Cryptocurrencies are a polarizing phenomenon. They simultaneously confuse and intrigue investors and normal folk alike. Decisions about the future of the currency are supported by some and attacked by others. Now, one of the biggest disruptions in cryptocurrency is happening, and just like reactions to the subject itself, many are angry, elated, or just plain bewildered.
Bitcoin is the particular cryptocurrency in question here and today it will split into two different digital tokens. Bitcoin will still exist, and the new form will be called bitcoin cash.
A “user activated hard fork” will take place today starting at around 8:20 a.m. EST. Bitcoin miners on the ViaBTC pool will be given the option to send their computing power to a new client called Bitcoin ABC. If enough miners begin to divert their resources, it will permanently create a new resource that’s being called bitcoin cash.
The reason behind the fork is logistical: the new client increases bitcoin’s transaction processing speed to 8 MB, way up from the original speed of 1 MB. It also removes a code optimization called Segregated Witness (SegWit). SegWit was created to free up more space for bitcoin transactions by removing signature data from sales or trades. It is going to activate on the main bitcoin blockchain later this month, and developers believe it can increase speeds to 2 MB.
Scaling up to become a global currency is also a problem if bitcoin remains tied to a 1 MB or even 2 MB transfer speed. Demand for bitcoin is only increasing and slower access will have to be addressed if this split does not work out.
There are more than 20 bitcoin mining pools active, but only ViaBTC is supporting Bitcoin ABC so far. A bitcoin mining pool is a way for many people to pool their computing and hashing powers together to mine bitcoin then split the reward.
If no big pools or users begin to support bitcoin cash, it could fall into decline and become a minor blip on the cryptocurrency timeline. Bitcoin is decentralized, so each user will have to decide if they support this new node.
If and when the blockchain does split, users will now have two tokens: bitcoin (BTC) on the original and bitcoin cash (BCC) on the new one. If you held bitcoin before the split, you will essentially hold tokens on both platforms after the split. In this example, if you have BTC tokens, you will now have the same amount of BCC tokens.
You still need access to your bitcoin cash though. Hopefully you heeded many experts’ advice and secured your private keys before the split.
BCC futures are currently trading for $280, about a tenth of what BTC is worth. Millions of people currently own bitcoin that will be turned into the new cryptocurrency, so it is likely to live on in some form or another. What’s unclear still is how the market will react to BCC. Some say many will hold on to it, as it is essentially free tokens. Others think it will be heavily dumped and sold, bottoming out the market and relegating it to oblivion, at least for now.
One things still rings true—as long as cryptocurrency exists, drama and controversy will follow it around like a little lost crypto-puppy.