Over the years, numerous new cryptocurrencies have been formed from the Bitcoin network. The process in which they are formed is called a hard fork.
The most famous Bitcoin hard fork is probably Bitcoin Cash (BCH) but plenty of others have followed it on to the market. There’s Bitcoin Platinum, Bitcoin Atom, Super Bitcoin and even a Bitcoin GOD!
Let’s start with the basics.
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Every cryptocurrency has its own set of rules. These include: how information is recorded, what transaction fees users will pay and what rewards they can earn. These rules are called its protocol.
Sometimes changes are made to the protocol. Cryptocurrencies have no central leader or management so changes to the protocol are made by the cryptocurrency’s community. These are the users who support the network and carry out important tasks on it.
Changes to a cryptocurrency’s protocol are called forks. Try to think of them like software upgrades. Some systems on the network will support the changes and upgrade; others won’t. There are two different kinds of forks;
So, now you know what a hard fork is, let’s examine the Bitcoin Diamond fork more closely.
In 2017, two Bitcoin miners called Team Evey and Team 007 decided to change the network’s protocol that is called Bitcoin Core. They were unhappy with the way that Bitcoin was working and thought they could improve it. Evey and 007 named their improved protocol, Bitcoin Diamond.
Note: Miners are Bitcoin users who do special tasks which help to process Bitcoin transactions. They play a vital role in the Bitcoin community.
The main improvements Evey and 007 wanted to make to the Bitcoin protocol were:
Team Evey and Team 007 wrote changes into the Bitcoin protocol that they hoped would achieve these goals. The Bitcoin Diamond fork happened on November 24, 2017. The fork affected the whole Bitcoin community. I’ll tell you how in the next section. Now, let’s have a quick look at how Bitcoin Diamond coin has performed in the market so far…
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Following the Bitcoin Diamond fork, the Diamond coin entered the market in style! One week after the fork, the Diamond coin was worth 61.71 USD. By November 25, the price had gone up to 91.47 USD!
Unfortunately, this didn’t last and prices began to go down across the market throughout January 2018. The price of Diamond coin has since dropped to an unimpressive 2.44 USD.
UPDATE 2020: Currently, BCD price is only $0.83 USD, however, it doesn't seem to be dropping anymore.
Even though its price is low, the total value of all the BCD on the market is still well over 150 million USD. The market is becoming very crowded with Bitcoin fork coins and only the ones with the best protocols will succeed.
Bitcoin Diamond coin could win over a lot of Bitcoin users with its faster transaction times, lower fees and easier access to new users. Bitcoin is a hugely popular coin but it can be quite difficult to use! Many Bitcoin critics argue that the coin won’t be a valid replacement for normal money until users can make small purchases; quickly and easily.
A network offering these features will also appeal to small businesses dealing in low priced, high-volume goods like coffee or fast food. However, in my opinion, the price of Bitcoin Diamond will have to be more stable before it attracts any big-brand clients like Starbucks or McDonalds.
UPDATE 2020: Even though BCD pricing dropped, it seems to be very stable at the moment.
So, who can use BCD?
Whether you buy it or you’re lucky enough to get it for free, you’ll need a place to keep your BCD. For this, you’ll need a Bitcoin Diamond wallet.
Note: A wallet is a software application or hardware drive that stores important access codes for your cryptocurrency. You can also use a paper wallet to store your access codes.
It can be hard to find wallets that support new coins. There are eight sites offering a Bitcoin Diamond wallet at the moment. They’re listed on the coin’s homepage. Each is software wallets offering mobile, web and desktop storage.
BCD’s homepage also contains download links for two multi-platform wallets called QT and Electrum. Both can be used as a Bitcoin Diamond wallet. I always recommend using a mix of software and hardware wallets.
Tip: When you start using new cryptocurrencies it’s very important to use exchanges and wallets that you trust, so do your homework! If you're looking for a reliable exchange, you should check out Binance, and if you want to have a secure hardware wallet to keep your crypto, Ledger Nano S is one of the most recommended options.
Now you know who can use BCD, let's find out more about how BCD transactions work.
In some ways, Bitcoin Diamond transactions are very similar to normal Bitcoin transactions. The two share a lot of the same code from the Bitcoin Core protocol.
I’ll talk about the similarities first.
Bitcoin and BCD are networks where users can store and transfer information. All this information is stored in huge databases called blockchains. A blockchain is a very long list of all the transactions that have ever been made on the network. Blockchains are stored across thousands of computers called nodes.
New transactions are put into groups called blocks and checked by nodes to make sure they’re valid before being added to the blockchain. Miners play an important role in processing transactions on both the Bitcoin network and on the Bitcoin Diamond network. Each platform takes about 10 minutes to process one block of transaction information.
For more information about the role of miners on the blockchain, check out my Blockchain Explained guide!
Both networks are also planning on using the lightning network to speed up transaction times. Evey and 007 have announced that BCD will start using the lightning network on July 31, ning network will allow users to form mini-networks where real-time transactions can take place away from the main blockchain. These transactions are then checked and added to the main blockchain as a whole. This takes a lot of pressure off the main network.
Remember, BCD aims to be faster, cheaper and easier to access than Bitcoin. Here’s how:
Now you can answer the question, “What is BCD offering that Bitcoin doesn't?”, I want to talk about security issues.
Blockchains are a very safe way to store and transfer information. Big companies like Visa, Google, and Facebook store our information on a limited number of central servers.
If these servers are attacked, our information can be put at risk. Blockchains spread our information across thousands of different computers. This makes attacking a blockchain extremely difficult!
One of the main safety features of blockchain technology is encryption. Private personal information is hidden using computer code. Some critics of Bitcoin think that not enough user information is encrypted.
For example, all transactions and their amounts can be seen by anyone using the Bitcoin network. This can make tracing the real identities of users fairly easy for governments and other organizations.
The team behind Bitcoin Diamond wanted to encrypt more user information. However, they have recently decided not to add more privacy features to BCD.
They feel that governments will soon start passing laws that stop cryptocurrencies from hiding user data. In a statement published on Medium, the team noted Japan and Russia as examples of this trend.
The team also thinks that businesses won’t want to support coins that offer a high level of user privacy. On April 20, 2018, they said that they “realized that more exchanges might delist anonymous cryptocurrencies in the future".
Such news might disappoint a lot of crypto fans who value privacy. It shouldn’t affect the overall security of the blockchain though.
The real risks that Bitcoin Diamond coin faces are scammers who target the release of new hard-fork cryptocurrencies. Who are these scammers and what is BCD doing about them?
How Can it be Abused?
New hard-fork coins are often abused in the confusion following their launch. Whenever new coin forks from the Bitcoin network, holders of Bitcoin are targeted by scammers.
After the hard fork in November 2018, Bitcoin holders who didn’t understand how to claim their free BCD were tricked into depositing funds into a fake Bitcoin Diamond coin wallet. Instead of getting free Diamond coin they lost their Bitcoin deposit!
If you hold Bitcoin, you should be very careful with your coins when hard forks happen. Always use a combination of hardware and software wallets. When it comes to the most recommended hardware wallets, you should definitely go for Ledger Nano S and Trezor.
Important: Don’t be fooled by offers that "give away" money. Use wallets that you can trust only. New coins can cause a lot of uncertainty, so take time to consider your options.
Before you go, let’s have a quick recap of the pros and cons of Bitcoin Diamond.
Let's begin with the positive aspects.
Next, let’s have a look at a few cons.
You should now have a good understanding of what Bitcoin Diamond is and how it works, so let's jump to conclusions.
Hard forks are a part of an ongoing process to build the perfect cryptocurrency. Bitcoin Diamond has made some important changes to Nakamoto’s software.
A diamond coin isn’t a perfect cryptocurrency but neither is Bitcoin or Bitcoin Cash. However, each new solutions bring us closer to a world where the transfer of important information is fast, easy and free!
Here are the steps that you can follow to get Bitcoin Diamond without much trouble:
1. Get a secure cryptocurrency wallet (Ledger Nano S and Trezor).
2. Sign up to Binance.
3. Purchase Bitcoin Diamonds on Binance.
4. Send your Bitcoin Diamonds to Ledger Nano S wallet.
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