The Bitcoin cryptocurrency’s split to be followed by others?
On August 1st, decision making day for Bitcoin, the Bitcoin power brokers could not find a solution that would preserve a unified cryptocurrency. As such, they decided to create a second version of the cryptocurrency, resulting in: Bitcoin and Bitcoin Cash.
There was an immediate following after the Bitcoin split, with a price of US$460 and tokens worth US$7.6bn in circulation (although nothing compared to the original Bitcoin cryptocurrency).
This “fork” materialised earlier than expected. However, its conclusion is how insiders and speculators had expected the two-year-old conflict to end. At the core of this “internal battle” was the question of how the capacity of the system could be increased, which can handle only up to seven transactions per second. The new Bitcoin Cash, although much like its original counterpart, can process more than 50 per second.
Can Bitcoin Cash become more than just another “altcoin” (as existing clones of the cryptocurrencies are termed)? The cryptocurrency is backed by Chinese cryptocurrency miners; firms providing the computing power to confirm payments and mint new coins. For some period, they have been unhappy with the way the developers managed the original system, and have thus, made technical tweaks to ensure the survival of Bitcoin Cash. Now, cryptocurrency activists can fight over the differences of the Bitcoins, and which can claim to be “The Bitcoin”.
More interestingly, is what this event stands for in the world of cryptocurrencies, which numbers over a hundred. It was once assumed that the crypto-world would be dominated by a single currency, Bitcoin, because of its network effects: the more users it has, the more attractive it becomes to potential users. But the split shows that this need not be true anymore, especially with the rapid rise of other cryptocurrencies like Ethereum and Ripple.
This week’s split has made Bitcoin holders richer – they get an amount of Bitcoin Cash equal to their holdings of Bitcoin. For now, both together are worth more than the old one alone. For this reason alone, could we be expecting more “forks” in the near future?