The future of Bitcoin has long looked uncertain due to the continued arguments between miners and developers as to the best way to move the digital currency forward. These arguments eventually led to a split, sometimes termed a ‘hard fork,’ where some bitcoin miners decided to create their own offshoot cryptocurrency called Bitcoin Cash. However, recent evidence seems to indicate that investors aren’t nearly as worried about the effects of the split as many predicted.
In fact, following last week’s division, the price of bitcoin surged over the weekend to pass the $3,200 mark for the first time ever. Although the price eventually dropped off slightly, the cryptocurrency still reached an all-time record high of $3,344 per coin on Saturday—showing that the original Bitcoin is most likely to be the clear winner after the dust finally settles over the split.
Contrast Bitcoin’s record price surge to that of its new rival, Bitcoin Cash, and it is clear that the miners who decided to split may have made the wrong decision. The announcement of the split and the formation of Bitcoin Cash seemingly saw many investors coming out of the woodwork and putting their money behind the newer currency. Eventually, this culminated in Bitcoin Cash reaching a peak market capitalization of $12 billion.
Based on this early evidence, it originally seemed that investors were embracing the new cryptocurrency rival. Unfortunately, it now appears that the miners haven’t been so quick to embrace Bitcoin Cash, which has led to its price suddenly plummeting. After reaching a record high last week, the price of Bitcoin Cash dropped by more than 62% over the weekend. Even with the slight rebound that the currency is currently seeing, this sudden price decline caused its market capitalization to plummet to only $4 billion. Compare this to the $53 billion market capitalization of the original Bitcoin and it immediately becomes apparent that the new rival is already in trouble after only a week or so.
The debate and eventual split of Bitcoin Cash was caused by a question of how to update the currency’s underlying blockchain technology. Many miners called for the size of the data blocks to be increased dramatically, whereas most developers believed that the smarter move was to move some data off of the currency’s main network and to double the size of the data blocks to 2MB. This plan from the developer’s is known as SegWit2X, which is set to be implemented beginning in August.
Under the new Bitcoin Cash, data blocks have been increased to 8MB. However, the fact that the SegWit2X plan has yet to be fully implemented means that we most likely haven’t seen the end of the debate. In this sense, it will be interesting to see how further developments end up affecting the price of both the original Bitcoin and its new Bitcoin Cash rival.