About Bitcoin Cash

What You Need To Know About Bitcoin Cash

Bitcoin Cash’s announcement on Saturday that they intend to promote their fork caught many by surprise. Let’s see what Bitcoin Cash (aka BCC) is, how it can affect us, and what we should prepare for..

Project announcement on Bitcointalk and project website.

What is Bitcoin Cash?

Excerpt from the website’s FAQ:

What is Bitcoin Cash?
Bitcoin Cash is the internet’s peer-to-peer electronic money. They are completely decentralized, do not include a central bank and do not require third parties to carry out transactions.

The familiar line “peer-to-peer electronic money” is used here for a reason. Bitcoin Cash Aims To Become A High Throughput Cryptocurrency.

Why this fork was a surprise?

Many believed that the fork would only go live if BIP148 crashed the network. In other words, many thought that Bitcoin Cash (and its client Bitcoin ABC) was simply a compelling threat to prevent the controversial User Activated Soft Fork (UASF). Bitmain stated that Segwit2x (also known as the New York Agreement) was prioritized:

Further development plan
In case the New York Agreement is activated
We hope the New York Agreement will be drafted and implemented smoothly. This is the last hope for bitcoin’s collaborative scaling in the face of the BIP148 threat. We will do everything to deploy and activate it as soon as possible.

So when BIP91 (the first part of Segwit2x) was fixed and activated ahead of BIP148, which is scheduled for August 1st, many decided that it would not allow UASF to run..

But it seems that Bitcoin Cash supporters had other considerations on this score..

Why should I care?

You should be worried because Bitcoin Cash is an irreversible fork of Bitcoin.

Back to the FAQ:

Is Bitcoin Cash Different From Bitcoin?
Yes. Bitcoin Cash is the continuation of the Bitcoin project as peer-to-peer digital money. This is a fork of the Bitcoin blockchain ledger with updated consensus rules that will allow it to grow and scale..

This means that if you have bitcoins (and private keys from wallets) before the fork, which occurs on August 1, 2017 at 15:20 Moscow time, then after the fork you will have the same amount of bitcoins and Bitcoin Cash..

If you think BCC is worthless then check out the ViaBTC page: BCC futures are currently trading at $ 475 per unit.

What else do I need to know?

First, you must understand that many exchanges, including Coinbase, are simply not ready for this development..

Let’s go back to the FAQ:

If I have Bitcoins, will I receive Bitcoin Cash automatically??
Yes. Since Bitcoin Cash is a fork of the ledger, you will receive as much Bitcoin Cash as you have at the time of the block fork. However, if your bitcoins are held by third parties such as exchanges, you should contact them to resolve this issue..

Pay attention to the last sentence. The exchanges and third parties that hold your bitcoins may or may not issue the Bitcoin Cash owed to you. They will most likely do the right thing, but you cannot know in advance if they will be ready to act in accordance with the situation when the time comes..

Second, all hard forks carry two risks: replay attacks and data erasure attacks. Erasing data is not particularly dangerous, since this is an irreversible fork (there are scenarios in which miners on one chain can attack another chain, but they have no place to be yet). Replay protection is included in the Bitcoin Cash release, as reported in the FAQ:

How is the problem of replaying transactions between the old and new blockchain solved??
Bitcoin Cash transactions use the new SIGHASH_FORKID flag, which is not standard on the old blockchain. This prevents replayability of Bitcoin Cash transactions on the Bitcoin blockchain and vice versa..

Rest assured that if you control your own private keys, you can use them to secure transactions on any of the blockchains.

I thought the bitcoin scaling issue was resolved! Why is this happening?

Good question. After years of discussion, we are finally moving ahead with the BIP91 commit on Thursday. Although Segwit increases network bandwidth, it doesn’t suit everyone.

BCC looks like an attempt to interest Bitcoin users who don’t like Segwit.

Since the issue of activating Segwit has already been resolved, all these people will be able to switch to an alternative version.

From the FAQ:

Why the Bitcoin Cash fork was created?
The obsolete bitcoin code supports blocks of up to 1 MB, that is, about three transactions per second. While it is not technically difficult to raise this limit, the community has been struggling for years..

What features does Bitcoin Cash have??

Bitcoin Cash has three features. First, the block size has been significantly increased (up to 8 MB).

Second, it offers replay and data erasure protection. The signature of transactions is slightly different, and the block will be larger than 1 MB.

Thirdly, it allows the difficulty of proof-of-work to be changed more often than every 2016 blocks (standard bitcoin interval). If the hash rate drops, the difficulty will change quite quickly..

What does this mean for bitcoin?

This is the most difficult question. It may mean nothing, or it can mean a lot. Here is a list of questions to consider:

  • Who will mine Bitcoin Cash?
  • Who will have the highest hash rate? Both coins will use double sha256 for proof-of-work.
  • What will the price ratio be?
  • What volumes will fall on each of the coins?
  • How will the hash rate react to the price? How the price will react to the hash rate?
  • How this will affect the 2MB Segwit2x hard fork?
  • Which chain will Bitcoin blockchain coins like Omni and CounterParty choose??

Conclusion

Unfortunately, the Bitcoin Cash announcement raises more questions than answers. Only one thing is certain: if you want to maximize your savings, it is in your best interest to withdraw all bitcoins from exchanges and make sure that private keys are safe until August 1.

Source: https://medium.com/@jimmysong/bitcoin-cash-what-you-need-to-know-c25df28995cf

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