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Bitcoin has forked today and Bitcoin Cash has appeared as an offshoot. Cointelegraph takes stock of the evolving situation.
Bitcoin in many ways is synonymous with cryptocurrency and it was the first of its kind when it arrived in the world in 2008.
Since the time Bitcoin has been in existence millions of transactions have been successfully conducted on its Blockchain. With the passage of time though Bitcoin transaction speeds had slowed down and it was akin to moving sludge along the pipes.
The slowdown in Bitcoin is the result of its own success as more and more people use the currency and conduct transactions. The very nature of Bitcoin is such that it requires thousands of miners to keep it functional and run Bitcoin software.
It is also necessary that big decisions such as solving the speed problem are made with the consensus of those that are involved in the running of Bitcoin.
Bitcoin has not been able to evolve the consensus that was needed to implement the technology called SegWit2x, which though has been adopted by key players, still lacked a total agreement.
This has resulted in the launch of Bitcoin Cash, which is rival to the SegWit2x technology. While SegWit2x involves taking Bitcoin’s transaction data out of the block and allowing more transactions to happen that way thus increasing the speed of transactions overall, Bitcoin Cash would keep the data within the block but increase the size of a block to 8MB.
Now that two rival technologies have emerged we have a scenario where a portion of Bitcoin nodes are not fully compatible with others.
CNBC cited Coinmarket cap as saying:
“A Bitcoin block was just mined that's invalid for Bitcoin Cash nodes! [That] means the chain has now forked. Bitcoin Cash is one block behind."
There are now two versions of Bitcoin. Bitcoin Cash (BCH), which at the time of writing was trading at $359.56 according to Coinmarketcap and Bitcoin (BTC) which was trading lower by 3.35 percent at $2,702.33.
In a way it does and in a way it does not. Many people will be getting both the currencies after the fork in their wallets but some would not. What the eventual value of either BTC or BCH would be, would depend on market forces.
However, there is a wide variety of views out there on whether this is indeed ‘free’ money.
Perry Woodin, Node40 CEO, says:
“People who are going to benefit from Bitcoin Cash are the ones who see it as free money, so they can then invest in something else. It's going to be a race to see who can sell it the fastest.”
Ryan Taylor, CEO of Dash Core, had this to say:
“There are many misconceptions about Bitcoin Cash and what it represents. To be clear, Bitcoin is not forking. Rather, some developers have created a new digital currency and formulated an effective means of distributing it, by giving it to everyone with an existing Bitcoin balance.”
He adds, “While the markets will ultimately decide, I think there is little chance that Bitcoin Cash will be successful in the long-term. It may have increased capacity, but several issues remain. First, Bitcoin Cash has not solved scaling. It has merely kicked the can down the road with slightly larger blocks but still lacks a credible technology to scale to massively larger numbers of users. Second, Bitcoin will retain the network of integrated services that make the Bitcoin network useful to businesses and consumers. With no substantial enhancements compared with Bitcoin, Bitcoin Cash is unlikely to be integrated into those same services, given the substantial expense for businesses operating them to do so.”
Bitcoin is now nearly a decade old and the fork is just another step in the journey of the world’s first cryptocurrency.
Charles Hoskinson, CEO of Input Output HK, tells Cointelegraph:
“Bitcoin's best days are ahead of it and we'll see a lot of growth post fork. Now that lightning is enabled, we have a lot of good applications coming.”
Luis Cuende, Aragon Co-Founder and Project Lead, explains:
“It will be a huge stress test on community governance — forks are a way to vote, to reclaim independence, and I really look forward to seeing how further development will continue and how the community will react.”
Whatever might happen price wise, one thing is certain Bitcoin has entered a new era and the possibilities for growth are immense. Faster transactions, newer applications and more rapid adoption by businesses.
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