Bitcoin fork happens – Business Insider



Bitcoin-themed
balloons at the “Inside Bitcoins: The Future of Virtual Currency
Conference” in New York.

Reuters/Lucas
Jackson


Bitcoin
power brokers were unable to come behind a single solution that
would have preserved a unified cryptocurrency by Tuesday
morning’s deadline.

As such, the digital currency has officially forked and split in
two: bitcoin cash and bitcoin.

Miners have been able to mine for bitcoin cash since this
morning. But he first bitcoin was reportedly mined at about 2:20
PM, according
to Coindesk
.

“There seems to be some technical issues that might be slowing it
down, but yes, the fork has happened,” Peter Borovykh of
Blockchain Driven, a blockchain technology company, told Business
Insider.

Miners are the folks who solve complex computer problems using
computers to unleash cryptocoins into the market. It took a
couple hours for miners to unlock the first bitcoin cash coins.

“It seems as if people over-estimated the mining power, or the
support from miners, hence it is taking far longer than most
expected, Iqbal Gandham, UK Managing Director at eToro said in a
statement sent to Business Insider just before the split.

Bitcoin was the first digital currency built on blockchain
technology, in which transactions are independently verified by
the network without the need of a middleman like a bank. Bitcoin
cash is built on the same blockchain network as bitcoin, but the
new software increases the size of the “blocks” that make up the
network to allow it to process more information.

Supporters of the newly formed bitcoin cash believe the currency
will “breath new life
into
” the nearly 10-year-old bitcoin by addressing some of
the issues facing bitcoin of late, such as slow transaction
speeds.


Bitcoin power brokers have been squabbling over the rules

that should guide the cryptocurrency’s blockchain network.

On one side are the so-called core developers. They are in favor
of smaller bitcoin blocks to protect it against hacks. On the
other side are the miners, who want to increase the size of
blocks to make the network faster and more scalable.

Until last week, the solution known as Segwit2x, which would
double the size of bitcoin blocks to 2 megabytes, was slated to
become the standard.


Servers for data storage are seen at Advania's Thor Data Center in Hafnarfjordur, Iceland August 7, 2015. REUTERS/Sigtryggur Ari
Servers
for data storage seen at Advania’s Thor Data Center in
Hafnarfjordur, Iceland.

Thomson
Reuters


Then bitcoin cash came along. The solution is a fork of the
bitcoin system: It’s a new software that has all the history of
the old platform — bitcoin cash blocks, however, will be 8
megabytes.

Bitcoin cash came out of left field, according to Charles Morris,
however, a chief investment officer of NextBlock Global, an
investment firm with digital assets,

“A group of miners who didn’t like SegWit2x are opting for this
new software that will increase the size of blocks from the
current 1 megabyte to 8,” Morris told Business Insider.

To be sure, only a minority of bitcoin miners and bitcoin
exchanges have said they will support the new currency.

Investors who have their bitcoin on exchanges or wallets that
support the new currency will soon see their holdings double,
with one unit in bitcoin cash added for every bitcoin. But that
doesn’t mean the value of investors’ holdings will double.

Because bitcoin cash will initially draw its value from bitcoin’s
market cap, it will most likely cause bitcoin’s value drop by an
amount proportional to its adoption. Bitcoin
was already
trading down by 5.78% at $2,715
on Tuesday following word
that bitcoin cash had
gone live
. Morris told Business Insider that bitcoin cash was
trading in the futures market for about $200 to $400 last week,
suggesting that’s the range it would fall in during regular
trading.

Kraken, a bitcoin
exchange, tweeted Tuesday morning that it was experiencing delays
getting bitcoin cash to show on user’s accounts.

“Please note,” the exchange
said
, that bitcoin cash “balances have not been credit yet.”
It added that it was “working to credit as soon as possible.”


Numerous exchanges
have said they won’t back bitcoin cash.

“In the event of two separate blockchains after August 1, 2017 we
will only support one version,” David Farmer, the director of Biz
Ops at Coinbase, a cryptocurrency exchange, wrote in a
blog post
. “We have no plans to support the bitcoin cash
fork.”

Coinbase has served nearly 9 million customers across 32
countries, according to the firm’s website. The firm
has enabled the exchange of over $20 billion worth of digital
currency.

But just because some big players won’t get behind it doesn’t
necessarily mean bitcoin cash will be a dud or that it couldn’t
eventually usurp the original bitcoin. Miners may rally behind
bitcoin cash if it turns out to be the better digital currency.

“Bitcoin cash has a chance to become the dominant cryptocurrency
contingent upon its ability to gain trust and support from both
current and new players as well as security of its network,”
Borovykh of Blockchain Driven said. “Due to, at least temporary,
solution of the scalability issues, bitcoin cash could attract
more new capital to the entire crypto space, thus helping
increase overall market cap.”

Arthur Hayes, the CEO of BitMex, a bitcoin derivative exchange,
told Business Insider he thought a fork would benefit the
cryptocurrency in the long run, despite short-term volatility and
confusion.

“There are people with billions of dollars of skin in the game
and they will ultimately go with the superior bitcoin network and
the market will follow,” Hayes said.

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