The Bitcoin Split - What it Means for You
On Tuesday, August 1, Bitcoin Cash was created, after the underlying Bitcoin technology underwent a “hard fork”. In other words, Bitcoin split to create a new currency.
Why did it happen? According to Tom Simonite’s excellent piece in Wired, Bitcoin is splitting in two. Now what?, it’s a result of a two-year feud over Bitcoin’s future. Backers of the new currency want to make it a serious rival to other currencies. And, they believe that requires changes to the original design to make transactions faster.
What does this mean for Bitcoin owners? Every pre-split Bitcoin investor is entitled to the same number of “Bitcoin Cash” tokens as they own Bitcoins. However, not all Bitcoin exchanges will support the new currency. That means customers of some exchanges, will have to move to different exchanges in order to have their accounts credited with Bitcoin Cash. Which exchanges take Bitcoin Cash is changing day to day. Coinbase first rejected Bitcoin Cash, but reversed course on August 3, after an outcry from angry customers. But they won’t start supporting Bitcoin Cash until January 1, 2018.
Unfortunately for investors the new cryptocurrency is in free fall. On August 4, Bitcoin Cash was trading at $290 a coin down 33% from the previous day and well below its all-time high of $727 set on Wednesday, August 2, the day after its debut. Compare that to Bitcoin which during the same period is up 1.92% to $2,852.
To say that the situation is fluctuating is an understatement. According to Frank Chapparro’s clear analysis in Business Insider, some experts such as Sebastian Quinn-Watson a venture partner for Blockchain Global, a Bitcoin operator based in Australia, predict that Bitcoin Cash will not survive. “We see 8 August as the day the bell tolls for Bitcoin Cash,” Quinn-Watson said. “If the prices of BCC remain strong past the 8th then it is likely to be a currency for a long period.”