Bitcoin’s focus was major at the beginning of August, as the digital currency split into two separate currencies – Bitcoin and Bitcoin Cash. After long lasting debates over how to scale the digital currency called Bitcoin, Individuals have decided to create a brand new currency called Bitcoin Cash. It’s a bit complicated for those who aren’t in the “Bitcoin Rush”. Basically- ideological, political and technological debates about growing Bitcoin have come to a breaking point. Some say that an entirely new currency called Bitcoin Cash could help scale Bitcoin and make it more accessible to the masses. “The course of the summer has been a battle between competing visions,” said Zaki Manian, an independent expert of Crypto-currencies.
If we want Bitcoin to eventually be a simple global payment system for mass use worldwide, it must get over its growing process. For some, the solution to this is creating a whole new currency using a comparable software.
Reading between the lines –
We’ll begin with why an expansion of Bitcoin isn’t an easy task.
Bitcoin is built on a blockchain. The Bitcoin’s blockchain is a public ledger containing all the transaction data from any Bitcoin user. Transactions are added to “blocks” or the links of code that make up the chain, and each transaction must be recorded on a block. But the situation is that the blocks are full, and it is slowing transactions down drastically.
At the moment, there are about 1,700 transactions that can be saved per bitcoin block, at about three transactions per second, Manian said.That’s not a huge sum. (Visa, for example, processes thousands of transactions every second.)Because the bitcoin blockchain is becoming too congested, someone could purchase products using bitcoin, but hours could go by before it’s approved.
The Bitcoin community came together and tried to solve this problem by enforcing a new guideline to its software called “Segregated Witness”. The change would let people put more transactions on each block. This is called a “soft fork” in technical terms and would not result in an entirely new cryptocurrency. The new change took place last month.
For some, this was not sufficient. And that’s where Bitcoin Cash came in.
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The creation of Bitcoin Cash is what is called a “hard fork”.The creators launched a completely new software that allows much more transactions per block (up to eight times to be exact). Meaning – Bitcoin Cash could process more transactions, and do it faster than its predecessor. However, Bitcoin Cash and Bitcoin are not evenly valued. As of this writing, a unit of Bitcoin Cash is valued around $605, but that’s not even close to the staggering $4,315 one Bitcoin unit’s worth.
Both Bitcoin and Bitcoin Cash puts its trust on their community. This move could only be effective if people decide to create these blocks for the Bitcoin Cash blockchain – with the first one created on August 1st.
What does the split mean for consumers and businesses?
Any Bitcoin owner will also own the same number of Bitcoin Cash units.However, some Bitcoin exchanges (where people store their Bitcoins) won’t accept Bitcoin Cash, and that could potentially cripple the broad adoption of the new digital currency.
In order for Bitcoin Cash to be used for mainstream transactions like buying coffee, businesses will have to accept it, regardless of whether they already accept Bitcoin or not.
“This will be informative for how we deal with these systems in the future,” Manian said. “Without a doubt, this is going to be a blueprint, and we are going to learn a lot from this process.”