For the past few months, the biggest news in the Bitcoin community has been the impending hard fork. There was infighting in the community as to how the scaling issues that were occurring with Bitcoin should be handled, and August 1st, 2017 was set as the date that would trigger a split in the currency.
As a result of this fork, there are now two currencies where there was once one. A new cryptocurrency called Bitcoin Cash (BCC or BCH) was created. With BCH, the block size has been increased in order to allow more transaction to be performed in the duration of 10 minutes (one block).
Prerequisite to the Hard Fork
Before BCH, the transaction fees were becoming much too high to allow any small trades on the platform. This was because of the high demand, but a limited supply of transactions that could be “settled” in each block. By increasing the block size, the supply has increased, and the transaction prices are expected to decrease.
Bitcoin Cash gets its name from the hope that it will be able to be treated like cash and have minimum transaction fees rather than being only appropriate for large transactions as Bitcoin currently is. The ability to be treated like cash is one of the qualities that would allow a cryptocurrency to be adopted into the mainstream, which is why this was such a point of contention.
The debate within the community was largely around how they should go about fixing the scalability issues with Bitcoin. One faction believed the best way to do this was to increase the block size and another thought that speeding up the verification of transactions was the best way. Whenever you have two very passionate groups arguing, it is unlikely that you end up with a clean resolution.
What makes cryptocurrencies different is the ability they have to handle these “multiple factions”. With fiat currencies such as the US dollar or British pound, one person or group of persons makes the decision and the rest of the community or country dealing in that currency has to deal with the results. Cryptocurrencies, on the other hand, can split into new coins.
Many believe that this is a source of instability, and a lot of mainstream news sources called this the end of Bitcoin, but it is actually more of a symbol of the resiliency of the coin. The fork was handled with minimal issues, and everything went according to plan. If there were to be more forks in the future, it is assumed that something similar would happen.
Keep an Eye on the Leaders
In the lead up to the fork, CEX.IO was well-prepared and had a solid plan in place. Anyone that wished to have CEX.IO handle their Bitcoin during the fork was required to deposit all of their Bitcoin at least 12 hours before the hard fork was set to occur. The result was that anyone who wished for CEX.IO to handle the hard fork for them ended up with both Bitcoin and Bitcoin Cash.
CEX.IO is also one of the few exchanges to offer trading of BCH and has been executing a lot of trades in the aftermath of the fork. Coinbase has currently elected not to offer the option to trade BCH, so this has opened up a huge strategic opportunity for CEX.IO.
What’s the Next Step?
Bitcoin still has its fair share of issues to handle in the future. Many see the next big issue being a number of transactions waiting to be settled. There is estimated to be 200,000 transactions that have not been properly settled in the blockchain yet. This has happened because transactions are being done more quickly than each block can process them, so some get left behind.
The result is that many elect to pay a higher transaction fee in order to speed up the settlement of their transaction, and this makes it more difficult to picture someone buying a coffee with Bitcoin. Compounding these issues is the fact that all the exchanges that process Bitcoin transactions have a ledger of their own in order to get around the settlement issue. If they were to ever cease operations, all of these transactions would be nullified. This is why it is essential to use large and trustworthy exchanges such as CEX.IO.
Bitcoin has proven itself to be resilient thus far, and there is no reason to think this won’t continue in the future. With the creation of BCH, one major debate has been resolved in a democratic way. There are still many tests that Bitcoin must pass before being accepted into the public sphere as a common medium of exchange, but there is no reason to fear.