- Bitcoin will likely split into two separate currencies following a brutal civil war among crypto-powerbrokers.
- Coinbase, one of the largest cryptocurrency exchanges, however, will not back bitcoin cash, a fork of the original bitcoin.
The conclusion of the bitcoin civil war is fast approaching.
And Coinbase, one of the largest cryptocurrency exchanges in the world, has made its position in the fight clear.
To recap, bitcoin has been embroiled in a years-long civil war because the underpinning network has slowed as the number of people using the currency has increased.
On one side of this war, there are the so-called core developers who want to keep the blocks that make up the network limited in their size to protect against hacks. On the other side, are the miners who want to increase the size of blocks to make the network faster.
There are several potential solutions for speeding up the platform. Until last week, the solution known as Segwit2x, which would increase the size of bitcoin blocks to two megabytes, was slated to become the standard after the August 1 deadline. Then, bitcoin cash came along. The new solution is a fork of the bitcoin system: it’s a new software that has all the history of the old platform but bitcoin cash blocks will be eight megabytes.
And if the fork in the bitcoin blockchain were to take place, Coinbase would not back the bitcoin cash version.
“In the event of two separate blockchains after August 1, 2017 we will only support one version,” David Farmer, director of Biz Ops at Coinbase, wrote in a blogpost. “We have no plans to support the bitcoin cash fork.”
Coinbase has served nearly 9 million customers across 32 countries, according to the firm’s website. The firm has enabled the exchange of over $US20 billion worth of digital currency.
Farmer said Coinbase decided not to back bitcoin cash because “it is hard to predict how long the alternative version of bitcoin will survive.”
Bitcoin cash came out of left field, according to Charlie Morris, the chief investment officer of NextBlock Global, an investment firm with digital assets.
“A group of miners who didn’t like SegWit2x are opting for this new software that will increase the size of blocks from the current 1 megabyte to 8,” Morris told Business Insider.
According to Morris, as soon as the split takes place most people will see their bitcoin holdings double. But that doesn’t mean the value of investors’ holdings will double.
Morris told Business Insider that bitcoin cash (BCC) has been trading in the futures market for about $US200 to $US400. Thus, if a split were to occur BCC would trade somewhere in that range while the value of bitcoin would witness a decline equal to the value of the new bitcoin.
The fork, according to Morris, will most likely resemble the Ethereum split. Bitcoin’s rival, Ethereum, experienced its own fork in 2016, eventually leading to the creation of the version of the cryptocurrency we know today.
“It will be similar to what happened with Ethereum when Ethereum classic came on the scene,” Morris said.”The two currencies marketcap equaled out to the marketcap of the original Ethereum.”
But since Coinbase won’t back the new bitcoin cash, folks who hold their bitcoin on Coinbase’s system won’t see their bitcoin supply double. As such, if the price of bitcoin were to decline as a result of bitcoin cash entering the market place, then Coinbase users would witness their total bitcoin holdings decrease.
That’s exactly the reason Morris said people might benefit from putting their bitcoin into a private wallet.
“If you’re holding it in an exchange, then they might not give you the bitcoin cash,” Morris said.
Over the weekend, Coinbase experienced delays in its processing of bitcoin withdrawals. They are currently operating as normal.
Get the latest Bitcoin price here.