It's not over until it is over. The disagreement in the bitcoin community has given birth to a fork - Bitcoin Cash, which comes to life on the first of August. It will be the first time bitcoin will go through a hard fork. Everyone has their ears to the ground, waiting cautiously and expectantly. The future begins now.
Bitcoin, for the past week, seems to be moving in a safe direction with the overall agreement (though grudgingly in some quarters) in the community on how to make it scale through the adoption of Segwit2x- until Bitcoin Cash made a huge splash in the trembling waters.
The price fell again but is now rising.
By the look of things, the civil war in the community is far from over. A few players are still brandishing their swords while the majority have sheathed theirs, howbeit some have got their twitching hands on the sword handle, reading to draw any moment should things go south.
Now, let me speak English.
Bitcoin saw a fantastic leap last week when 95% of miners signalled adoption of Segwit2x, and it seems as if a hard fork, which everybody wanted to avoid, would be averted.
The agreement in the community was that miners would activate Segwit by August 1st and in return, the size of the bitcoin block would be increased from 1MB by November to 2MB and 4MB in 2018. This is what they've wanted all along.
However, some bitcoin players are unhappy about how things are. They probably don't believe the bitcoin block size will be increased come November, as agreed. So they have decided to take matters into their own hands.
On August 1, at precisely 12:20 UTC, the "disgruntled" group said they will split off from bitcoin, creating a new cryptocurrency called Bitcoin Cash which won't run Segwit and will have a block size of 8MB. Here's part of what they said:
"Those who do not want to follow our lead are free to use whichever chain they like. Miners implementing the UAHF will safely split away, creating a new version of Bitcoin called “Bitcoin Cash." All current Bitcoin holders will automatically own Bitcoin Cash. The existing ledger at the time of the split is preserved, thus users retain any balances they had before the split.”
A developer who is contributing code to an implementation of Bitcoin Cash, Calin Culianu, believes there are others like him who don't like Segwit.
”If the Segwit2x agreement fails to implement the 2x part, which is not entirely unreasonable, and only ends up being being basically SegWit without the 2x, many miners will likely defect to Bitcoin Cash", he said according to Coinbase.
Beijing-based mining firm ViaBTC, which controls 4% of bitcoin's computing power, is leading this group along with Bitcoin.com, Okcoin, Huboi, LiveCoin BTCC and Bithumb. All these players have a very small share of the network's computing power.
Coinbase, Itbit, Bitmex, and Bitstamp are against the idea with Poloniex undecided.
Antpool, which contributes 20% to the network's computing power is sitting on the fence. It is not writing off Bitcoin Cash, and it is not wholly supporting Segwit2x as well.
Also, a futures market was launched for Bitcoin Cash with the coin rising to almost $900 after opening at $500. It has however been falling. It's now below $400, but many don't expect it to hit zero.
So, what are the implications of this hard fork?
These 3 events would likely happen when the blockchain splits:
1. Altcoins. Bitcoin could fork in many ways, giving rise to several versions of the cryptocoin. Also, other cryptocoins like Ripple and Litecoin could start rising as people shift away from bitcoin to them.
2. Price fall and volatility. There's going to be competition in the market. So, naturally, the coin will depreciate. People at the moment are already emotional, and they will price the coins - both the original bitcoin and its alternatives. People will also move their coins around which will cause a lot of price movements as these altcoins compete with each other.
3. A new, better bitcoin could be the outcome. After the dust settles, a much better cryptocoin could rise from the ashes like a phoenix that will agree with everyone in the community.
So, what should you do to prepare for the coming Bitcoin Cash hard fork?
Immediately move your coins out of the exchanges unless they specifically state that they will honour the fork. Get them off the exchanges and put them in your wallet. Also, hold on to the private key of your wallet so that when the fork eventually happens, you'll be safe.
Now, when the market opens on August 1st you should be able to sell off your bitcoin cash- at a profit or a loss, but Culianu is certain it will be at a profit.
”My secret gut feeling is Bitcoin Cash may surprise all of us. It is not entirely impossible that it will be the de-facto bitcoin after a few months. The much roomier 8 MB block space is attractive." he said.
And he's right. If the Segwit2x deal falls though, the majority of miners will turn to bitcoin cash as it's what they've always wanted. When this happens, the price will skyrocket.
However, these are what could happen. A more interesting turn of events could take place and wow everybody. So, until August 1, keep your wallet, your seed, and your private key safe.
P.S: Bitcoin wallet MultiBit has been discontinued. If you have coins with them, you'll want to move them to another wallet.