On August 1st, the predominant crypto currency, Bitcoin (BTC), was split in two.
The split or “hard Fork” resulted in the creation of a new alt coin. They copied the existing ledger of Bitcoin at the time and split taking off as Bitcoin Cash (BCH).
A House Divided
Basically, there are only two real differences between Bitcoin and Bitcoin Cash. Bitcoin Cash increased to the block size from 1MB to 8MB and will not be implementing SegWit, a code change set to take place later this month.
So what was the cause of the split?
At its core, the split was caused by slow and increasingly expensive transactions as a result of bitcoins max block size limit of 1MB. The limit was set to avoid spam on the network.
With increased popularity of bitcoin and legitimate transactions average fees have grown from pennies to dollars in order to get them pushed through. This is where Bitcoin cash comes in. They proposed an increase from 1MB to 8MB per block in to increase the amount of transactions per block thus decreasing fees.
Anyone holding BTC back on August 1st received the equal amount in BCH. This means that if you held 10 Bitcoins in your wallet you now have both 10 Bitcoins and 10 Bitcoin Cash. Many users saw this as free money and sold off coins from one to invest in their preferred coin.
This may seem like creating value out of thin air but the market accepted BCH. Bitcoin was essentially unaffected as the hard fork didn’t split the currency, but instead created a new currency to compete in the free market
A Solid Start
The launch of BCH seemed rocky at the beginning, and it wasn’t until 6 hours into its creation that a new block was discovered. The new block chain for BCH also inherited the difficulty threshold for discovering a new block from the old block chain.
Most speculators thought it could take days for miners to devote enough processing power to unlock a new block. Luckily, Chinese based VIAbtc devoted enough resources to add block 478,559 to the BCH chain.
The block contained 1.9MB of data, nearly double that of the BTC block chains limit, the same block on the original block chain was 276KB. Bitcoin cash recently mined its first 8MB Block so it’s safe to say that BCH is living up to its promise.
It’s Not Over Yet
Bitcoin will be implementing SegWit (segregated witness) in order to speed up transactions by removing signature data from transactions freeing up space for more transactions per block.
However, many still believe on top of implementing SegWit the block size should be increased to 2MB this is called SegWit2x and is set to be yet another hard fork split for Bitcoin scheduled for November.