Bitcoin likely to fork today

Chinese miners are pushing for the split.

 

In a significant development, the underlying code for bitcoins is likely to split on Tuesday and create a clone called “Bitcoin Cash”; this is likely to provide windfall gains to the holders of the cryptocurrency.

This initiative is being led by a small group of mostly Chinese bitcoin miners who earn in bitcoins for their contribution of computing power to the bitcoin network. They are unhappy with the proposed improvements to the technology underlying the digital currency.

They have thus initiated what is known as a “fork”, wherein a blockchain, think of it as a public ledger of all bitcoin transactions splitting into two paths, which is set to go active on August 1.

If this were to happen, it would essentially create a competitor for bitcoin.

There is an element of uncertainty surrounding the happening of the fork; if it does happen it is not clear what will be the worth of the new bitcoins.

“This is somewhat like a stock split,” said Jeff Garzik, co-founder and CEO of Bloq, a blockchain company. “You go to sleep with 100 bitcoins and wake up in the morning with 100 bitcoins plus 100 ‘Bitcoin Cash’, a new token.”

Two weeks ago, Bitcoin averted a split when its software developers and miners agreed to implement a software upgrade called the Bitcoin Improvement Proposal (BIP) 91.

BIP 91 was significant in terms of being the first step toward implementing a larger effort to upgrade the code underlying currency through a software called SegWit2x, which is expected to make the bitcoin network faster at processing transactions of the virtual currency.

Miners are a powerful segment of the bitcoin community, who provide computing power to validate information on the blockchain. Since bitcoin is powered by open-source code, any group of coders can use it to create clone coins.

Already Bitcoin Cash futures are being trading on certain exchanges at around $282.40. As per coinmarketcap.com, Bitcoin traded at $2,806.27.

“We do not want to support any behavior whereby anyone can potentially split the bitcoin blockchain and effectively create free money out of nothing,” said Greg Dwyer, head of business development at BitMEX.

According to two large bitcoin exchanges, Bitfinex and Kraken, they will allow users to trade Bitcoin Cash and will credit them with the same amount of the new token if the fork does happen today.

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