Published: Thu, August 03, 2017
Economy | By Melissa Porter

It's official: Bitcoin is splitting in two

It's official: Bitcoin is splitting in two

Blockchain is the technology used for verifying and recording digital currency transactions. It's meant to run just like Bitcoin, but no one knows if the mining community will buy into the newly created currency. He likened it to a stock trading "ex dividend" - when the buyer isn't entitled to collect a dividend on the shares.

The eagerly awaited new cryptocurrency Bitcoin Cash has had a rocky start, with its value fluctuating wildly in its first day of operation. While on HitBTC, Bitcoin Cash (BCH) is now trading as high as $360.

After the split, Bitcoin Cash has all the history from bitcoin's blockchain, creating the same number of tokens, plus the new currency created. It will happen once blockchains reach over 1,000 kilobytes on the website "It's a trading event where there's number of hoops you have to jump though and people are trying to make a profit".

Part of the effort, known as Bitcoin Improvement Proposal 91 (BIP91), was accepted last month, and a split was averted. For example, the Bitcoin network can right now handle around 6 transactions per second which is ridiculously low compared to Visa that can process 1600 per second.

That wasn't enough for some, who started backing Bitcoin Cash, which chose the former route and increased its blocks to 8MB.

The great majority of miners and developers support bitcoin, while ViaBTC, which has nearly 6% of bitcoin processing power, is the mining pool backing bitcoin cash.

If he had, he would have spent far more time working on bitcoin's scalability. Experts are now estimating that Bitcoin Cash will be worth significantly less that its predecessor.

"People who are going to benefit from Bitcoin Cash are the ones who see it as free money, so they can then invest in something else". Anatoliy Knyazev, co-founder of investment company Exante, told CNBC he is in favor of these kinds of splits as they are how bitcoins and other cryptocurrencies are supposed to work.

Kraken said that it's working on crediting accounts with bitcoin cash, and that its site's login function is down due to heavy traffic.

Bitcoin Cash is an independently developed alternative coin to Bitcoin. In May, a portion of the community floated the idea of adopting Segregated Witness code optimization that, among a few things, would double the size of bitcoin's block size to 2 MB and improve the blockchain's efficiency.

The new token will be nearly like a free dividend, according to Charles Hayter, founder of digital currency comparison website CryptoCompare. As the saying goes, ne'er the twain shall meet, and so Bitcoin split to allow for each camp to get what it wants. Since it is built off the Bitcoin blockchain, all owners of Bitcoins who are storing their coins in participating wallets received one Bitcoin Cash coin for every Bitcoin they own.

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