What is Bitcoin Cash and Why Is It Happening?
Bitcoin Cash (BCC) Explained
Bitcoin Cash, the new sudden announcement that they’ll go ahead with a fork on August 1 shocked a lot of people. The Forking of Bitcoin which was believed has averted due to lock in of BIP 91, may happen on August 1.
Bitcoin Cash is explained in this article, along with how it affects existing Bitcoin (BTC) users and how users should prepare for August 1,2017.
What is Bitcoin Cash?
Bitcoin Cash is a peer-to-peer electronic cash for the Internet. It is fully decentralized, with no central bank and requires no trusted third parties to operate.
Bitcoin Cash is seeking to be a cryptocurrency that is focused on transaction capacity.
How Is Bitcoin Cash (BCC) different from Bitcoin (BTC)?
Bitcoin Cash is basically the continuation of the original Bitcoin project i.e., a peer-to-peer decentralized digital cash.
Bitcoin Cash is the fork of the original Bitcoin Blockchain ledger with upgraded consensus rules that allow it to grow and scale up.
Features of Bitcoin Cash
Bitcoin Cash offers three new features:
First, it offers a larger block size of 8MB as compared to 1 MB in Bitcoin (BTC) Blockchain.
Second, it offers replay and wipeout protection. The transaction signature is slightly different and the forking block has to be greater than 1MB.
Third, it offers a way to adjust the proof-of-work difficulty quicker than the normal 2016 block difficulty adjustment interval found in Bitcoin. It means the difficulty level will adjust pretty quickly should there be a low hash rate.
Fourth, it removes SegWit, a code change that might activate on the bitcoin blockchain by the end of August.
Why is Bitcoin Cash Fork Happening?
Various Bitcoin enthusiasts around the world thought Bitcoin will fork only if BIP148 triggers and splits the
When BIP91 locked-in and activated ahead of BIP148, which is scheduled for August 1, most people in Bitcoin world assumed this would prevent the so called User-Activated Hard Fork (UAHF) from triggering.
But, it looks like Bitcoin Cash supporters had other ideas.
After the continuing scaling drama from the past few years, Bitcoin community cheered up their glasses when BIP91 locked in last week. Though Segwit increases transaction capacity, by removing witness(signature) from the transaction and segregating it in another block called “Extended Block”, it still did not made everyone happy.
BCC looks like an appeal to the segment of the Bitcoin users that they don’t like Segregated Witness or SegWit.
Who is Supporting Bitcoin Cash?
Most bitcoin companies, mining pools, users and bitcoin developers are showing no interest in Bitcoin Cash. But, there are some eager supporters.
Beijing-based mining firm ViaBTC, which also has around 4% of bitcoin’s computing power, is the major supporter. The firm, which also operates an exchange, and has become the first to list the cryptocurrency.
Viabtc also has plans to launch a new mining pool dedicated solely to Bitcoin Cash.
At the time of writing this article, Bitcoin cash was being traded around 0.16 BTC per Bitcoin Cash.
Bitcoin Cash has attracted support from some users who want a block size increase, as well as developers of other proposals such as Bitcoin Classic and Bitcoin Unlimited.
How will Bitcoin Cash affect existing Bitcoin users?
Firstly, Bitcoin cash is a permanent hard fork of Bitcoin (BTC). This means that if you own Bitcoin and you control your private keys prior to the fork on August 1, 2017, 12:20 UTC, you will have the same amount of Bitcoin and Bitcoin Cash after the fork.
It is because Bitcoin Cash is a fork of the ledger, that means you own the same amount of Bitcoin Cash as you did Bitcoin at the time of the forking block. However, if your Bitcoins are stored by a third party such as an exchange, or any other place where you don’t control your private keys then you must inquire with them about Bitcoin Cash.
Many exchanges, including Coinbase and Poloniex are not prepared for Bitcoin Cash.
Poloniex has also announced that it won’t support any potential Bitcoin Forks and shall not list Bitcoin Cash in near future.
Exchanges or third-party bitcoin storage/wallet services providers may or may not give you your Bitcoin Cash. There is no way to know if they can get everything set up in time to be able to give you the Bitcoin Cash that you are entitled to receive.
Secondly, all hard forks possses two risks: replay and wipeout attacks. Wipeout is not as much a risk since this is a permanent fork. Replay protection is provided by Bitcoin Cash.
Bitcoin Cash transactions use a new flag SIGHASH_FORKID, which is non standard to the legacy blockchain. This prevents Bitcoin Cash transactions from being replayed on the Bitcoin blockchain and vice versa.
Finally concluding, the Bitcoin Cash has created more tensions in the cryptocurrency space rather than the excitement of outcomes of activation of SegWit.
KryptoMoney.com advises it’s users to store your Bitcoins in any wallet in which you own your private keys and don’t store on exchanges, third party wallet service providers before August 1, 2017 in order to avoid any potential losses.
KryptoMoney.com publishes latest news and updates about Bitcoin, Cryptocurrencies and Blockchain Technology.
Rohit Kukreja is a Commerce graduate with Financial Markets expertise involving Stocks, Forex, Futures & Options Market and now Bitcoins & Cryptocurrency Markets. Blockchain Enthusiast but not a techie, Rohit is an active member of various Blockchain & Crypto communities all over India.