Split Into Two Bitcoin Camps Will Occur

Announcements, Event, FinTech, Group, Investing, News, Regulation | July 26, 2017 By:

A group backing a different form of bitcoin blockchain adjustment has announced that they are moving forward with an offering that will split bitcoin into two competing camps. The new coin that will be created, called “Bitcoin Cash,” (or BCC, as opposed to the current bitcoin BTC) will be available next week.

The move creates a problem that just a few days ago appeared to be solved, and continues a bitter war between various segments of the decentralized development community.

On one side, a large group of bitcoin miners has alreadysignaled support for SegWit2x, a software modification that slightly expands the bitcoin blockchain and will allow for faster transactions. That support – called the User Activated Soft Fork, or UASF – was supposed to avoid the split into separate coin camps that happened with ethereum.

However, another group of bitcoin holders has been dissatisfied with the SegWit2x solution, and now has opted to take its chances and fork into a new blockchain, creating another version of bitcoin. That plan is referred to as the User Activated Hard Fork (UAHF).

Whether the BCC plan will prove successful is a toss-up among industry observers, but confusion and unforeseen problems are likely, at least in the early stages of the split. It is also uncertain if the new BCC chain can sustain itself and become economically significant, like Ethereum Classic has become.

For the moment, bitcoin holders will watch to see which companies will back Bitcoin Cash, which is variously known as BCC, UAHF, or Bitcoin ABC. The original plan upon SegWit2x’s August 1 activation was for participating miners to ignore blocks that didn’t activate the software in order to avoid a chain split. However, by creating a new chain on August 1, Bitcoin Cash will follow its own path, one featuring an 8MB block size, no SegWit and no RFB support, with at least some replay protection. All funded bitcoin private keys at the time of the fork will thereafter control an equal amount of Bitcoin Cash on the new network.

BTC transactions made on the BCC chain will not be replayable on the main Bitcoin network. This means that if you send BCC to an address using Bitcoin ABC or some other Bitcoin Cash client, that transaction will not also cause an equivalent amount of Bitcoin (BTC) to be spent to that same address on the BTC chain.

Some observers cheered the development. Entrepreneur Roger Ver told the New York Times that the differences between the various bitcoin camps are too great to be reconciled.  “I actually think it would be a good thing if there is a split,” he said. Ver has been against the SegWit2x activation and will support the split-off in his companies.