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Bitcoin Cash

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Bitcoin Cash
Demographics
Date of introductionForked on 1 August 2017; 7 years ago (2017-08-01)Bitcoin
User(s)Worldwide
Issuance
AdministrationDecentralized

Bitcoin Cash (BCH) is a hard fork of the cryptocurrency bitcoin. The fork occurred on August 1, 2017.[1]

History

On July 20, 2017 Bitcoin Improvement Proposal (BIP) 91, aka Segregated Witness, activated.[2][3][4]

Some members of the bitcoin community felt that adopting BIP 91 without increasing the block-size limit would simply delay confronting the issue and that it favored people who wanted to treat bitcoin as a digital investment rather than as a transactional currency.[5][6] They announced implementation of Bitcoin Cash as a hard fork for August 1. It inherited the transaction history of the bitcoin currency on that date, but all later transactions were separate. Block 478558 was the last common block and thus the first Bitcoin Cash block was 478559.[7] Bitcoin Cash cryptocurrency wallet started to reject BTC block and BTC transactions since 13:20 UTC, August 1, 2017 because it used a timer to initiate a fork. It implements a block size increase to 8 MB. Bitcoin Cash started futures trading at 0.5 BTC on July 23, but dropped to 0.1 BTC by July 30. Market cap appeared since 23:15 UTC, August 1, 2017.[6][8] As of 29 October 2017, one Bitcoin Cash was being traded at roughly 0.084 bitcoin.

On August 9, it was 30% more profitable to mine on the original chain.[9] Even though the fork allows for a higher block size, block generation was so sporadic that the original chain was 920 MB bigger than the chain of the fork, as of 9 August 2017.[9] Due to the new Emergency Difficulty Adjustment (EDA) algorithm used by Bitcoin Cash,[10] mining difficulty has fluctuated rapidly, and the most profitable chain to mine has thus switched repeatedly between Bitcoin Cash and incumbent bitcoin. As both chains use the same proof-of-work algorithm, miners can easily move their hashpower between the two. As of 30 August 2017 around 1,500 more blocks were mined on the Bitcoin Cash chain than on the original one[11] as the high profitability periods[12] attracted a significant amount of miners proportional to the previous total processing power.[13]

A fix for these difficulty/hashrate/profitability fluctuations was introduced on November 13th, 2:06PM UTC.[14] The existing EDA algorithm has been replaced with a new difficulty adjustment algorithm that hopes to prevent extreme fluctuations in difficulty while still allowing Bitcoin Cash to adapt to hashrate changes faster than incumbent bitcoin.

It is important to note that while the alphanumeric address style is the same as the incumbent bitcoin (BTC), that Bitcoin Cash (BCH/BCC) should not be sent to a bitcoin (BTC) address. Like the incumbent bitcoin, Bitcoin Cash addresses can be used more than once, but should not be reused if privacy is a concern. However there are plans to change the address format.[15]

Response from exchanges

Supported Exchanges

In a blog post, SFOX announced they would support Bitcoin Cash trading starting December 01, 2017 to allow customers to easily trade across multiple exchanges. [16]

On November 21, 2017, Bitstamp announced they would support Bitcoin Cash trading starting the first week of December 2017. [17]

Coinbase initially announced that it would not support Bitcoin Cash.[18][19][20][21] This led to consumer backlash and speculation about a class action lawsuit from consumers.[22][23] On August 3, Coinbase announced that it would start supporting Bitcoin Cash transactions by January 1, 2018, and that users who had any amount of bitcoin at the time of the fork were credited an equal amount of Bitcoin Cash though they could start transacting in it only once Coinbase was ready to transact.[24][25][26]

China-based ViaBTC began allowing trading in Bitcoin Cash before it went live.[18] Kraken[27] and Bitfinex[28] announced that they would support Bitcoin Cash.[29][20] On August 4, 2017, Bitfinex officially opened up Bitcoin Cash deposits and withdrawals.[30]

Unsupported Exchanges

BitMEX,[31] and Exodus announced that they would not support Bitcoin Cash.[20][32][33]

Poloniex had not announced a decision as of July 2017, but said that they were making a decision keeping the security of users' bitcoins in mind.[34][32] In mid-August Poloniex began trading Bitcoin Cash.[35]

Supporters

Notable supporters of Bitcoin Cash (both the idea of increasing the block size and the split of the cryptocurrency) include Tokyo-based investor Roger Ver, Jihan Wu from Bitmain, Rick Falkvinge, John McAfee, Kim Dotcom, Calvin Ayre and Gavin Andresen.[5]

Tax implications

Americans wondering whether their acquisition of Bitcoin Cash is taxable as income, or not taxable as a division of property, have received no guidance from the Internal Revenue Service.[36]

See also

References

  1. ^ Tepper, Fitz (2 August 2017). "WTF is bitcoin cash and is it worth anything?". TechCrunch.
  2. ^ Crosbie, Jack (July 26, 2017). "When Will Bitcoin Fork, and What's It Mean for Crypto's Future? A fork could change the equation for thousands of bitcoin users". Inverse. Retrieved July 29, 2017. {{cite web}}: Italic or bold markup not allowed in: |publisher= (help)
  3. ^ Aaron van Wirdum (July 20, 2017). "BIP 91 Has Locked In. Here's What That Means (and What It Does Not)". Bitcoin Magazine. Retrieved July 29, 2017. {{cite web}}: Italic or bold markup not allowed in: |publisher= (help)
  4. ^ Hertig, Alyssa (July 21, 2017). "BIP 91 Locks In: What This Means for Bitcoin and Why It's Not Scaled Yet". CoinDesk. Retrieved July 29, 2017.
  5. ^ a b Popper, Nathaniel (2017-07-25). "Some Bitcoin Backers Are Defecting to Create a Rival Currency". The New York Times. ISSN 0362-4331. Retrieved 2017-07-28.
  6. ^ a b Wong, Joon Ian. "There's a strange new twist in bitcoin's "civil war"—and a way to bet on the outcome". Quartz. Retrieved 2017-07-28.
  7. ^ "Fork Watch: Block 478558 Initiates 'Bitcoin Cash' Split – First Blocks Now Mined - Bitcoin News". 1 August 2017.
  8. ^ "Bitcoin Cash (BCH) price, charts, market cap, and other metrics - CoinMarketCap". coinmarketcap.com.
  9. ^ a b "Coin Dance - Bitcoin Cash Block Details". 8 August 2017. Archived from the original on 8 August 2017. {{cite web}}: Unknown parameter |deadurl= ignored (|url-status= suggested) (help)
  10. ^ "Technical specifications". 12 November 2017 – via GitHub.
  11. ^ "fork.lol". fork.lol.
  12. ^ "fork.lol". fork.lol.
  13. ^ "fork.lol". fork.lol.
  14. ^ "Bitcoin ABC - Home". Bitcoin ABC - Home.
  15. ^ "linuxfoundation.org". linuxfoundation.org.
  16. ^ "What is Bitcoin Cash?". SFOX. November 22, 2017. Retrieved November 22, 2017.
  17. ^ "BITCOIN CASH (BCH): TRADING TO BE LAUNCHED". Bitstamp. November 21, 2017. Retrieved November 22, 2017.
  18. ^ a b Vigna, Paul (August 1, 2017). "Bitcoin Rival Launches in Volatile First Day. Bitcoin Cash trades at about 10% of a bitcoin's value, or around $270". Wall Street Journal. Retrieved August 5, 2017. {{cite web}}: Italic or bold markup not allowed in: |publisher= (help)
  19. ^ Kelly Philips Erb (July 30, 2017). "Bitcoin Shift Could Cause Tax Headaches For Some Users". Forbes. Retrieved August 5, 2017. {{cite web}}: Italic or bold markup not allowed in: |publisher= (help)
  20. ^ a b c "Bitcoin Technology Faces Split, May Create Clone Virtual Currency". Reuters via New York Times. July 31, 2017. Retrieved August 5, 2017. {{cite web}}: Italic or bold markup not allowed in: |publisher= (help)
  21. ^ Farmer, David (July 27, 2017). "Update for customers with bitcoin stored on Coinbase". Coinbase. Retrieved July 29, 2017.
  22. ^ Roberts, Jeff John (July 31, 2017). "Coinbase Faces Backlash, Legal Risk Over Bitcoin Cash". Fortune. Retrieved August 4, 2017. {{cite web}}: Italic or bold markup not allowed in: |publisher= (help)
  23. ^ Schwarzbaum, Erica (August 1, 2017). "Coinbase Is Courting Serious Legal Trouble By Not Supporting Bitcoin Cash". Benzinga. Retrieved August 4, 2017.
  24. ^ Farmer, David (August 3, 2017). "Update on Bitcoin Cash". Coinbase. Retrieved August 3, 2017.
  25. ^ Roberts, Jeff John (August 3, 2017). "Coinbase to Let Users Withdraw Bitcoin Cash After Outcry". Fortune. Retrieved August 4, 2017. {{cite web}}: Italic or bold markup not allowed in: |publisher= (help)
  26. ^ Russell, Jon (August 3, 2017). "Coinbase says it will support Bitcoin Cash after all — but it isn't committed to trading yet". TechCrunch. Retrieved August 4, 2017. {{cite web}}: Italic or bold markup not allowed in: |publisher= (help)
  27. ^ "Bitcoin Cash and a Critical Alert for Bitcoin Margin Traders". Kraken (bitcoin exchange). July 27, 2017. Retrieved July 30, 2017.
  28. ^ "Bitcoin Cash (BCH) Token Distribution". Bitfinex. July 27, 2017. Retrieved July 30, 2017.
  29. ^ Lujan, Sterlin (July 27, 2017). "Fork Watch: 'Bitcoin Cash' Support Grows as August 1 Draws Near". Bitcoin News. Retrieved July 30, 2017.
  30. ^ Dinkins, David (August 4, 2017). "Price of Bitcoin Cash Plummets as Exchanges Open Deposits". CoinTelegraph. Retrieved August 5, 2017.
  31. ^ Hayes, Arthur (July 25, 2017). "Policy on Bitcoin Hard Forks". BitMEX. Retrieved July 29, 2017.
  32. ^ a b Redman, Jaime (July 27, 2017). "Fork Watch: These Bitcoin Exchanges Will Not Support 'Bitcoin Cash'". Retrieved July 29, 2017.
  33. ^ Buntinx, JP (July 28, 2017). "Most Major Exchanges Will not Support Bitcoin Cash". Live Bitcoin News. Retrieved July 29, 2017.
  34. ^ "OUR PLANS TO HANDLE POTENTIAL BTC NETWORK DISRUPTIONS". Poloniex. July 24, 2017. Retrieved July 29, 2017.
  35. ^ Buntix, JP (14 August 2017). "Bitcoin Cash is now Trading on the Poloniex Exchange". LIVE BITCOIN NEWS. Retrieved 17 August 2017.
  36. ^ Saunders, Laura (25 August 2017). "No One Knows How Much to Pay in Bitcoin Cash Taxes". The Wall Street Journal. Retrieved 25 August 2017.
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