All you need to know about the BTC (Bitcoin) and BCH (Bitcoin Cash) war
What is Bitcoin?
Believed to be invented by the person named Satoshi Nakamoto (whose identity is actually anonymous), Bitcoin is a cryptocurrency with no external control. The transactions between two parties are verified through network nodes and the record of the same is maintained in a public ledger called blockchain.
With no physical existence, the balances reflect on the public ledgers in the cloud. Since there is no regulatory body that governs the bitcoin, it is not categorized as legal tender. Despite this, Bitcoin is gaining progressive popularity.
What is Bitcoin Cash?
Created on August 2017 via the fork of the Bitcoin network, Bitcoin cash is a hard form of Bitcoin and is generally referred to as the altcoins. Bitcoin cash provides scope for more transactions to be processed by increasing the size of blocks.
Back in 2009 when bitcoin entered the market, its prospective popularity was not estimated. Increasing value of bitcoins demands an equal increase in the block size as blocks reaching the maximum limit can lead to delayed transactions.
How Bitcoin Cash manages the block size?
Bitcoin Cash manages the block capacity to meet the present demand, by increasing the block size on the one hand and removing the SegWit code to free up the block space. Bitcoin Cash has effectively increased the block limit from one megabyte i.e. approximately 2,50,000 transactions per day to 8 MB i.e. around 2 million transactions per day.
What led to the War between Bitcoin and Bitcoin Cash?
If you closely follow the Bitcoin indices, you will notice a consecutive decline in the Bitcoin value and on the other hand Bitcoin Cash’s value has been increasing. The decline of one has been attributed to the increase of the other. This is what has created a war among the both.
The Bitcoin market is never obvious. It’s hard to calculate the actual value of the cryptocurrencies and therefore, has led to a thrift among the investors. Investment in Bitcoin or Bitcoin Cash is an expensive affair as it is a guessing game.
Despite this, the unconventional assets have increasingly gained investor’s attention. Some believe that a war has begun between the both as a medium of exchange and some believe that there is no reason for animosity and both should be complimentary as each currency addresses a different market.
With that being said, some of the small miners fear the popularity of Bitcoin cash. The belief that Bitcoin Cash’s adoption will centralize the power in the hands of big players as the computer power required for Bitcoin cash mining is critically large and is not a cup of tea for small-scale miners.
What is Bitcoin Mining?
Just like any other currency requires generation, Bitcoin is generated through the mining process. All you need is a good internet connection and supporting hardware. It is a process where the complex calculations are performed at the system’s end and compilation of the transactions is done. In return, the miner who completes the complex transactions in the first place gets to place the next blocks in the blockchain and is rewarded with bitcoins.
A close analysis of the indices shows that the bitcoin’s price and the hash rate has significantly decreased over the period of past 30 days. As hash rate signifies the power invested in mining each digital coin, it is of great importance to the investors. Bitcoin’s hash rate has fallen by 50% in the recent past. As a result, chain death spiral is likely to be caused if the value of Bitcoin keeps on falling.
Continuous delays in Bitcoin transaction completion can motivate the investors to dump bitcoin and hence a price drop is seen. As a result, alternative investment option is chosen by the miners which could further worsen the cycle and hence may result in chain death spiral. This could be the case of any decentralized digital currency. For now, it is Bitcoin.
It is probabilistic that improving the transaction processing time and increased block size will ease the market. Since the increasing value of Bitcoin Cash in the market will encourage the game changers to develop alternative coins and the same thrust can then be felt on Bitcoin Cash as there is on Bitcoin nowadays.