Welp, Bitcoin Might Still Fork on August 1
What is 'Bitcoin Cash'?
Image: Shutterstock. Edited by the author
Bitcoin, dear readers, is back on its bullshit with a new plan to split the virtual currency into two versions on August 1. This news comes just days after bitcoiners rallied around a solution to avoid such a split.
The new version of bitcoin, which supporters are calling "Bitcoin Cash," is being pitched as a refuge for bitcoiners who want the virtual currency to scale up to worldwide adoption but who don't agree with some of the more popular proposals to do so.
This might surprise you if you've been following the "scaling debate," an ongoing war of words between elements of the bitcoin community regarding how best to implement a code change that would allow the network to handle more transactions. Right now, the "blocks" of transaction data that make up the blockchain, bitcoin's public ledger, are full. This causes a bottleneck, forcing transactions that should take about 10 minutes to be confirmed to take hours or even days. For about two years, the bitcoin community has been careening towards the possibility of a fork that would split the network into two versions; one that will support the code change, and another that won't.
On July 20, it seemed like bitcoiners had finally come together to avoid this eventuality. A large majority of miners (enterprises that process blocks for a reward) signalled their support for a proposal that would incentivize everybody to lock-in a specific code change before the deadline of August 1. Hardliners refer to that date as their "independence day," when they'll activate the code change regardless of its support and hope that everyone gets on board. With the acceptance of this proposal, called BIP 91, it seemed like independence day would pass by without the danger of a split.
But, apparently, there are still some holdouts to the code change that BIP 91 supports. So, Bitcoin Cash is a new contingency plan intended to come into effect if on August 1 the network isn't in agreement, causing instability. It's gained the support of some major players in bitcoin, blowing the sense of security offered by BIP 91 out of the water.
So, what is Bitcoin Cash, exactly? The main difference is that while the main chain will likely support 2 megabyte blocks, Bitcoin Cash would support up to 8 megabytes. The "cash" part is a nudge-and-a-wink to people who believe that bitcoin should be a low-cost payment network for everybody, and that big blocks are the solution.
It's important to note that Bitcoin Cash doesn't actually exist yet, which has provoked some derision. The moniker is simply a name for the new currency that would be created only if the network splits. There's no telling if that will happen, or how much the currency will be worth. However, ViaBTC, a large Chinese exchange for buying and selling virtual currencies, has already added a futures option for Bitcoin Cash and it's currently valued at about $423 USD.
Regardless, Bitcoin Cash is a potentially very serious proposal. Chinese company Bitmain, which operates the largest bitcoin mining pool in the world, announced in a blog post on Monday that it would use a portion of its resources to support a hard forked chain if August 1 rolls around and a lack of consensus makes the network unstable. Bitcoin.com, which operates a small mining pool, stated that it is open to supporting Bitcoin Cash. ViaBTC, which operates its own pool, also announced that it would mine Bitcoin Cash in the event of a fork. Together, these pools represent about 30 percent of the entire network's mining power.
For a forked chain to grow and become its own currency, people have to continue to mine it. If bitcoin forks and everyone decides they want to go with the flow and stay on the original chain, then no worries! But, if people see an opportunity for profit or simply a good troll by working on the new chain, there's a chance Bitcoin Cash could take off.
For an idea of how this would look, check out what happened when ethereum, a cousin of bitcoin, forked last year—one chain was supposed to wither and die, but a community rallied around it and it continues to this day.
At the moment, Bitcoin Cash is still just a contingency plan. But if there are two constants in the world of cryptocurrency, it's these: Never underestimate the power of trolls, and never discount people's eye for a quick buck.
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