By Max Bibeau | USA
Slightly more than 24 hours ago, a new cryptocurrency was born: Bitcoin Cash. The split currency was created as the result of a divide that formed between Bitcoin “miners” over whether or not Bitcoin’s block size should be updated.
Bitcoin’s former block size was capped at 1 megabyte every 10 minutes. This meant that only a small amount of Bitcoin transactions could be confirmed at a time. As the currency continues to expand, the smaller block size was lengthening transaction time, and increasing the fees that companies facilitating the transaction were forced to charge. The new form of Bitcoin, Bitcoin Cash, attempts to solve this problem by expanding the maximum block size to 8 megabytes every 10 minutes. This upgrade is meant to ensure speedier and cheaper transactions for users.
Many traders worried over predictions of massive swings in the value of Bitcoin after the fork, however, none of these fears have seen reality. Bitcoin has continued to hover around 2700USD. Bitcoin Cash, however, has seen fluctuation in its value in the past few days. The currency soared to 300USD by the first day and peaked at about 700USD at noon of August 2nd. The currency has since dropped back down to 400USD as of 4:21 on August 2nd, and seems to be remaining steady.
While most Bitcoin wallets and trading exchanges have supported Bitcoin Cash, Coinbase, the largest Bitcoin exchange in the world, has declined to support it. They cite issues of technical ability as the reason for their decision, claiming that under their current system, Bitcoin Cash cannot be supported. They also claimed that it would not be supported for the foreseeable future, given that the upgrade it would require is not worth the questionable value of Bitcoin Cash.
Coinbase is now at extreme risk from the millions of angry cryptocurrency holders they supply. Legal action is being taken by multiple users. One site, coinbasebch.com, claims their goal to be to “take the correct and appropriate action of allowing users to trade or withdraw the Bitcoin Cash tokens (known as BCH or BCC) that rightfully belong to them following the 8/1/2017 Bitcoin hard fork. However, Coinbase needs to understand that the community is ready and willing to pursue legal action if their BCH tokens continue to be withheld by Coinbase Inc, resulting in tangible and significant financial loss.” This action is backed by legal scholar Tim Wu, who compared Coinbase’s actions to that of a broker declining to give the appropriate stock to its owners after a split.
Another issue coming to public light regards “mining.” Bitcoin Mining is a process in which a computer solves a series of complex mathematical equations in order to confirm Bitcoin transactions around the world. Every once in a while, the computer is rewarded with a Bitcoin for its effort. Companies and individuals that confirm these transactions on a large scale are called miners. The problem arises in the fact that Bitcoin Cash requires far more computer power than its older counterpart, Bitcoin. Due to the massive increase in block size, computers must work harder in order to maintain the same number of confirmations they confirmed before. Many harbor concerns that this upgrade could destroy smaller scale mining operations, and allow larger corporations to dominate the currency.
While the future of both Bitcoin Cash, Coinbase, and miners is unclear, they are all important issues that can impact cryptocurrencies for years to come.