Cryptocurrencies are open source and anyone with an internet connection is capable of creating a fork. Many forks of Ethereum exist today, however only one has any market value (Ethereum Classic). The success of a fork of any cryptoasset: Ethereum, Bitcoin or otherwise is reliant on the uptake of the new version of the software by miners and nodes (securing the network) and users (using the network). It is therefore extremely difficult to successfully fork a blockchain as it requires miners, nodes and users to move away from existing their system. For such a fork to be successful, it needs to satisfy a strong demand that the existing version of the code doesn’t.
In the case of Ethereum, the fork of July 2016 – which resulted in Ethereum Classic (ETC) – satisfied a demand for a version of Ethereum which was not “rolled back” to retrieve funds from an exploit in the software weeks earlier. ETC appealed to blockchain idealists who believed that every transaction should be immutable regardless of any community consensus to undo those malicious transactions. There were many other reasons as to why ETC remained popular, many of which related to the opportunity to generate personal wealth – often thinly veiled with the aforementioned idealism.
The same is now happening to Bitcoin. Whilst the initial fork fears were abated last week, a new fork of Bitcoin is due to launch on August 1st called “Bitcoin Cash” (BCC). This new coin appeals to those who believe Bitcoin should be scaled by increasing the block size (currently limited to 1mb, and increasing to 8mb in the BCC proposal). These users do not want to see the “off-chain scaling” solutions that BTC enables, and instead want to scale transactions by updating the Bitcoin protocol itself. BCC has now gained enough media attention, and has enough of a demand that it is likely to hold value once it launches on August 1st. It will no doubt continue to exist in some capacity for the foreseeable future. Despite this sounding damaging to the ecosystem, Bitcoin holders have two reasons to be very happy:
1. Bitcoin’s future will no longer be split between two groups. Those who want bigger blocks can now move to BCC, without interfering with the progression of Bitcoin.
2. Bitcoin holders will – once the fork occurs – have access to the same number of BCC coins as they have in Bitcoin today. If you have 0.5BTC, then you will have 0.5BCC post-fork.
Bitcoin’s volatility has clearly had an impact on the price of Ethereum over recent months. But with the scaling debate out of the way (at least for the time being), uncertainty over the future of Bitcoin will subside and we may see a crypto market bullrun in the lead up to 2018 – particularly with planned Ethereum network upgrades due in the months ahead.
The BCC futures market on ViaBTC.com has a price of 0.112BTC (roughly $310). Expect enormous volatility in the price of BCC in the coming days.