Last month, a group of activists in the Bitcoin community felt that Bitcoin had lost its way. They believed that the mining process was too centralized and that people were ignoring its original purpose which was to be used as a payment system. So they decided to create an offshoot of Bitcoin called ‘Bitcoin Cash’.
These splits are called a ‘fork’. However since the split wasn’t that significant, it is being referred to as a ‘soft fork’. A more dramatic split is called a ‘hard fork’, which we’ll get to in a minute. The advantage of Bitcoin Cash is that it works off of larger blocks making transactions faster and less expensive than the original Bitcoin.
So why didn’t everyone just switch to Bitcoin Cash?
Since Bitcoin cash is faster, cheaper and less centralized, you’d think that for a Bitcoin user to make the transition would be a no-brainer. But most didn’t adopt the new version of the cryptocurrency-and for good reason. That’s because on November 15, an upgrade to the blockchain called the Segwit 2x was expected to take place. This upgrade was supposed to make transactions even faster while allowing the blockchain to handle them at a larger volume. Unlike Bitcoin Cash, the Segwit 2x is a ‘hard fork’ which means that it’s a far more significant and dramatic upgrade than a ‘soft fork’ like Bitcoin Cash. Because its impact was so drastic, many in the Bitcoin community panicked out of fear for bugs and compromised security. Reddit, Twitter and just about every other social media was lit up with cries from Bitcoin owners freaking out about the looming upgrade. And although most of the hysteria was unfounded, it was enough pressure to force a cancellation of the Segwit 2x upgrade.
Now that the expected upgrade got cancelled, regular Bitcoin owners are stuck with a more inferior version of Bitcoin than Bitcoin Cash. But that’s also why they’re starting to make the switch. CNBC reported that Bitcoin Cash climbed an impressive 32% since Friday while its market capitalization soared to over $41 billion on Sunday. Meanwhile, the original Bitcoin dropped 5.6% since Friday and at one point dropped to as low as 29%. In fact, for a few hours on Sunday, Bitcoin Cash’s zero-to-hero popularity made them the second largest cryptocurrency (behind the original Bitcoin of course) with a market capitalization of $29 billion. At the same time, Bitcoin Cash reached a new record high of $2,577.11 on Sunday at 1:49 a.m. ET according to Bloomberg.
With all the confusion and competition of so many new cryptocurrencies trying to take out Bitcoin, it’s hard to imagine the crypto market increasing in value. However, Vitalik Buterin, co-founder of Ethereum (who congratulated the creators of Bitcoin cash on Twitter), sees it differently. Responding to a tweet, he said “a key reason why I am now so confident in crypto is precisely the fact that there are so many different teams trying different approaches.” Whether you agree with him or not, one thing it’s becoming more and more apparent; one man’s Bitcoin Cash is another man’s treasure.
Do you believe Bitcoin will rise again? iFOREX offers Bitcoin, Ethereum and hundreds of other instruments on its online trading platform.
Found this article interesting?
Want to see how quickly you can take your first steps in the world of online trading?
iFOREX has one of the most popular training packages.