on-chain scaling of the network. Increased scalability via larger blocks results in faster transactions and enterprise-level capabilities—as seen today with Bitcoin Cash. While SegWit Coin BTC has the first-mover status largely due to history, it is Bitcoin Cash that much more closely resembles the original Bitcoin that sparked the entire digital currency boom.
“We thought that Bitcoin would run out of capacity for users and fees would go very high and it would erase the network effect and growth,” Clifford told CoinGeek. “The network effect is terribly important for cryptocurrency, and the reason why Bitcoin price is so high is it got the first mover initiative, the first-mover status, and it does not yet lost the energy, the inertia from the first-mover status.”
In a bid to prevent users from going elsewhere and turning to altcoins, Bitcoin Unlimited pushed for Bitcoin Cash, which got rid of the capacity constraint and able to handle up to eight times the volume of the legacy chain when it launched in August 2017—a block size that has already quadrupled during the May 15 network upgrade. This means that the Bitcoin Cash network won’t reach the capacity limit for a few years, according to Clifford.
Like other teams in the Bitcoin Cash community, Bitcoin Unlimited is working hard to support the growth of Bitcoin Cash. Aside from providing a full node client, Bitcoin Unlimited is also funding technical development focusing on network security, scalability and providing more advanced functionality for transactions on the Bitcoin Cash network.
Bitcoin Unlimited has also partnered with blockchain technology research and development outfit nChain for the Gigablock Testnet Initiative, a project that seeks to determine how large blocks Bitcoin can handle as well as identify the bottlenecks that may obstruct the network’s scalability. In October, Bitcoin Unlimited announced that the “world’s first 1.0001GB block has been mined and propagated on the Gigablock Testnet.”
“We want to prepare Bitcoin Cash for several years down the line when we will be handling much larger volumes than 8MB,” Clifford said, “we’ve discovered that there are many different issues with scaling to do with creating transactions. The Bitcoin wallet as it stands, can’t create transactions very quickly. So there’s been optimizations there, there’s been many changes in the propagation and the building of blocks.”