Bitcoin spawns rival offshoot
Bitcoin holders just became the proud owners of a new cryptocurrency called Bitcoin Cash, the product of a longstanding feud between factions of the Bitcoin community.
Proponents of the new offshoot, which officially split off from the parent just before 3 p.m. Tuesday, say it will allow for faster transactions, making widespread adoption of the cryptocurrency easier.
“For too long, Bitcoin has been held back,” reads the website for Bitcoin Cash, arguing the new cryptocurrency “brings Bitcoin into the modern age.”
For years, the Bitcoin community has been locked in a bitter civil war over how to handle the growing number of transactions as Bitcoin becomes more popular.
Bitcoin’s core developers have largely favoured their own technical fix, but dissenters have argued it doesn’t go far enough to increase the network’s capacity and wanted that team of developers replaced.
To that end, supporters of a new team and a different technical solution to Bitcoin’s scaling problem funded the development of Bitcoin Cash.
Bitcoin Cash copies the Bitcoin blockchain and most of its code, but uses a different method for speeding up the transaction processing time that has more support from miners and other dissenters.
Because ownership was copied f rom the Bitcoin blockchain, someone who held two bitcoins through an exchange that supports Bitcoin Cash also became the owner of two units of the new currency as of Tuesday morning.
It’s possible either Bitcoin or Bitcoin Cash will eventually fizzle and die as the other emerges as the clear choice of consumers and investors, but it’s also possible both will succeed and grow in value independently. Samson Mow, chief strategy officer of the blockchain technology company Blockstream, said he’s hoping for the latter scenario.
“It’ s like Br exit for Bitcoin,” Mow said. “They’ve decided they’re going to do their own thing, which is great, because then they’ll stop mucking around and injecting politics into Bitcoin development.”
Until just before 3 p.m. Tuesday, Bitcoin Cash holders could do little with their new assets other than trade them on futures market. That’s because the first block of Bitcoin Cash had yet to be secured by miners, who compete to be the first to get a random valid result by solving complicated math problems to form a code that makes the split official.
Just after the split became official, Bitcoin Cash was trading at around US$ 235. Earlier in the day, Bitcoin Cash futures had been trading as high as US$424.
Bitcoin also fell to US$2,784 from a high of US$2,921 early Tuesday morning.
It’s a bit of a mystery who, exactly, is behind the fundi ng and development of Bitcoin Cash. Chinese mining pool ViaBTC was the first to offer futures trading of Bitcoin Cash, but has publicly pledged neutrality on the issue.
Mow said it’s clear the driving force behind Bitcoin Cash is coming from China, where most of Bitcoin’s prominent miners are based.
Bitcoin Cash’s solution to the transaction speed problem — significantly increas- ing the size of each mined block — has a lot of support from those miners.
“People behind the scenes are working very hard, especially within China, to position it as legitimate and a successor to Bitcoin,” Mow said. “They’ve gotten a lot of Chinese exchanges to list it. That lends it some authenticity.”
Bitcoin has yet to take off among mainstream consumers and the introduction of a competing token makes it even more complex and confusing to get started. Todd said it will be important to educate users about the difference between the two cryptocurrencies.
“It would be like having a wallet full of American dollars and Canadian dollars and I gave you a Canadian dollar by accident,” he said. “You don’t want that to happen. You want that to be a deliberate choice.”