Bitcoin’s civil war has come to a conclusion. Crisis has been averted. Bitcoin rallied to near all-time highs. The fork in the road is inevitable.Yes, after years of efforts from miners and developers to prevent the blockchain from splitting into two different coins, the fork is still going to happen, but few are angry this time around.On Aug. 1 at 7:20 a.m. ET, the blockchain will split into bitcoin and Bitcoin Cash, a new peer-to-peer electronic cash.What Happened With BitcoinBIP 91 has received support from over 97 percent of bitcoin miners, successfully implementing a solution to the cryptocurrency’s scaling problem.
The blockchain’s 1-megabyte limit on the number of transactions had been slowing down the system, clogging it with a feed of uncompleted transaction, as bitcoin became more popular.The solution, BIP 91, did not actually increase the block size limit, which was arbitrarily set when bitcoin first launched.Many miners believe that the solution is only delaying the problem and risk of a split, which led to Tuesday’s announcement of Bitcoin Cash.What Is Bitcoin Cash?Bitcoin Cash will increase the block-size limit from 1 megabyte to 8, greatly increasing transaction speeds and allowing it to be used as cash.Previously, bitcoin had been more similar to a digital version of gold: valuable and tradable, but not easily spent.All current bitcoin holders will automatically own Bitcoin Cash, and retain the value of their account once the fork happens.Afterward though, investors and miners will have to decide which chain they would like to follow.
The process is said to be similar to Ethereum and Ethereum classic, which originated from the same source but are now two independent cryptocurrencies.Other Need-To-Knows For InvestorsBitcoin Cash already has at least one futures market, and is trading at a fraction of a bitcoin. As of 12 p.m. ET, one unit of Bitcoin Cash was worth 0.177 bitcoins or about $460.Investors whose bitcoin that are stored by an exchange or other third-party will need to check with them about whether they will receive Bitcoin Cash.
Many of the biggest bitcoin exchanges, such as Coinbase, are not ready for Bitcoin Cash and have not given clear indication of whether they will immediately adopt the new chain.Bitcoin Cash is expected to offer replay and wipeout protection, but the event of the fork itself could pose a threat to bitcoin holders.Regardless of whether investors choose to use bitcoin or Bitcoin Cash in the future, the prudent move for safety and to maximize earnings would be to move all bitcoin onto private keys before the time of the split.