Bitcoin has become so popular, it’s being forced to split in two. The cryptocurrency giant has increased its price by well over $2000 since August 1st of 2016. With such a massive increase in price comes popularity, and Bitcoin has struggled to handle the increased number of transactions. Several solutions to the currency’s scaling issue have been presented, but some believe the only solution is a completely new currency. Those people put their plan in action, and today marked the launch of Bitcoin Cash.
The idea behind Bitcoin Cash is largely to increase the speed with which Bitcoin transactions are processed. As it stands now, all Bitcoin transactions are recorded in links of code or “blocks” that make up the Bitcoin blockchain. Because of Bitcoin’s spike in popularity, these blocks are now full, and transaction speeds have slowed to a crawl. With slow transaction speeds, it means making purchases with Bitcoin is highly impractical, as any transaction could take hours to be approved. Bitcoin Cash relies on a completely new software that allows for eight times the number of transactions per block, allowing transactions to process faster.
It’s certainly obvious that low transaction speeds present a massive problem for Bitcoin. In order to become a more widely accepted form of currency, it needs to be able to meet the demands of the consumers using it. However, many aren’t convinced that Bitcoin Cash is the answer. The creation of a new currency based on a new software is called a “hard fork.” Many in the cryptocurrency community aren’t sure this is necessary. Instead, they plan to implement their own “soft fork” later this month, a rule change referred to as “Segregated Witness.” This software change would also allow for more transactions to be recorded per block. With the Bitcoin community unable to come to an agreement on which solution is best, both are being enacted.
The coming days should give a good indication as to which way consumers lean. Bitcoin Cash certainly has plenty of obstacles to overcome. Because it is its own currency, it has a different price than the original Bitcoin. Bitcoin Cash currently trades above $200 at the time of writing, which is certainly impressive given its recent introduction to the market. However, its predecessor remains incredibly strong, trading at over $2700 at the time of writing. In fact, despite a slight dip at the time of Bitcoin Cash’s debut, Bitcoin is still up from where it was just a week ago.
Bitcoin Cash must also break into the mainstream, a challenge that the original also faced. To be successful, businesses must now accept the new currency, but there’s the catch. Because it’s an entirely new cryptocurrency, it won’t be accepted just because a business accepts the original Bitcoin. Therein lies the cost of creating this completely new currency. Though its creators have solved the problem of transaction speeds, they now face several problems that the original Bitcoin has already overcome.
In addition to the already numerous obstacles, Bitcoin Cash is certain to face stiff competition. There are numerous other cryptocurrencies in circulation. The most notable alternative to Bitcoin is Ethereum, which has seen growth of over 10% in the last 24 hours at the time of writing. Of course, the big challenge will come not from these alternative cryptocurrencies, but from Bitcoin itself. If the “soft fork” solution slated to go into effect later this month is successful in speeding up transaction speeds, there becomes precious less reason for people to switch to its new counterpart.
Nonetheless, there seems no reason to suspect that the Bitcoin juggernaut will slow down anytime soon. As already mentioned, Bitcoin’s price has held strong. Experts remained convinced that it will continue to be successful. Max Keiser of Keiser Report and maxkeiser.com was one of the first to endorse Bitcoin when it was valued at $3. He tweeted his support for Bitcoin as well as quotes from a live stream about the impending fork on Monday.
"I'm looking for a pop to $3,000 – 4,000 for Bitcoin when Bitcoin Cash is deemed irrelevant in next 48 hrs." – Tone Vays https://t.co/ZxEPuKfdW1
— Max Keiser (@maxkeiser) July 31, 2017
Tempted to go for some BCC? You could lose all your BTC 😒 "This has disaster written all over it" – Tone Vays >WATCH, LISTEN, LEARN https://t.co/odfwBjwM54
— Max Keiser (@maxkeiser) July 31, 2017
Perhaps Bitcoin Cash is successful, and increased confidence in cryptocurrencies as a whole. That could lead to jumps in other alternative currencies like Ethereum. Perhaps it fails, and the public at large remains wary for the time being. Regardless the outcome, it certainly appears that for the time being, the original Bitcoin is going only one place: Up.