Bitcoin Cash was launched on August 1 as a protest to Bitcoin Core’s implementation of segregated witness (Segwit) as a scaling solution. This new cryptocurrency has been skyrocketing lately after the fork mined its first 8MB block. So lets talk about what this crypto is and what drives it to its success.
1) What is Bitcoin Cash?
Bitcoin Cash is a splinter cryptocurrency that has “hard forked” from the original Bitcoin digital currency. The Bitcoin Cash digital currency was created and placed into circulation on August 1st 2017. At this time all holders of Bitcoin were awarded an equal amount of Bitcoin Cash and this has been recorded into the Bitcoin Cash forked blockchain. This action was made in an effort to maintain the current value of Bitcoin cash through the transition period of introducing the new Bitcoin Cash cryptocurrency into circulation.
2) What is a fork?
The term fork refers to the fact that the technology underpinning the original Bitcoin cryptocurrency has been applied to the Bitcoin Cash system. It is specifically in reference to the blockchain technology that has led to the success of the Bitcoin currency. Instead of starting from scratch the Bitcoin Cash currency has applied a duplicate of the Bitcoin transaction history (i.e. a duplicate of its blockchain) and future Bitcoin Cash transactions will be appended to this duplicate ledger.
The new Bitcoin Cash blockchain elements implement a block size increase to 8 MB – this ensures the two currency logs remain distinct as the new blocks are backwards-incompatible with the previous bitcoin blockchain.
3) Why has it been created?
In July of this year Bitcoin miners voted 97% in favour for the Bitcoin Improvement Proposal (BIP) 91, suggested by a Bitmain Warranty engineer James Hilliard to activate Segregated Witness (SegWit) on August 1st 2017. Bitcoin community members felt that this to successfully execute this proposal the system required an expansion of blocksize capacity to prevent bottlenecks and delays. They also wanted to ensure Bitcoin was used for transactions rather than just for investment purposes. The fork was designed to add to capacity and meet these goals.
4) Coinbase
Coinbase, one of the leading cryptocurrency trading and service providers, initially announced that it would not support Bitcoin Cash – as they failed to agree with its purported merits and value. Based on consumer sentiment they have since reversed this decision and announced that they will start supporting Bitcoin Cash transactions by January 1st 2018.
5) Where does it trade?
Bitcoin Cash started futures trading at 0.5 BTC on July 23rd 2017 and by July 30th 2017 the value fell to 0.10 BTC. Bitcoin Cash is currently not being accepted for trading on major exchanges because it is almost impossible to send Bitcoin Cash over the blockchain under the current build status. Mining of blocks is long and cumbersome, as it was as the start of Bitcoin.
The difficulty of mining diminishes with time – this is a design feature of the cryptocurrency. As an example, one Bitcoin Cash block will take 10 hours to mine rather than the 10minutes it takes to mine a similar Bitcoin block. Many exchanges require around 7 block confirmations prior to crediting a deposit into an account – making it essentially impossible to move around Bitcoin Cash under the current infrastructure.
6) What is it worth?
Currently, Bitcoin Cash is showing significant signs of developing value – its price after rocketing as high as $941 on Saturday started a correction against the US Dollar.
At these valuation levels Bitcoin Cash is ranked as the third-largest cryptocurrency by market capitalization at the current time. These values are currently only as indicated on paper and through futures trading.
7) What can we expect going forward for Bitcoin Cash?
We have seen previous successful hard forks of cryptocurrencies in the past. For example, Ethereum Classic was a hard fork from Ethereum that took place in 2015. The value of this splinter currency has been volatile but has gained significant value and become a credible cryptocurrency in its own right. However, it still pales in comparison in terms of cash value. We might expect a similar trend from Bitcoin Cash – but perhaps on an exacerbated scale given the larger popularity of Bitcoin to begin with as well as the swathes of mass media coverage adding to its potential success.
8) What has been the response so far?
The current consensus in the cryptocurrency community is that they will sell the Bitcoin Cash deposits allocated to them when this actually becomes a feasible option. At this time we would expect to see a fall in prices of Bitcoin Cash. However, there is also the possibility that the currency will gain in popularity, and demand, and thus boost prices. This outcome is considered to have the lesser likelihood at this time.
Sources:
- https://www.bitcoincash.org/
- https://www.coindesk.com/
- https://medium.com/
- http://www.nbcnews.com/
- https://www.coindesk.com/
- https://support.coinbase.com
- http://www.nbcnews.com/
