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Bitcoin set to split as new ‘XT’ version of currency is created

Bitcoin, the virtual currency that has gained worldwide prominence, could be about to undergo a split.

The dispute has emerged over the creation of Bitcoin XT, a new version of the currency that is being championed by some, but not all, of the core staff responsible for the cryptocurrency.

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Bitcoin’s chief scientist Gavin Andresen and its chief developer Mike Hearn both believe that the adoption of XT is essential for the currency to cope with increased demand, but the reaction to the release within the Bitcoin community has been mixed. In particular, bitcoin miners in China are concerned about how the new version will affect currency control.

Bitcoin uses a system known as blockchain to record all transactions and is made up of 1MB blocks. Bitcoin XT, however, would have blockchains up to 8MB in size, making it incompatible with exiting software and causing a split. Critics believe that creating two separate currencies would damage Bitcoin’s credibility and erode consumer trust.

Speaking to the BBC, however, Mr Hearn has said that the XT version has experienced some initial success. "We've gone from zero people running the software to 10 per cent of the network in 72 hours, which is really good," he explained. But he did accept that not everyone had embraced the new format and that some of the core development team still had to be won over, increasing the risk of further currency splits in the future.

In addition, a researcher at the Oxford Internet Institute believes that the larger blockchains used by Bitcoin XT could be prohibitive for some miners.

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"Downloading the whole blockchain is already such an effort that most people choose not to run Bitcoin on their computers," explained Dr Vili Lehdonvirta. "This would put Bitcoin on a trajectory where that problem is exaggerated."