The world’s first digital currency has changed quite a bit since it was launched in 2009. The fork was in the making for the last couple of years, and now it finally happened.
The never-ending Bitcoin scaling issue has been resolved on Tuesday, August 1st, as the underlying software code was split in two. As a result, a new cryptocurrency has emerged, becoming a rival to bitcoin. The clone is now named “Bitcoin cash”.
The “original” Bitcoin is, of course, still around. Its being supported by the traditionalists, favoring the technology called SegWit2x.
The necessary changes
Bitcoin blocks were always limited in size. Every 10 minutes, 1MB block is being generated by the miners, which equals 7 transactions per second. Doesn’t sound too impressive for what’s supposed to be modern digital money, does it? Especially since “standard” currencies can handle thousands of trades simultaneously.
Over time, such limitations have led to a huge backlog of transactions. They started taking longer to process, leaving the users to deal with delayed payments. Obviously, the community wasn’t happy. Miners, developers and entrepreneurs started looking for a way to change the situation. Naturally, there was more than one solution to the problem. The two most powerful camps didn’t come to an agreement, resulting in a chain split.
What solutions are there?
SegWit2x got adopted by several biggest Bitcoin players on the market. The technology creates a parallel blockchain that works alongside the one that already exists. Therefore, the burden was eased, resulting in faster transactions. It is expected that block size will double by the end of this year, increasing the transaction speed even more.
Bitcoin Cash proposes a completely different solution. Instead of using a parallel track, why not just increase the size of the current one and make it 8MB instead of 1MB?
A rather stressful start
While it seems like an easy fix, Bitcoin Cash had a very slow start. Not many miners have installed the new software, resulting in a low hashrate – only 1% of the hashrate of BTC. Given that mining difficulty has remained the same, generating the first block took quite a while.
Observers started having doubts as it looked like it might take over 24 hours for the first block to be added to the chain. The most pessimistic community members assumed that the miners will simply give up because they could earn so much more just mining for BTC.
And then it happened. After six hours of trying, the first block was mined by ViaBTC. It consisted of 6,985 transactions and had a size of 1.915MB, which roughly doubles the original block. So it is safe to say that Bitcoin Cash does serve its purpose of introducing bigger blocks to the chain.
The performance of the clone
Shortly after the event, Bitcoin Cash traded at a median price of $146.37, while its older brother was at $2,729.
Bitcoin Cash contains all the history of the original blockchain, which includes the same number of tokens plus the Bitcoin Cash tokens itself. The users who held their Bitcoins before the event are now able to access an equal amount of Bitcoin Cash. The cryptocurrency can be exchanged for fiat currencies or digital tokens.
While there’s less computing needed for Bitcoin Cash, resulting in faster mining, some experts claim that it didn’t really solve the scaling issue, but only pushed it further down the road. Bitcoin Cash didn’t come up with any credible technology meant to deal with an increasing amount of users. At press time, Bitcoin Cash traded for $240.69.
What about the big brother?
On Tuesday after the fork, Bitcoin price fell more than 6%. The new cryptocurrency is to blame as it predictably confused the market. However, Bitcoin recovered quickly enough, reaching a new all-time high in less than a week from the stressful event. On Saturday, August 5th, Bitcoin price hit a record $3,360.87. On the following day, the digital currency settled down to $3,286.87. Another record was tied to the market cap: it was the first time Bitcoin surpassed $50 bil.
Despite high volatility, Bitcoin price has jumped more than 10% over the past week. Digital currency has tripled its value in 2017. The $2,000 threshold was crossed in May, and, as you can see, not even the fork can stop its meteoric gains.