Bitcoin Cash: the Genie out of the bottle
Material posted: Publication date: 27-08-2017
14 July Geektimes published quite an extensive article with an assessment of the development of the Bitcoin infrastructure. Then he said that from August 1, cryptocurrency can be divided into two branches, which will evolve independently, or almost independently from each other. One of the problems which led to the division of the increase in time of the transaction confirmation in the bitcoin network.

Before the split block size was 1 MB, and the speed of transaction processing — no more than 7 units per second, despite the fact that the Visa network, this rate is much higher — tens of thousands of transactions a minute (about 2 million per second in normal mode). In General, as expected, August 1 the division took place. There is a new crypto-currency which was called Bitcoin Cash.

Why there was a division

About the middle of July, the developers have agreed to upgrade the bitcoin Protocol technology SegWit2x (Segregated Witness). This is the solution proposed by the team of developers of Bitcoin Core, it supported the largest mining pools from China. New technology has allowed to remove from the block of certain information, including a signature transaction, with a simultaneous increase in throughput of the entire chain.

Most of the miners agreed to update the Protocol, which promised to increase performance of the whole network. But some large companies that are engaged in mining, supported the separation. Most proponents of this position from China, we can say that Chinese miners and prompted a fork of Bitcoin (by the way, not everyone agrees that this is a fork). But, in General, it really is. So, August 1, on the light and there was a Bitcoin Cash with a block size of 8 MB. The separation occurred on the unit No. 478558. Accordingly, both versions of bitcoin have total old transactions, but new operations are different. The size of the unit of the new currency is 8 MB. Interestingly, the first to conduct operations with this cryptocurrency also become Chinese.

"A group of miners who did not like the option of using SegWit2x decided to increase the size of the unit of cryptocurrency from 1 MB to 8 MB", — commented Charles Morris, a representative of the investment company NextBlock Global.

Disaster or not?

No, except for the "redistribution of spheres" of influence and change some of the principles of infrastructure in the world of cryptocurrency, nothing happened. In principle, the separation expected for a long time, and have been preparing for. Here, too, the words "who is not hidden, I do not blame the fair to the fullest. No wonder before the split of users of the Bitcoin network was asked not to accept and send payments on 31 July and 1 August. No one knew exactly what might happen — perhaps when sending a certain amount of money it just would not come to the addressee or reached, but then was gone straight from the purse.

Before you split the bitcoin exchange rate reached $2900, although it then declined slightly. The volatility of bitcoin has been very high, the rate of both units is not too stable and still. The same Bitcoin Cash originally cost $300, then its rate increased to $700 and fell again, though not to the original position, and up to about $500.

At the time August 2, Bitcoin Cash climbed to third place among cryptocurrencies. On the ground and is now bitcoin (the original), the second — Ethereum.

Bitcoin exchange rate before the split. Source: Bloomberg

"The rate of bitcoin has increased prior to the split in expectations of more profit holders of crypto-currencies," — says one of the participants in the market. "It has happened before in other blockchains. This is a common market phenomenon when you expect extra money."

Some exchanges before the breakdown of Bitcoin, mindful of the problem described above, ceased to perform the operations with cryptocurrency, including a freeze on the receiving and delivery of deposits, but quickly resumed all operations (literally the day after separation). As mentioned above, part of the Chinese stock exchanges immediately began to conduct operations with a new cryptocurrency. Cash support companies like OKCoin, Huobi, BTCCPool, Bitmain, F2Pool, BTC.Top ViaBTC, BiXin, BW, 1Hash, Canoe, BATPool, Bitkan and others. On the other hand, no less, and those who chose not to work with Bitcoin Cash until the situation stabiliziruemost. These include the Coinbase exchange is a large player in the cryptocurrency market.

"In anticipation of the split August 1, we say that we will support only one version. We have no intentions of working with a fork of bitcoin", — said the head of Coinbase.

It is worth noting that after the split of bitcoin all owners of classic cryptocurrencies are Bitcoin owners Cash. And since the treatment was 16,48 million bitcoins, and the number of new crypto-currencies have become the same. According to Katie wood, a representative of the company ARK Investment Management, new and old of cryptocurrencies will get into the world of the blockchain its purpose, behind a Board there will be none.

By the way, after the division was presented and a new software client called Bitcoin ABC. Some nodes will be updated, and to use it, while others will remain "in the money". Each node will decide what to do, upgrade or not, on their own.

What's next?

Experts on cryptocurrencies believe that in the future the original bitcoin will grow faster than the fork. This would mean that "big brother" for a long time will be more attractive for investors than Bitcoin Cash. But if a sufficient number of miners and exchanges will pay attention to a new cryptocurrency, its development will also be fast. Miners before all other participants in the cryptocurrency market will determine the future of the new Bitcoin.

In addition, its contribution to the development of new cryptocurrencies do and those who sell virtual coins. So, some users of the Bitcoin network massively buying Bitcoin Cash, in the hope of the appreciation of and the ability to pay, and good.

The number of market participants that support Bitcoin Cash is growing. So, if right after separation a new cryptocurrency supported 3% of miners, but now they have about 10% or even more.

However, at the moment mining new kryptonite are not dozens and not hundreds, but a few large pools. All three of them. Two is ViaBTC, plus the company ViaBTC. But the third is still unknown. The third pool accounts for more than 77% of the total Hasrat network.

According to data published by the representatives, bottom new cryptocurrency representatives of the company MC Pool from Hong Kong. They say they are doing this more for fun than for profit. While the pool is building, Kwong Wah Mansion hostel in Hong Kong.

Near this building is a new shopping center, the owner of which is MC Pool, so that the company mines Bitcoin Cash for advertising. A few days later after working with a fork of Bitcoin guide MC Pool said that to get that bitcoin is not profitable, because the network complexity is the same, but the reward is less. "The reward here does not correspond to the complexity of mining," said the owner of MC Pool. He also added that it admits that the fork will exist without any problems, gradually developing. "Yes, something similar has happened with other cryptocurrencies. They are quite able to co-exist," he said.

As far as we can judge, that it produces the lion's share of Bitcoin Cash

Consequently, miners are more profitable to produce the original bitcoin, which, moreover, is trusted by most companies that work with bloccano. This is one of the problems that stand in the way of Bitcoin Cash, and it is quite serious.

As you can see, in the near future Bitcoin Cash will be weaker than the main cryptocurrency, but the existence of alternatives is not threatened. If the miners will maintain Cash, then all will be well. And the same company MC Pool, despite the leadership's statement about the cessation of mining news, apparently, continues to do the job, and is clearly not for the sake of advertising, because all operations are conducted without unnecessary publicity.

Anyway, the Genie really is out of the bag, there's no turning back.


Tags: financial center , Exchange