In what’s been dubbed the year of cryptocurrencies, bitcoin cash is the latest to join the growing list of digital currencies.
Launched on Tuesday (August 1), the highly-anticipated currency was created to “split” from the “main bitcoin” and speed up transaction processes, CoinDesk reported. According to The Verge the split, otherwise called a “hard fork” was created out of a bitcoin group’s want to withstand higher transaction fees and “a bitcoin size limit that made mining larger blocks invalid.”
In an interview with CNBC, Charles Hayter, founder of CryptoCompare, said that bitcoin cash as a “pivotal moment” for cryptocurrencies.
“The inception of Bitcoin Cash may prove to be exactly what Bitcoin needs,” Hayter said.
As detailed by CoinDesk, when the bitcoin blockchain is “forked,” it becomes two sets of tokens: bitcoin (BTC) as the original, and bitcoin cash (BCC/BCH) on the “new” blockchain.” The publication further notes that those who hold bitcoin tokens before the split will have both bitcoin and bitcoin cash following the split.
“Anyone holding bitcoin tokens (BTC) on the original chain will end up with the same amount of bitcoin cash (BCC or BCH) on the other,” CoinDesk describes.
As to why bitcoin is splitting, Iqbal Gandham, managing director at eToro, said demand for the cryptocurrency has been so high recently that those creating the digital currency can’t keep up, which is slowing transactions.
“For bitcoin to continue to scale and have the potential to become a globally used currency, this slowdown in transactions has to be addressed,” Gandham said in a statement.
Following the launch of bitcoin cash, its price soared to a high of $727.54 on Wednesday (August 2), but has since cooled own to $404.97 as of 6:38 p.m. EST on Thursday (August 3).
CNBC further reported on Thursday that a number of experts are doubtful that bitcoin cash will have any sort of long term potential.
“Over the longer term, Bcash’s prospects are limited due to the relatively small size of the community maintaining its blockchain, developing its software and using the cryptocurrency,” Aurelien Menant, founder and CEO of Gatecoin told CNBC.
Roger Ver, one of the earliest investors in bitcoin-related start-ups, took to Twitter (NYSE:TWTR) on Thursday, stating that “competition is always welcome in a free market.”
— Roger Ver (@rogerkver) August 3, 2017
Coinbase CEO Brian Armstrong also used the social media platform to share some thoughts on the new digital currency, saying: “Coinbase is certainly not opposed to adding new assets to the platform. We’re agnostic on which assets people want to trade.”
Wanted to shared a few thoughts on Bitcoin Cash! Thx. pic.twitter.com/Sfr3GvDZqp
— Brian Armstrong (@brian_armstrong) August 1, 2017
Following bitcoin cash’s launch, bitcoin tokens tumbled to $2,675.68 on Wednesday, but have since rebounded to $2,801.81 as of 6:55 p.m. EST on Thursday. Etherum soared to as high as $229.21 on Wednesday but has since stepped back to $219.83 as of 6:56 p.m. EST Thursday.
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Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.