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What is the Bitcoin cash means

The virtual currency Bitcoin has a new competitor: the sister currency Bitcoin Cash. The split succeeded, but investors need to be extra careful.




There is a new cryptocurrency on the market. It names Bitcoin Cash. It reveals how closely the new digital money is related to the world's most well-known cryptocurrency, Bitcoin. The launch of Bitcoin Cash was on Tuesday night.


The market responded immediately - and positively. On Thursday morning, Bitcoin Cash had climbed to third place in the hottest cryptocurrencies, behind Bitcoin in the first place and Ethereum in second place. The Bitcoin price, which is traditionally extremely volatile, eased slightly and currently stands at $ 2,741 (2315 euros). A Bitcoin cash is worth much less, but at least 375 euros.

How does Bitcoin Cash work?


Both Bitcoin systems use the so-called blockchain technology. It is an encrypted database where all transactions are stored. The Blockchain is a kind of incorruptible and almost unmanageable digital accountant.

One can imagine the Blockchain as a Lego tower, which is gradually growing around new stones called blocks. Each of these blocks contains information about current transactions, and each new block is linked to the previous one by a so-called checksum calculated from its content.

Therefore, the stones that are further down in the tower can not be easily removed and manipulated or replaced - but form an unchangeable foundation. However, the components do not come from a vacuum but have to be generated digitally. They are calculated in complicated computing processes, the so-called mining. That needs a lot of computer power.

The controversy was around the question of how big the blocks should be. So far, a bitcoin block was one megabyte in size - from the perspective of many too little space to quickly incorporate the increasing transaction volume in the blockchain. The blocks of Bitcoin Cash should now be eight times as large as those of Bitcoin - a second arm of the Blockchain Tower arises.

What does the spin-off for Bitcoin investors mean?


Because both arms of the tower still have the same foundation, the same history, a peculiarity applies: Coins existing before the fork are now present in both blockchains. If you had three Bitcoin before the Fork on August 1st, you now have three Bitcoin and three Bitcoin Cash.

However, this duplication does not apply to all investors, it depends on the exact nature of the investment and the Bitcoin investment. Some users could thus go out empty-handed. The Bitcoin exchanges have positioned themselves very differently to Bitcoin Cash. Investors of the big stock exchange Coinbase, for example, leave empty-handed - as announced in an e-mail to customers. Coinbase ignores the new digital currency. In a tweet, the head of the stock exchange, Brian Armstrong, said they would not rush things. In the long term, however, he wants to offer all the legal products that his customers want to trade with.
Stock exchanges, exchanges and other Bitcoin pages now advise investors on how to deal with the changes. Many details are still unclear. "Please be very careful in everything you do," warns, for example, the Bitcoin page "BTC Echo" and advises: "Everyone should take enough time and deal with the matter, the BCH do not run away." BCH and BCC are new abbreviations used for Bitcoin Cash.


Will Bitcoin Cash establish itself permanently?


This is still very uncertain despite the good start. Splits, the Forks, have been around again and again in Bitcoin history. As an indication that Bitcoin Cash will be among the more successful start-ups, the influential circle of supporters can apply.

It is still unclear to what extent influential stock exchanges will deal with Bitcoin Cash in the future. For example, the new money is being traded on the big stock exchange Bitfinex from China.

Meanwhile, the dispute over the future of Bitcoin continues despite the secession of Bitcoin Cash. There may be more changes soon to double the block size after all. This update is named SegWit2x. If it does not come, that could boost Bitcoin Cash.

Note: The Boerse Coinbase has announced in a blog entry to support from 1 January 2018 also Bitcoin Cash - "assuming that no security risks emerge". If a Coinbase user owned Bitcoin on the 1st of August, he would receive the same amount of Bitcoin Cash.
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