Bitcoin was the first cryptocurrency to gain any mainstream traction, but now its future viability is in question.
Bitcoin runs on a technology called a “blockchain.” This is a computerized ledger of sorts that records the history of transactions of virtual coins like Bitcoin. A group of developers decided they wanted to create a “fork” of the original Bitcoin blockchain, and Bitcoin Cash was born.
The new split from Bitcoin is volatile. After the launch of Bitcoin Cash on August 1, it jumped 48 percent in value before dropping down 26 percent.
The Bitcoin split follows a more dramatic split of the rival cryptocurrency Ethereum, which forked in two after a hacker made off with millions in the cryptocurrency by exploiting a loophole in the code. Bitcoin’s split was not due to a massive theft of the coins, but a technological problem that Bitcoin Cash claims to solve.
According to the Bitcoin Cash website, Bitcoin was doomed because of a maximum limit of 1MB of data per block. In laymen’s terms, this means that the code had a hard limit in it that slowed transactions down.
“In 2017, capacity hit the ‘invisible wall’. Fees skyrocketed, and Bitcoin became unreliable, with some users unable to get their transactions confirmed, even after days of waiting,” according to the Bitcoin Cash FAQ. “Bitcoin stopped growing. Many users, merchants, businesses and investors abandoned Bitcoin. Its marketshare among other cryptocurrencies quickly plummeted from 95% to 40%.”
For people who owned Bitcoin up until the split, they may also own an equivalent amount of Bitcoin Cash. However, some companies that store Bitcoin in virtual wallets had announced previous to the split that they would not support Bitcoin Cash, negating this benefit for many owners of Bitcoin.
The developers of Bitcoin Cash feel that their version of Bitcoin is far superior to the original and that it will eventually supplant it.
“Low fees and fast confirmations will resume with Bitcoin Cash,” says the Bitcoin Cash FAQ. “The network will be allowed to grow again. Users, merchants, businesses, and investors will return.”
Some investors agree. “Money will pour into Ethereum and Bitcoin Cash,” said Sebastian Quinn-Watson, a venture partner for an Australian-based Bitcoin exchange operator. “I think the excitement will also bring more people into the market looking to invest.”
Skeptics, however, feel that this split may mark the eventual downfall of not just Bitcoin, but its derivative Bitcoin Cash. Is the entire cryptocurrency movement just a fad? Some believe so.
“It’s the beginning of the end of Bitcoin,” wrote lithium630 on Engadget. “It lasted much longer than I expected.”
“Bitcoin is not going anywhere so long as people have faith in it and keep invested money in the currency,” responded a user named Gmoney. “Like any investment, that faith is the thing that keeps commodities from instantly tanking at the first sign of bad news.”
“That’s pretty much what I’m talking about,” replied lithium630. “People will lose faith. Bitcoin was never an investment. It was a gamble that paid off well. Eventually it will be worthless and a lot of people will have held on too long.”
Gmoney responded: “Just like that silly internet fad in the 90s.”