Of Forks and Splits
It’s official. Bitcoin has split in two. Following weeks of speculation that a hard fork was imminent, Bitcoin Cash has separated from the main Bitcoin blockchain, resulting in two distinct Bitcoin currencies and blockchains that could be used in cryptocoin exchanges.
The primary issue leading to the fork concerned conflicting ideas on how to scale up transaction support over the Bitcoin blockchain. Bitcoin Cash emerged as the final solution. It increases Bitcoin blocks to eight megabytes — the previously agreed upon compromise, BIP91, was expected to double the current block size to two megabytes several months from now.
A Pivotal Moment?
Several experts have weighed in on the potential effects of this split.
Aragon co-founder Luis Cuende thinks it “will positively impact Bitcoin.” He explained, however, that Bitcoin Cash may be short-lived. “Probably a fatal bug will crash the whole network (it already happened with Bitcoin Unlimited, Cash’s predecessor) or people will just lose interest in a currency engineered to look decentralized while being totally centralized,” he said in a statement.
The same concern has led major exchanges like Coinbase and BitMEX to hold off on support for Bitcoin Cash. “When we look back 30 days from now, this is essentially going to be a non-event,” said Coinsource CEO Sheffield Clark. “We have absolutely no plans to integrate Bitcoin Cash at our machines at this time.”
“While the markets will ultimately decide, I think there is little chance that Bitcoin Cash will be successful in the long-term. It may have increased capacity, but several issues remain,” said Ryan Taylor, CEO of Dash Core. He argued that Bitcoin Cash didn’t solve Bitcoin’s scaling issues and that it isn’t really forking.
ZenCash co-founder Rob Viglione is more optimistic: “[T]here are pros and cons to everything. The downside of a split is that Bitcoin loses part of its ecosystem, and network effects are so important to this industry. That said, this isn’t a zero-sum game, and it’s more than possible to see both chains flourish in parallel.”
This new cryptocurrency won’t be usable for trading for some while, however. Bitcoin Cash will first need to make it past initial adjustment difficulties and secure multiple block confirmations. For now, all we can do is wait to see how this fork plays out.
Disclosure: Several members of the Futurism team, including the editors of this piece, are personal investors in a number of cryptocurrency markets. Their personal investment perspectives have no impact on editorial content.