Bitcoin is one of the most popular and widespread cryptocurrency in the world. For 9 years of its existence, it has won global markets and steadily kept on the stock exchanges. However, following the results of the so-called “hard fork”, Bitcoin split into two separate cryptocurrencies: Bitcoin and Bitcoin Cash. From now on, both currencies will exist, but the rules have changed. All who keep Bitcoin on the account, automatically receive a similar amount of Bitcoin Cash. Now it is the turn of the miners who will determine which currency they will use. In early August 2017, the price for one Bitcoin amounted to $ 2700, while for Bitcoin Cash it amounted to $439.
War of the Tokens
The division of Bitcoin was due to the so-called “civil war”, which grew because the participants of the cryptocurrency markets could not find a common solution that everyone would like without exception. In order to increase the speed of the transaction, Chinese technology suggested a proposal, the purpose of which was to increase the memory of the unit, which stores all the information on operations. They offered to increase it from one to two megabytes of data. The software update was scheduled for August 1st.
The opinion of the Chinese colleagues was not agreed with other miners, most of whom are representatives of Western countries. They proposed to make changes not in the size of the block of the transaction, but in its contents. A conditional transaction block can be divided into two components: transaction data and a digital signature. Technologists from the United States proposed to exclude the digital signature from the block, yet add an additional operating cell.
In general, both sides were able to come to a common agreement and prepared for the “soft fork”. This means a soft separation with the full agreement of all market participants. As a result, the rules of mining had to change, but the network should remain common and undivided.
Another group of users who disagreed with the innovations, joined the process and considered that the new software, called Segregated Witness (SegWit), would not be so effective and would not entail an increase in the transaction block. That’s exactly where the “soft fork” transformed into “hard fork” and new tokens of Bitcoin Cash have appeared.
The word Cash should now take a broader meaning. Now, Bitcoin Cash can be used not only by large organizations and financial institutions, but also by ordinary users. At the moment, the main differences between Bitcoin Cash from Bitcoin is the lack of activated SegWit and the increase in the transaction block to 8 MB.
According to Mikhail Mashchenko, an analyst of the social network for eToro investors in Russia and CIS countries, the disintegration of Bitcoin was due to the desire of the miners to make changes to the system. But, according to the researches, it turned out that about 3-10% of the total number of computing capacities of Bitcoin could be attributed to the breakdown of the cryptocurrency, so the currency did not receive the expected support.
The expert also noted that at the moment, the major mining pools have not yet determined whether they will work with the new cryptocurrency, which is absolutely logical. No one has confidence in the stability of Bitcoin Cash. Nobody knows what prospects the currency expects. Why should someone risk and use the new Bitcoin Cash when the proven Bitcoin operates. The expert recommends to think about the fact that, despite that Bitcoin Cash and Bitcoin have common history, the new cryptocurrency will work differently after making changes to the code. The other developers who do not inspire much confidence will make these changes.
Making a conclusion, Mikhail Mashchenko added that it is still difficult to predict whether Bitcoin Cash will be popular and succeed, so the large traders will not invest their money in this cryptocurrency.
Another expert expressed his opinion on the split of Bitcoin. Alexander Mamaev, the Diamond Guard’s positioning director and crypto-enthusiast, said that at the moment, the split of the cryptocurrency turned into a significant variability of Bitcoin, and in the near future, nothing will change significantly in this regard. The expert added that it is worth waiting for the appearance of scammers who will try to make money on the instability of the exchange rate. We also should expect increased attention to other, more stable types of cryptocurrencies, which will help to save users’ funds.
Russia: Little Support for Mining
In the Russian Federation, cryptocurrencies are also actively developing, but so far there is no mechanism that could regulate mining. According to Anatoliy Aksakov, the head of the State Duma committee, the law on cryptocurrency may appear in the lower house of parliament in autumn 2017. According to him, cryptocurrency should be given the opportunity to develop freely.
The Deputy Chairman of the Bank of Russia, Olga Skorobogatova, spoke at the St. Petersburg Economic Forum. She said that the process of creating a virtual national currency has already been launched.
It should be noted that according to the analytical center of NAFI, during the survey, it was found out that only 28% of Russians have heard about cryptocurrencies. Only 1% of respondents uses cryptocurrencies, and 47% of those who are aware of this term believe that this is a temporary phenomenon.