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In August 2017, we have experienced a hard fork from the original Bitcoin network. The new cryptocurrency that split is known as Bitcoin Cash, now, the fourth cryptocurrency by market capitalization. Since then, the community has been divided and Microsoft took part of the discussion.

Bitcoin Cash supporters believed that the solution to Bitcoin scaling problems could be solved by increasing the block size. The Bitcoin community stands for an off-chain scaling solution known as Lightning Network. Microsoft supports the off-chain solution proposed by the original Bitcoin community.

Microsoft Supports Bitcoin Against Bitcoin Cash

Bitcoin Cash, the cryptocurrency supported by Roger Ver, did not receive Microsoft approval. In a statement released by the company, Microsoft explains that on-chain solutions in general degrades the decentralized nature of the network. Besides that, these solutions are not able to allow millions of transactions per second if the system grows at world-scale.



The statement reads as follows:

“While some blockchain communities have increased on-chain transaction capacity (e.g. block size increases), this approach generally degrades the decentralized state of the network and cannot reach the millions of transactions per second the system would generate at world-scale.”

But Microsoft goes even further by supporting the Lightning Network solution that developers proposed and are working to make it possible. Microsoft is collaborating in order to allow this decentralized protocol to achieve global scale.

“To overcome these technical barriers, we are collaborating on decentralized Layer 2 protocols that run atop these public blockchains to achieve global scale, while preserving the attributes of a world class DID system,” says the statement.

Microsoft is Working With Digital IDs

At the moment Microsoft is working in order to provide a decentralized identity system. The intention is to give individuals the possibility to control their ID and private digital information. Before, this private data was managed by centralized authorities. By working on different decentralized blockchains, Microsoft wants to empower citizens from all over the world.

Alex Simons, Director of Program management from the Microsoft Identity Division explains:

“To achieve this vision, we believe it is essential for individuals to own and control all elements of their digital identity. Rather than grant broad consent to countless apps and services, and have their identity data spread across numerous providers, individuals need a secure encrypted digital hub where they can store their identity data and easily control access to it.”

In order to achieve this, Microsoft is working on an off-chain solution. That would allow for massive amount of ID and private data to be processed without congesting the main blockchain network. Besides that, Microsoft is working side by side with the Decentralized Identity Foundation (DIF). At the moment, Microsoft and the DIF have already developed demo working prototypes of these ID solutions.

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