I am sure if you are reading this, you might know about the current Bitcoin scaling issue. This issue is not new, but it seems like it is about to reach its climax.
Multiple users, miners, and developers are clinging to multiple solutions to solve the overarching Bitcoin scaling debate. And everyone is deciding which side to join in the chaotic situation of this upcoming Bitcoin fork.
- Best Bitcoin Cash Wallets (BCH): Free Money For Every Bitcoiner! WooHoo!
- Where To Sell Bitcoin Cash (BCH) [Full list of Best BCH exchanges]
Which side are you joining?
If you don’t understand what I am talking about, check out the scaling debate and the fork issue here.
So here are some technical jargons you may have seen:
- UAHF-User activated hard fork
- UASF-User activated soft fork
- The New York Agreement
- BIP 141
- BIP 91
- BIP 148
These don’t help normal users and do little good. In my opinion, this has only led to a lot of the present day’s FUD (fear, uncertainty, and doubt) in every Bitcoiner’s mind who doesn’t understand these jargons.
So I thought of covering the latest on this Bitcoin drama without getting deep into these technical jargons for now. (Soon, I will publish a separate guide on all these jargons related to the BTC fork…)
For now, you should just know that our original dearest- Bitcoin (BTC), which Satoshi Nakamoto created, is likely going to split on August 1, 2017.
The new split of Bitcoin will be called Bitcoin Cash.
Wondering what that is?
All you need to know about Bitcoin Cash (BCH)
What is Bitcoin Cash?
Bitcoin Cash is a new cryptocurrency denoted, as of now, as BCH.
A group of influential miners, developers, investors, and users who are against the agreed consensus (aka BIP-91 or SegWit2x) have decided to fork the original Bitcoin blockchain and create a new version called “Bitcoin Cash”.
The official Bitcoin Cash’s website defines itself as:
Bitcoin Cash is peer-to-peer electronic cash for the Internet. It is fully decentralized, with no central bank and requires no trusted third parties to operate.
The official date and time for the fork is:
Fork Date: 2017-08-01 12:20 p.m. UTC
For your information, it will be a miner activated hard fork (aka MAHF) that will happen without the agreement of a majority of miners or hash power.
Benefits & Features of Bitcoin Cash
Bitcoin Cash will be a fork of the original Bitcoin blockchain with some changes and additional features here and there.
Mind you, these changes might look small and insignificant, but in reality, these small things have been the reason for a massive debate on Bitcoin scaling for many years.
1. New Name – With a new name to Bitcoin’s offspring, i.e. Bitcoin Cash, it seems to appeal to a stratum of users who believe that Bitcoin should be a cash-like thing that’s easy to exchange with minimal or no fees. Suffixing ‘Cash’ to Bitcoin encourages this usage.
2. Block Size Limit Increase – A certain group of users, miners, and developers have always advocated for a bigger block size in BTC. Now with Bitcoin Cash, they will start off with an immediate increase of the block size limit to 8MB.
3. Replay and Wipeout Protection – If and when BCH splits, they have a well thought out replay and wipeout protection plan for both chains. With this, everyone involved will have minimum disruptions and both the chains can peacefully coexistence from there.
4. New Transaction Type – As part of the replay protection technology, Bitcoin Cash has introduced a new transaction type with additional benefits such as input value signing for improved hardware wallet security, and elimination of the quadratic hashing problem. (Source-https://www.bitcoincash.org/)
Websites from where you can buy Bitcoin Cash:
Is Anyone Supporting BCH?
You may think that no one would support this new kid in the crypto market. But that’s not true!
BCH is getting enough support from users, miners, and developers. And in reality, to start with, you only need support from these key players.
Moreover, it wouldn’t be fair to dismiss a currency which has not yet been born and has yet to be traded in the market.
For your information, CoinMarketCap lists the futures options of Bitcoin Cash.
Notable Supporters (Exchanges, Mining Pools, and Wallets)
- Bitmain – This is the Chinese miner manufacturing company which owns AntPool, the world’s largest mining pool with 23% hash power. They have also announced that they will be supporting BCH mining.
- Bitcoin.com (Roger Ver’s Pool) – They operate a small mining pool and have announced that they are open to supporting Bitcoin Cash in the case the user demand surges.
Together, these four pools in total make 30% of the entire hash power, which is not small. So far, there is no official confirmation that they will be giving all of their hash power to BCH mining. But if that happens, BCH is here to stay.
- Best Bitcoin Cash Wallets (BCH): Free Money For Every Bitcoiner! WooHoo!
- Where To Sell Bitcoin Cash (BCH) [Full list of supported BCH exchanges]
What does it mean for Bitcoin (BTC) holders?
As the official website of Bitcoin Cash states:
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.
So it means that if you hold Bitcoins, after the split/fork, you will have both BTC and BCH balances; in other words, your coin holdings will double.
You may think this is a good thing as your value will also double.
Note: Doubling of coins does not mean doubling of value. The value of both BTC and BCH will be determined after the split based on demand/supply in the market and on user sentiments.
What can happen and what do you need to do?
You do not need to do much, but you need to be updated and agile about all of this. If you want access to your BCH coins, you will require your private keys.
And here’s the important part: Both of your coins (BTC and BCH) will have the same private keys.
Moreover, due to this fork/split, another problem called Replay Attacks can happen.
Though, in their FAQ section, Bitcoin Cash says that they have replay protection in place, but we are not sure how effective it is as it is still not been tested in live.
How is transaction replay being handled between the new and the old blockchain?
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.
So to avoid replay attacks and access your BCH coins, we suggest you take care of the following things:
- Avoid transactions for some days till the dust settles to avoid replay attacks.
- Keep your Bitcoin private keys with you, not in a third party exchange like Coinbase.
- Use hardware wallets like Ledger Nano S and Trezor if you can, to access your Bitcoin Cash ( aka BCH coins). Both wallet providers have said that they would support BCH in case there is user demand. Read Ledger Nano S guide and BCH guide here.
- If you don’t have a hardware wallet, use software wallets like Jaxx or Exodus to control your private keys.
- You can also use a paper wallet or brain wallet.
- If you hold your keys in a paper wallet or software wallet, wait for instructions from them on how to access your BCH coins.
Future of Bitcoin Cash
Predicting or commenting on the future of Bitcoin Cash is impossible.
The only certain future prediction as of now is that if you owned any Bitcoin before the fork on 2017-08-01 12:20 p.m. UTC, then you will surely have the same amount of BTC and BCH after the fork.
For more details on how you will be able to access BCH, keep an eye on our blog.
Note: This last part of the article is for advanced users who are aware of Bitcoin’s fork-ology terms. For non-technical users, I will be explaining terms such as Segwit2x, UASF, UAHF, etc. in an another article. For now, I have shared with you actionable things to avoid any loss in case a fork happens. So if you wish, you may skip this part.
Continuing forward …..on how we reached here!
Some of you who are aware of some dynamics of the BTC fork might be thinking why I am talking about this fork now. Well, we heard a few days back the news that BTC isn’t splitting due to BIP 91 or SegWit2x or BIP 141 or whatever.
Well, that was true, and it is still sort of true. But, there was another proposal on how to scale Bitcoin called BIP 148 (aka UASF) which intended to activate SegWit on August 1, 2017, without seeking the majority of miners by updating their full node software.
In response, Bitmain (and others) came up with a contingency plan to save some miners and users who otherwise would have gotten wiped out in case BIP 148 was activated. They called this plan a UAHF (user-activated hard fork). That means they will be supporting and implementing BCH.
But, as BIP 91 (the first part of SegWit2x) is already locked in and on the path of activation, it means that there would be no need for Bitman’s contingency plan because BIP 148 won’t be activated now. On the other hand, BIP 148’s original aim is already being achieved by the activation of BIP 91 (or BIP 141 or SegWit2x), so there is no point, it seems, in activating it.
However, now it appears that this plan will still be carried out on August 1, 2017, because this group is fundamentally against the idea of SegWit (or SegWit2x) and sees a block size increase as the only option.
The only ray of hope to stop this fork seems to be that Bitcoin core developers, miners, users, etc. who voted in favor of BIP 91 need to suddenly agree on August 1 to reject SegWit and accept the increasing of block size to 8 MB. And believe me, this is very unlikely.
August 1st will be a historic day in the lifetime of Bitcoin and its users. If people find BCH more profitable and appealing, it could take off, or if it turns out to not offer anything useful to the world, it could just die an unnamed death.
But no one knows…
So until that time, stay tuned at CoinSutra to keep with the Bitcoin revolution!
For further reading: