Bitcoin vs. Bitcoin Cash: 5 Things Bitcoiners Need to Know
Bitcoin vs. Bitcoin Cash (BTC vs. BCH)
In a move that has been anticipated for months, Bitcoin has officially split. Called a “hard fork,” Bitcoin (BTC) now has a separate competing cryptocurrency vying for the market called Bitcoin Cash (BCH). The BTC vs. BCH divide has now officially begun, with a wide range of implications for both the current state of Bitcoin and the future. The full implications of Bitcoin vs. Bitcoin Cash will be revealed as time goes on, but BCH futures are definitely on the minds of coin holders and miners as the cryptocurrency faces a major split.
Seeing as how the cryptocurrency market is one of the most exciting and active ones in 2017 (which is saying a lot, considering the success of the market recently) let’s go through five things that Bitcoin owners and potential buyers need to know about Bitcoin vs. Bitcoin Cash.
What Caused the Split?
As is usually the case with these cryptocurrencies, there’s a lot of technical word vomit you have to sift through if you want to get to the bottom of the story, but we’ll break things down so the layperson can understand the general issues at stake.
A minority group of developers were fed up with high transaction fees and the block size limit of Bitcoin, which is a hard cap on how large blocks can be, with an assortment of arguments both for and against their size being locked down. (Source: “Bitcoin has split in two, so you can have double the cryptocurrency,” The Verge, August 1, 2017.)
That’s the long and short of it. The group that wanted changes to come to Bitcoin felt the best recourse was instead to go with the hard fork option and sprout Bitcoin Cash, and that’s how we ended up where we are today.
Data courtesy of CoinMarketCap
This Has Happened Before
It’s not uncommon for these types of internal squabbles in the cryptocurrency market to evolve into full-blown splits.
Ethereum (ETH), the second largest cryptocurrency by market cap, had a similar split that resulted in the creation of Ethereum Classic (ETC).
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This came about as a result of a similar dispute about just how best to manage the currency, with some members preferring to splinter off rather than follow the original coin in directions they did not support.
Which is to say that this is not an unprecedented event, and both ETH and ETC survived the aftermath of the split, closely mirroring each other in terms of value percentage gains and losses over the past year.
What Does the Bitcoin Split Mean for Owners?
Well, that’s where things get a little tricky.
For owners who control their own private keys, those same keys can be used to spend their newly created BCH.
For those who own Bitcoin but don’t control the keys, then whether or not they have Bitcoin Cash depends on whether the wallet or platform they’ve stored their coins in is Bitcoin Cash-friendly. The only way to know for sure is to check the policy of the wallet or platform where the coin is stored.
Another implication is that some exchanges won’t accept Bitcoin Cash. The world’s most popular exchange, Coinbase, has rejected BCH. So coin owners will have to find a suitable Bitcoin Cash exchange to play around with the currency.
Bitfinex, which has nearly a third of U.S.-dollar bitcoin trade volume, is undecided on how it will handle the BCH situation. (Source: “Bitcoin falls, futures for new ‘bitcoin cash’ briefly leap nearly 50% as ‘miners’ officially split currency,” CNBC, August 1, 2017.)
Bitcoin Cash Futures
The BCH price, like all cryptocurrencies, is volatile. BCH hit over $400.00 per coin before crashing down closer to $200.00, all in the span of a single day.
This makes Bitcoin Cash futures hard to predict, but if the ETC vs. ETH split is anything to go off of, then expect the BCH price to closely mirror the BTC price, at least for the next little while. As the two grow further apart and differentiate themselves, that will of course change, but their gains and losses are likely to be about on par with each other following the rapid-fire trading that the BCH price is certain to undergo for the next few days.
But what does Bitcoin vs. Bitcoin Cash mean for the BTC price?
Right now, it’s caused a little bit of a slowdown and will likely hurt the progress of BTC for the immediate future. But as the hype begins to die down, expect Bitcoin to resume its current trajectory, with large gains and equally large losses coming in at unexpected times, while BTC remains one of the most intriguing plays on the market due to its volatility and high growth potential.