The war behind BTC and BCC (and how you make money out of it)

Maybe you know already there will be something called BCC after 1st Aug. But do you know what on earth happened and the war behind it?

If you knew there is a transaction book keeping every bitcoin transactions, that's fine; if you didn't, you know it now. When there is a transaction, it will be recorded in the book, and of course it takes space.

As bitcoin is decentralized, it means everybody keeps one copy of that book. Thanks to the small block sizeof bitcoin, the book is still currently okay for a PC to store. Small block size also causes problems, of which the biggest one is congestion. Bitcoin has a limited capacity to record transactions, and when there are more and more transactions, it becomes harder and harder to process, that's so called congestion. However, there will be problems when the book become too big for ordinary people to download and keep.

So we have a problem here to solve. And we have to possible solutions, which caused possibly the biggest argument on BTC in its history so far.

The two solutions are respectively raised by two parties: the developers (known as the CORE team, who have been writing and maintaining bitcoin's source code) and the miners (mainly BITMAIN, a company invents mining rigs and also owns several world's biggest mining pools).

The solution offered by BITMAIN is quite simple: since the block size is not big enough, then let it be! However, CORE team doesn't agree on this and the reason is: if the block size is too big, the transaction book will grown explosively in size and soon become too big for individuals to keep. In the end, there will be only few institutions keeping that complete book and this is obviously against Bitcoin's first principle: decentralization.

What is offered by the CORE team is a bit more complicated but not hard to understand either. It is called Lightning Network. The idea of it is to keep some core transactions on blockchain, but small ones off it. This solution is against BITMAIN's interest though, because if most transactions are off the blockchain, it will cause potential losses and risks to BITMAIN since it has been working very hard on blockchains.

No party will agree on the other's suggestion, so compromises have been made. To enable the lightning network, CORE team needs to activate Segwit first, which had been objective by BITMAIN months ago. While BITMAIN is promoting 2x, i.e doubling the block size. At last, the two parties agreed on a compromised solution: Segwit 2x, so that Segwit will be activated, and block size will be increased as well. This is called "bitcoin new york consensus", a.k.a BIP91 and UASF.

The "fork" people are talking about is mainly the one going to happen on 1st August. Due to lack of knowledge of this story, most people though there will be 2 bitcoins. They panicked and bitcoin price almost halved. However, since both parties agree on BIP91, there will be no fork, nor another bitcoin. Therefore the price has come back.

What will happen later?

The CORE team will still keep working on the lightning network after Segwit 2x is activated. The BITMAIN side insists increasing block size. There will be no more compromise, but will be a "hard fork" in 3 months in November.

What we can do now?

Lots of exchanges will credit you a free BCC if you hold one BTC in your account. To avoid risks, you can hold 1 bitcoin in those exchanges, and short 1 bitcoin which will leverage your loss if BTC price drops. After Segwit 2x is activated, you will get a free BCC without any risk!

My own suggestion is: although BCC has a quite high price at the moment, it is regarded as rubbish globally. Sell it once you have got it, don't hold it. You can slap me if I were wrong, but I will compensate you.