Here Is What Happened With The BITCOIN On August 1

4 August, 2017
Money

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If you would remember earlier I wrote a piece explaining what was going on with the Bitcoin. I told you that my investment banker had advised I stayed all transaction on my Bitcoin platform till things stabilized. Read it here

The reason he gave me all this advice was because of the possibility that that the Bitcoin, as we knew it, may split into two types of cryptocurrency if the currency programmers were unable to reach a compromise on some certain technical issues they were having as at August 1

Well, they were unable to compromise so the Bitcoin Blockchain has split into two, producing two currencies- the original bitcoin and the Bitcoin Cash.

"The creation of Bitcoin Cash is certainly a pivotal moment for Bitcoin and its community," Charles Hayter, founder of digital currency comparison website CryptoCompare, told CNBC on Monday.

"The inception of Bitcoin Cash may prove to be exactly what Bitcoin needs."

Only 1 megabyte of transactions can be processed at any one time in the former Bitcoin chain, leading to delays.

"Demand for Bitcoin has been so high in recent months, that those creating the cryptocurrency can't keep up, slowing transactions," Iqbal Gandham, U.K. Managing Director at eToro, said in a press statement.

"For bitcoin to continue to scale and have the potential to become a globally used currency, this slowdown in transactions has to be addressed."

Bitcoin miners attempted to solve the scaling debate earlier last month by signalling support for SegWit2X. This would introduce "segregated witness" to the block chains, which would move some of the data outside the main bitcoin network to increase its capacity, and later increased the number of transaction to 2 megabytes.

However, some investors, miners and exchanges are unhappy with the proposal and think that it doesn't go far enough.

On August 1, a "user-activated hard fork" took place. Members of the Bitcoin community unhappy with the direction of the digital asset set up an alternative 'node' called Bitcoin ABC.

Nodes are required to send messages across the bitcoin network, but Bitcoin ABC will use a different set of rules, causing the blockchain (the digital ledger which records every bitcoin transaction) to fork and create two separate digital assets: the original bitcoin and Bitcoin Cash.

Bitcoin Cash will increase the transaction limit to 8 megabytes.

"This means that the two sides that were once debating within Bitcoin, can instead apply their different views of what the cryptocurrency should be in two different blockchains," said Hayter.

"So while this is a development that sparked from previous disagreements, it may come to end the scaling debate once and for all."

Bitcoin Cash will have all the history from the old blockchain, so investors with bitcoin tokens will receive the same number of tokens on the new blockchain.

However, even though someone who has 100 bitcoins will still have 100 Bitcoin Cash the true value of the Bitcoin Cash, in dollars, will be just 0.103 of that of Original Bitcoin, that is, the original Bitcoin is worth (as of today) $2778.39 while Bitcoin Cash on the website Coin Market Cap are just $288.35.

Now the value of the Bitcoin cash can still rise, it is after all, for all intents and purposes, a separate entity now.

 If investors feel that it is a more compatible and viable currency and if more countries, financial institutions , countries and businesses accept it as a means of exchange of goods and services, the value will rise.

However, as of now, the more widely accepted and viable cryptocurrency is the original bitcoin.

 


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