Just as the bitcoin world thought it was safe, a new threat to the cryptocurrency’s stability has emerged – Bcash or Bitcoin Cash/BCH. In recent weeks the price of Bitcoin reached near all-time highs as a proposal to increase its transaction capacity by means of SegWit was backed by over 97% of the digital currency’s miners, reducing the odds of the highly debated hard fork.
However, in a turn of events a new proposal resulted in a split on Tuesday August 1. Two competing strands of bitcoin emerged after some of its leading backers disagreed on the best way to take it forward. But this time the bitcoin world isn’t totally freaking out about it.
This is how qz.com describes the latest turn in the bitcoin fork saga and explains how this situation came about:
“Bitcoin’s creator set an arbitrary cap on the block size of 1 megabyte. The so-called ‘civil war’ in bitcoin over the past few years has centered on whether that limit should be changed, how, and by how much. The Segregated Witness or ‘Segwit’ route will double the maximum number of transactions on the bitcoin network but, crucially, without touching the hard-coded 1MB limit. This workaround cleverly removes chunks of transaction data, freeing up space for more transactions.”
To summarise what happened now, a group of users and some businesses planned to implement a non-compatible upgrade to the network, raising the block size limit to 8MB and removing SegWit. SegWit has been adopted by enough of the bitcoin community to proceed, but in recent days more have signalled their support for Bitcoin Cash, saying the rival proposals do not go far enough. As this upgrade does not have a wide backing of the network, this “hard fork” would split the Bitcoin network in two. As a result, we will be left with the Bitcoin with activated SegWit and its clone, dubbed Bcash (Bitcoin Cash/BCH).
As this is a chain-split, Bcash (Bitcoin Cash) will share its entire transaction history with Bitcoin up until the point of the split, with the history diverging after the split. This means that for whatever amount of bitcoins you had before the split, you will end up having that same amount of Bcash. Moreover, as Bitcoin and Bcash essentially become two separate currencies, they will be independent of each other. You will be able to spend your Bcash coins without spending Bitcoin.
Although Bcash brought about a hard fork in the cryptocurrency, this will matter only if it attracts enough miners to keep it going. Then, bitcoin and bitcoin cash could end up like ethereum and ethereum classic; two separate but viable coins that originated from the same blockchain. Thus after the split, Bitcoin Cash will effectively run as an alternative cryptocurrency, like Ethereum, Ripple or Litecoin. If miners ignore Bitcoin Cash, it will simply fade away as its transactions are rejected by miners.
As with the initial Bitcoin hard fork debate, Luno simplifies their strategy by means of an infographic. Simply put, they are saying let’s wait and see whether Bcash reaches non-trivial value or not. And so are most mainstream exchanges it seems at this point.
What does Luno consider “non-trivial value”?
We will consider Bitcoin Cash to have “non-trivial value” if it consistently trades:
- above a level of 0.01 per BTC,
- with more than 100 BTC of volume per day,
- for a period of at least seven days,
- on a reputable exchange
If Bitcoin Cash doesn’t attain non-trivial value, we won’t provide withdrawal functionality.
“At this stage, it appears the fork is only supported by a small minority of platforms, users and miners. It’s unknown whether this fork will survive or what value it might attain,” says Luno’s Werner van Rooyen.
If Luno considers the value of Bitcoin Cash to be negligible, what happens to the BCC coins?
Nothing. We don’t plan on selling, accessing or otherwise using Bitcoin Cash derived from our customers’ Bitcoin.