Bitcoin Is Breaking Out
After lots of hand-wringing and distress about what would happen to the "hard fork," a split of the cryptocurrency Bitcoin into Bitcoin and Bitcoin Cash, the original flavor of Bitcoin is now breaking out to new highs just a week after the community went separate ways.
Bitcoin on Friday crossed the $3,000 point for the first time and this morning is rallying on further strength carrying it up to 3,367.6 in USD terms.
The split in Bitcoin was deemed a "civil war" by some, mostly revolving around the technology structure of the two cryptocurrencies. The central debate was about the scalability of Bitcoin and whether its structure of blocks in the blockchain digital ledger could process transactions fast enough to keep up with demand. Bitcoin Cash increased the block size to allow more transactions to be processed faster, a technology adjustment the Bitcoin community says isn't necessary.
Bitcoin Cash has been massively volatile since its debut on August 1. Its price initially spiked above $600, but then it fell as low as $200 and is now trying to stabilize. This morning it was trading up 30 percent to $268.58.
Coinbase, recognized as the largest Bitcoin exchange, decided to support Bitcoin Cash after initially saying it would not support the new cybercurrency. It explained its position in a blog on Aug. 3:
Over the last several days, we’ve examined all of the relevant issues and have decided to work on adding support for bitcoin cash for Coinbase customers. We made this decision based on factors such as the security of the network, customer demand, trading volumes, and regulatory considerations.
Another major exchange, Kraken, supported Bitcoin Cash from the beginning.
On the face of it, the prices are instructive about the belief in the various cryptocurrencies. For now, with its powerful price breakout, Bitcoin remains the king. It has a market capitalization of $55 billion with Bitcoin cash trading at a $5 billion market cap. Ethereum, second to Bitcoin, was trading today with a market cap of about $25 billion.
