Bitcoin Hard Fork: The non-Segwit Hard Fork Implementation and What It Means For Bitcoin Holders
Tuesday, August 1, 2017 was a stressful day for Bitcoin and the millions of people that are part of the Bitcoin community. At 8:20 ET, a User Activated Hard Fork (UAHF) has divided the blockchain supporting Bitcoin, into two, creating a new cryptocurrency called Bitcoin Cash (BCC). The theoretical existence of Bitcoin Cash comes to an end.
So this is it. The irreconcilable differences in the bad Bitcoin marriage, finally led to a divorce. The Bitcoin community is now divided: both the software and the blockchain too. This is the first time such a fork happened.
Within hours of the forking, we have reports from Bitcoin.com that Viabtc, the China based mining pool, mined the first Bitcoin cash block at 2:14 pm EDT (6:14 GMT). Soon after, they mined a second block. The first block was 1.9MB (1915175) in size, with 6,985 transactions, which is much more than BTCís 1MB limit and 3,000 transactions approx. Thus begins the new cryptocurrency story.
Welcome to the world, Shuya Yang! And Bitcoin cash!
ViaBTC (@ViaBTC) August 1, 2017
After Bitcoin Cash went live, the price of Bitcoin dropped to $2715, down 5.78%. CoinMarketCap reported that Bitcoin cash was trading at $262.30 on the futures market. After the fork, at the time of writing, it was trading at levels of $210.
Bitcoin is a hot topic of interest for many, and many of you have been hearing about Bitcoin forking for a while now. I know you have questions about why they decided to go separate ways and what that means for investors.
Why did the great divide happen? What can Bitcoin holders look forward to?
The Blockchain Capacity
The fundamental problem was that of demand vs. supply. The Bitcoin community has been embroiled in an increasingly intense debate for the past two years, on the best way to scale the Bitcoin network.
The issue was mainly the 1MB block size limit of the Bitcoin code. Every block in the Bitcoin blockchain created approximately one block in a 10 minute timeframe. This can successfully manage up to 1 MB of Bitcoin transactions, which means approximately seven transactions per second.
Initially, 1MB was enough to process ALL the transactions efficiently. But in the last few years, due to the phenomenal growth of this cryptocurrency, people thronged to be a part of the wild world of Bitcoin. With this demand for increased block space, confirmation delays ensued.
The chart below shows the unconfirmed transactions which went as high as 157,199 on May 23, 2017. As more and more people joined the community, this is bound to get worse.
Reason for The Blockchain Split
In an attempt to save this wildly successful cryptocurrency, the Bitcoin community came forward with various plans.
Why not double the block size to 2MB instead of 1MB?
The SegWit2x (segregated witness) update will increase the block space to 2MB, by removing signature data from the transactions. With this, the transactions will be processed faster. But with the increased block space, the transactions will also be moved off of the blockchain. This was not acceptable to the miners, who were in favor of increasing the block size to 8MB and improving speed to facilitate more transactions.
This disagreement gave birth to Bitcoin Cash, which would take the block size from 1MB to 8MB.
With this hard fork, you have two digital assets; the original Bitcoin and Bitcoin Cash.
Are you a Bitcoin holder? Hereís what you can expect from this forking.
Bitcoin Cash is similar to Bitcoin, but with a far larger block size. It was a slow start for Bitcoin Cash, as it took about six hours after the network split, for the first block of Bitcoin Cash to be mined. This delay has some people worried.
Stefan Thomas, chief technology officer for Ripple said, ìThe fact the block is taking so long is making people reevaluate.î
If you own a Bitcoin, amidst all your concerns and worries, you will be happy to know that this fork gives one Bitcoin Cash for every Bitcoin owned. The Bitcoin Cash Page says, ìAll Bitcoin holders will automatically own Bitcoin Cash.î
This is possible because Bitcoin Cash has all the history from the old Bitcoin blockchain. If you have 100 bitcoins, you will receive the same number of the new blockchain tokens.
Understandably, for those of you who own Bitcoin, this may not be a welcome change. Your secure and happy Bitcoin investment suddenly turns not-so-secure and not-so-happy. And Iíve seen people talking about getting their coins out of exchanges in the past few days, leading to the hard fork.
- If you have your Bitcoin private keys, you have nothing to worry. Your coins are safe and secure. You just have to decide which route to take.
- If youíre not in possession of the private keys to your bitcoins, youíre leaving the decision making to the people who control your bitcoins.
Wallets/Exchanges
Not all wallets/exchanges will be supporting both Bitcoin and Bitcoin Cash.
As far as the wallets that are supporting Bitcoin Cash, Coinbase is not one of them. The firm that operates the GDAX exchange clarified that they will not be supporting the new cryptocurrency.
Bitfinex said that it is yet to decide whether it would like to list bitcoin cash or not, and the decision will be based on how the new currency evolves.
Kryptomoney.com offers the entire list of supporting exchanges and wallets supporting Bitcoin Cash.
For those that missed getting in on the Bitcoin wave, this might be a good chance to get some Bitcoin Cash at just a fraction of bitcoin.
- All images are under CCO Public Domain.
Bitcoin cash is currently trading near $500 average. I doubled mine when it first appeared for trading then doubled it again. (Woohoo)! Not sure I would be buying in now. I want to see if it drops a bit before I buy more. Interesting to see what happens this week!
I still have my Bitcoin Cash from the fork. I decided I will hold it for a minimum for six months. Now at the current price Im wondering if that was the right decision @eavaryan. I guess 5 more months and Ill see. Once things for sure, if it was im Bitcoin already it would of been worth more for sure.
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Buying now is highly risky. If you're not shorting better to wait till at least deposits and withdrawals are opened on exchanges and transactions get confirmed.
Agreed! I see people buying at 450 now and I am like 'no dude'.
now it has crashed.
I am just letting both ride. There is no guarantee that Bitcoin Cash is even around in 3 months, however, there is also no guarantee that it isn't. It is even possible it becomes the dominant Bitcoin currency somewhere down the line. For those reasons I am not buying more or am I selling, I am just holding what I owned previously and what I was gifted via the fork.
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Thanks for the article. The whole bitcoin topic is as important right now as ever before.
I personally believe that BCC is going to be the far better investment for the future and that while bitcoin may stay stable or rise a bit that BCC will b used more and increase a higher percentage in value.
I also think it may be likely that the value of BCC actually goes down first but in the next few months will increase and out perform BTC as far as new percentage gains.
I will follow you and be in touch!
SteemON!
Thx for sharing
Thanks for very important info.
Thank you for detailed information! I'd learned a lot.
no Bitcoin at all but i see a bright future for the whole crypto market. Currently we are in stormy waters. There is so much innovation in the pipeline and the question is "Who is the next disruptor?" or "What happens in two months, do we see another Bitcoin split?!"
Here my funny guess how such currency may look like.. maybeBitcoin United
picture by onetin84
Companies like TenX are good prepared either or not anybody uses Bitcoin because they work as intermediary between the crypto owners and goods and services industry who want's revenue from any currency. Currently i tend more to investing in ICO's because of the heated market. I wrote about a systematic approach how to select great ICO's
I followed also the frenzy after the fork yesterday.. the rise and the fall of Bitcoin Cash
Exciting times ahead steemit friends!
bitcoin bullion? doesn't that already exist? LOL
also with the mirrored "B"? .. had not researched that.. the idea was just for fun because of the "heavy forking" currently. Bitcoin eventually leaves it all behind and collects his forks to build an even stronger "united" version.. because that's impossible i made that picture
The opposite would be that Bitcoin is the source of many more Bitcoin Altcoins..
I think in 2 or 3 weeks the BCC price will drop and stabilize to it's normal price. So no need to buy BCC at such price because you are going to loose. Better to wait before everything to stabilize and then you can start buying BCC.
you are right , the same thing happen to zcash
Thanks for this important information. Now following you.
Thank you far important information
I still think that it is amazing how Bitcoin ABC has facilitated the injection of billions of dollars into the crypto market.
Agreed!