Bitcoin implemented a hard fork on Aug. 1, and a new coin, Bitcoin Cash (BCH), was created over concerns that Bitcoin (BTC) was too slow. People with Bitcoin stored in their wallets at the time of the fork received an equivalent amount of Bitcoin Cash.
A hard fork is when a cryptocurrency’s underlying protocol is rewritten so that new blocks in the chain are fundamentally different from the old blocks, with new rules and even new valuations of the currency.
Trevor Koverko, CEO of Polymath, is unconcerned about the fork. “A blockchain fork is essentially a nonviolent, fair, market-based solution to the problem of having too many good ideas to implement at once,” he said in an email. “As weird as this sounds, a fork is a beautiful thing. A fork allows two factions within a project, with differing views and opinions, to both be right.”
Polymath is a technology firm that helps bring security tokens to market by automating the technical and legal functions for offerers.
Unlike the Ethereum fork last year, which was an attempt to save coins for users following a hack, the Bitcoin fork is “not fixing a previous mistake; we are trying to improve our precious protocol,” Koverko said of Bitcoin users. “And the way I see it, it’s working. We have two groups of really smart people who are getting what they want — their own sandbox to play in.”
Alexey Antonov, a financial advisor to SONM, a decentralized worldwide fog supercomputer, hesitates to call the division a fork in the first place.
“The event that occurred can hardly be called a ‘fork.’ While the Ethereum network fork was the result of economic issues, the Bitcoin fork is rather a political measure,” he said.
He explained that most miners on the Bitcoin network “raised no disputes about the future of the network and supported traditional Bitcoin politics” others insisted on the faster transactions that were expected as a result of the split.
As of Aug. 8, Bitcoin Cash was trading at around $340 after peaking at $691 on Aug. 2, according to CoinMarketCap. After dropping below $2,700 on Aug. 1, Bitcoin recovered to over $3,110 by Aug. 5 and was over $3,400 as of Aug. 8.
Antonov believes Bitcoin Cash’s price is too high for it to succeed.
“It’s clear that the fork did not have an adverse effect on the Bitcoin exchange rate and the price is still growing,” he said. “Though it’s unlikely that Bitcoin Cash will be a competitor to Bitcoin, some Bitcoin investors were nonetheless happy to receive free Bitcoin Cash coins in their wallets.”
Simon Yu, CEO of CakeCodes, a Bitcoin incentive platform for app-based games, believes the fork and the ensuing rally around Bitcoin “has brought back confidence in the crypto market … . With the confidence back in the market and the fork situation seemingly resolved, we are very excited about the future of blockchain technology for the community.”
Ryan Taylor, CEO of Dash Core Team, which created a cryptocurrency called Dash, believes investors are underestimating how hard it will be for Bitcoin Cash to gain traction. “There is a long list of currencies that have started with a great deal of market enthusiasm, but failed to gain actual use,” he said.
Tayler noted that the real test for Bitcoin Cash’s potential is whether it can expand “beyond exchanges into actual services.”
“I’ve yet to see evidence of those investments being planned by service providers and merchants. Time will tell, but I don’t foresee that a slightly larger block size is enough to differentiate Bitcoin Cash in this competitive environment,” he said.
— Read Bitcoin’s ‘Hard Fork’ Is Good for Progress on ThinkAdvisor.