Last week the bitcoin community and investors breathed a sigh of relief as BIP 91 locked in and activated, signalling what we thought was a great step forward in finally resolving the long standing Bitcoin scaling debate. Confidence soared and the price recovered from a previous tumble.
And then came a twist.
In the last 72 hours, Bitcoin increasingly looks as though it is heading for a user activated hard fork (UAHF) called Bitcoin Cash. It is scheduled for the notorious date of 1 August 2017, previously earmarked as the proposed date for implementation of SegWit by way of a user activated soft fork (UASF).
What is Bitcoin Cash?
Bitcoin Cash is an alternative token that may come into existence as a result of a planned UAHF as mentioned above. Essentially this means that the Bitcoin blockchain may split into two competing chains.
The original plan for a UAHF came about from a contingency plan, proposed by Bitcoin mining company, Bitmain, who were opposed to the UASF for SegWit.
At the Future of Bitcoin Conference held in Arnhem, Netherlands from 29 June to 1 July this year, a software engineer named Amaury Sechet announced an alternative Bitcoin client (software) called Bitcoin Adjustable Blocksize Cap (Bitcoin ABC).
It has now been revealed that the token for this client is Bitcoin Cash.
Bitcoin Cash will differ from Bitcoin in terms of the following:
- SegWit: Bitcoin Cash will not implement SegWit
- Blocksize: Immediate increase from 1MB to 8MB
- Coexistence: Replay and wipe out protections ensures that should the two chains continue to compete, Bitcoin Cash aims to reduce user disruption and allows for the safe existence of two chains.
How Does This Impact Your BTC Holdings?
In short, it does not affect your BTC balance. Instead a chain split will result in you holding an equal number of coins on both the old and new chains, however, the value of those coins will be different and probably vary dramatically as they establish themselves as either the majority or minority chain.
The Community Reaction
Statements released thus far by a number of mining pools, including Bitmain, have said they will continue to support SegWit2x and the original Bitcoin chain, and do not rule out supporting the Bitcoin Cash chain as well. ViaBTC, an exchange as well as a Bitcoin mining pool (ViaPool) have listed Bitcoin Cash futures and have explicitly stated their mining support for the chain.
Exchanges seem to be more divided than the mining pools. Some major exchanges such as Coinbase, Coinfloor and Bitstamp are not signalling any strong support for Bitcoin Cash and have left the crediting of the forked coins to their discretion. On the other hand, Bitfinex and Kraken, two other major Bitcoin exchanges, have announced that they will be crediting the forked coins to client accounts and will list the coin for trading. This could be vital to the coins survival as without any trusted exchanges listing the coin, there would be no market for it.
As we quickly approach 1 August 2017, a day that will long be spoken about in the Bitcoin community, the Bitcoin price will likely be volatile and an influx of opinions will generate a degree of hysteria amongst unseasoned Bitcoin investors.
Featured image from Shutterstock.