The breakaway version of the cryptocurrency was set up by a group that runs the software behind bitcoin using a process known as a ‘fork’. One unit of the new currency is now worth 30% of the original one.
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Consequently, Bitcoin’s blockchain – the digital ledger that records all transactions – was forced to split into two different chains meaning everyone who held bitcoins before the split were eligible to receive the same amount of Bitcoin Cash tokens. This is at least partially responsible for the initial Bitcoin Cash spike.
The split was a result of unrest in a section of the digital currency community. Members were unhappy about the 1MB block size limit slowing transactions, leading to infuriating delays. Bitcoin Cash added a number of new features, including a block size limit increase to 8MB and a new way of signing transactions, to solve this frustration.
Despite its rapid rise, the new currency is still only worth around a fifth of a bitcoin, though, which has maintained its value. It’s up for debate whether the fledgeling alt coin will be able to maintain its own value in future.
“There’s no infrastructure available out of the box, to support BCC [Bitcoin Cash],” Fran Strajnar, co-founder and CEO of data and research company Brave New Coin told CNBC. “The network needs further support and infrastructure needs to be as easy as Bitcoin; otherwise it’s over for BCC.”
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The challenge is further compounded by the fact Coinbase, the world’s biggest bitcoin exchange, is not supporting Bitcoin Cash. This means people who maintain a wallet on Coinbase are unable to access their new alt coin cash. Inevitably, Coinbase users are angry with the decision, which could lead to legal woes for the company.
Like most things in the cryptocurrency world, no one really knows what’s going to happen with Bitcoin Cash in future, but many believe that users will sell their new digital currency as soon as they can.