Cryptocurrency Definitions: Bitcoin Fork August 2017

On August 1st, 2017, a divergence in the bitcoin blockchain was created. This created a new bitcoin token on the blockchain in addition to the bitcoin from the original chain: Bitcoin cash. Everyone who owned the original bitcoin kept their existing tokens, but also received bitcoin cash tokens on the day of the split. There was no change to the value of the bitcoin from the original chain.

Bitcoin cash was created to help manage transaction processing over the years, focusing on increasing block size. Because the Bitcoin code isn’t handled by a central authority, changes into the code require buy-in from programmers and miners. This consensus-driven approach can lead to proposals taking a very long time to finalize. This has caused groups to create separate blockchain ledgers employing new criteria, called a fork. Several forks, for example as Bitcoin XT and Bitcoin Unlimited, failed to be adopted by a wide audience.

Bitcoin Cash differs from Bitcoin Classic in that it increases the block size from 1 MB to 8 MB. It also eliminates Segregated Witness, a suggested code modification designed to free up block distance by removing certain areas of the transaction. The objective of Bitcoin Cash is to increase the number of trades that may be processed, and supporters hope that this shift enables Bitcoin Cash to compete with the volume of transactions that PayPal and Visa can manage by raising the size of blocks.

Cryptocurrencies are an incredible new and exciting frontier in the financial markets. To prepare yourself to capitalize on this exciting new opportunity, check out our Cryptocurrency Trading Chatroom.

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