The latest bitcoin hard fork aims to lift the interest-bearing benefits of traditional banking and bring it into the cryptocurrency world.
Bitcoin Interest, the latest spinoff of the first cryptocurrency Bitcoin, aims to lift the interest-bearing benefits of traditional banking and bring them into the cryptocurrency world. Starting with “Bitcoin Cash” last August, Bitcoin has seen around 19 hard forks so far and this year experts predict up to 50 more forks will roll out.
A familiar innovation for the crypto-economy
The main idea behind Bitcoin Interest (BCI) is very similar to that of an interest bearing savings account, with a decentralized approach. If you park your BCI coins for a certain interest period – “weekly or monthly” – the system will proportionally allocate interest payments to its participants.
One of the main advantages of Bitcoin Interest is that there is no set interest rate, and the rate is usually higher than that of a traditional savings account. The interest rate is calculated based on how many coins are generated and placed in the interest pool, and by how many users are participating in the interest round.
Hard forking for a hard problem
While both ICOs and Bitcoin hard forks end up in the creation of a new cryptocurrency, the main difference between Initial Coin Offerings (ICOs) and hard forks is that the latter initiates an immediate value for Bitcoin holders. Hard forks are essentially improving on the Bitcoin blockchain in order to bring benefits such as security, speed and efficiency for the so called ‘digital gold’. According to experts, the development of hard forks could further ensure the stability and the maintenance of the decentralized platform which has seen unprecedented growth and reach over the last few years.
Another issue with Bitcoin is the skyrocketing transaction fees – from around 20 cents to about $15 – throughout the course of 2017. Along with other obstacles, this inspired an avalanche of hard forks starting with Bitcoin Cash, Bitcoin Gold, Bitcoin Diamond which was followed by many others.
To overcome the shortcomings of Bitcoin, these forks have attempted to change the blockchain one way or another. For instance, Bitcoin Cash increased the block size from 1MB to 8MB making the processing of a larger number of transactions to be possible within the 10-minute period. This resulted in transactions becoming faster, and also made them cheaper.
Investing into the future
Bitcoin Interest stands out among other forks because apart from the usual reward for mining, investors can also earn interest by parking their BCI coins. This interest earning characteristic makes Bitcoin Interest an appealing choice in the booming cryptocurrency market. HitBTC already expressed its support in favor of Bitcoin Interest, and Okex, a world-leading digital asset exchange has also agreed to support the snapshot, however, whether or not they will support deposit, trading and withdrawal remains to be seen as that decision is based on the status of the Blockchain after the fork.
Even though the popularity and use of cryptocurrencies has gone through the ceiling in the last couple of years, trust and volatility have remained a serious issue for most of the blockchain industry. With the introduction of Bitcoin Interest, the company offers a type of service which many investors are already comfortable with, but has been missing in the digital currency world – earning interest on their coin holdings. Encouraging people to hold their savings instead of spending them might be able to stabilize the ongoing volatility of the cryptocurrency market and bring much needed assurance to investors.
You can learn more about bitcoin interest by visiting their website here.
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Author: Kata Karath