Bitcoin is set to split in two, here's what that means

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Bitcoin is set to split in two, here's what that means

This initiative is being led by a small group of mostly China-based Bitcoin miners that get paid in the currency for contributing computing power to the Bitcoin network. What will emerge is a bitcoin rival called bitcoin cash. Eastern on Tuesday, after a two-year ideological and technical battle over the future of the cryptocurrency.

Huobi, one of world's biggest bitcoin exchanges, has confirmed they will list the new cryptocurrency Bitcoin Cash (BCC) for trading on their Huobi.pro exchange. The new cryptocurrency was trading at above $200 on its first day, and today it is rated third by market capitalization, after Bitcoin and Ethereum. This update will (among other things) free up block space by removing signature data from Bitcoin transactions and eventually increase the block size to 2MB. If a fork should occur on or after August 1st, Cryptopia will support the Bitcoin Cash Coin (BCH).

According to data from BTCForkMonitor.info, the split started at around 12:37 UTC, when the blockchain reached block 478,558.

Arthur Hayes, the CEO of BitMex, a bitcoin derivatives exchange, told Business Insider when all is said in done there could be up to four iterations of bitcoin. A fork is a change in the protocol making up the blockchain, therefore creating two different chains; a new chain and maintaining the current chain.

How Much is it Worth?

Q: How will bitcoin cash's value compare with bitcoin's?

When Satoshi Nakamoto published his white paper, which eventually became Bitcoin, I doubt that he consulted any technologists who are responsible for the development and maintenance of electronic currency-trading platforms.

Basically, for every Bitcoin that existed on August 1, an equal amount of Bitcoin Cash was created by the hard fork.

While one can definitely argue over whether Bitcoin's giant 2017 run-up is sustainable, it's harder to question Bitcoin's preeminence in the cryptocurrency realm. Despite this split, Coinbase isn't going to allow users to access bitcoin cash because it doesn't support it.

This has a nuanced implication for Bitcoin owners.

Splitting Bitcoin means devaluing it. This would solve the problem of jam-packed blocks, and consequently speed up transactions times while reducing associated fees.

In the case of both currencies, differences in how the developers wanted to continue running the blockchain system caused a schism which resulted in two different coins.

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