On the morning of Friday, the 4th August 2017, Bitcoin (BTC) enthusiasts woke up to the news that the digital currency had just split into two. This follows years of disagreements about network scalability issues and the result is the birth of a new digital currency, Bitcoin Cash (BCC).
Bitcoin Cash has been created by a small faction in the Bitcoin community that did not approve of the SegWit2x proposal intended to increase the size of the Bitcoin block eight times. SegWit is set to be implemented later this month.
The split has generated mixed reactions with some exchanges like BitMEX and Coinbase making it clear that they will not support BCC while others like OKCoin and Kraken stating that they intend to list the new token. Some industry players view BCC as a passing cloud while others think that it will survive in the market, hitherto dominated by BTC.
Ryan Taylor, the CEO at Dash Core believes that there are misconceptions around the creation of BCC. According to him, BTC is not forking but some developers have simply created a new digital currency and formulated an effective means of distributing it; by giving it to those who have existing Bitcoin balances. However, he agrees that the creation of BCC is the culmination of a long standing dispute over how best to increase Bitcoin’s capacity. Taylor also believes that the governance model of BTC needs to change as the current one does not provide for effective dispute resolution. The fact that a simple dispute on whether to increase the block size can lead to years of stagnation is regrettable.
Taylor feels that while it is for the markets to ultimately decide, the chances of BCC succeeding are rather slim. Although it has increased the capacity, the new digital currency has not solved issues like scaling. Secondly, BTC retains the network of integrated services that make Bitcoin network useful to businesses and consumers. Considering that BCC does not have substantial enhancements compared with BTC, it is unlikely to be integrated into those services, especially given the substantial expense for businesses operating them to do so.
Aragon Co-Founder and Project Lead Luis Cuende believes that the split may have varying consequences on investors but it will probably make BTC holders more wealthy, since Bitcoin is better off with SegWit. Secondly, the people who were stifling the development of Bitcoin and seeking to centralize it have now left. According to Cuende, BCC will be around in the short term but will not go far just as happened with its predecessor, Bitcoin Unlimited. People are also likely to lose interest in BCC which is engineered to look decentralized while in real sense it is totally centralized.
Unlike many who have dismissed the creation of BCC as a non-event, ZenCash Co-Founder Rob Viglione believes the event is significant as it paves the way for progress after years of deadlock over scaling. It is good news as industry players will have an opportunity to experience the development along two distinct preference clusters. Instead of forcing one way or another, industry players will see how each idea unfolds in real-life. Viglione says that the split has both pros and cons with the downside being that BTC has lost part of its ecosystem. All in all, the split is not a zero sum game because there are high chances of both chains flourishing in parallel.
For Node40 CEO Perry Woodin, the only people who are going to reap from BCC are those who see it as free money and invest in something else. It’s going to be a race of who sells it fast.