Emergence of New “Bitcoin Cash”
A disagreement within the Bitcoin community has led to a “user-activated hard fork,” which will result in the creation of a completely new digital currency, an offshoot of Bitcoin, called “Bitcoin Cash.”
The dispute exists because a large faction of Bitcoiners has called for a solution to the currency’s scaling problem. The demand for Bitcoin has soared in recent months as its value reaches an all-time-high. One bitcoin of the volatile virtual currency is currently worth about $2,866, up dramatically from about $607 one year ago, and $96 at the start of August 2013.
Betting on Bitcoin
The uncertainty about the fate of Bitcoin’s value has casino bitcoin such as Bodog, the first online betting shop to accept wagers in Bitcoin, setting lines on the digital currency’s price itself after August 1.
The odds of BTC’s price dropping below $2,000 stood at +350 on Monday, while a price remaining between $2,000 and $2,500 stood at -150. Over the weekend, the odds of BTC value surpassing $2,500 stood at +200.
Bitcoin is not attached to any central bank. The currency relies on “miners” to lend their computing power to the cause. But because only one megabyte of transactions can be processed at any time, there are delays. In short, Bitcoin miners can’t create it fast enough to keep up with demand.
“For Bitcoin to continue to scale and have the potential to become a globally used currency, this slowdown in transactions has to be addressed,” UK Managing Director at social investment company eToro Iqbal Gandham tried to explain in a Monday press statement.
But many purists believe the Bitcoin concept, created in 2008 by a shadowy programmer (or programmers) known as “Satoshi Nakamoto,” is not to be messed with. A compromise was sought that would’ve doubled the transaction block size to 2 MBs. But for many, that didn’t go far enough, and thus a schism developed within the community.
Bitcoin Cash will increase the block size to 8MB. A blockchain is the digital ledger that records every bitcoin transaction in existence, and is essential to the currency maintaining its value. Tomorrow will see that ledger split into two separate currencies under a condition knows as a “hard fork.”
Bitcoin Cash is currently worth nothing because it won’t exist until Tuesday, but what its value will be by the end of the week, or in five years, is anyone’s guess.
“Because millions of Bitcoin users will automatically own Bitcoin Cash,” Cambridge Centre for Alternative Finance Garrick Hileman told CNBC, “and it is likely to live on for the foreseeable future. Bitcoin Cash could be significant but we won’t know more until after it launches. If it fails to sustain support then it could fade away.”