Forks, BTC Price, Transaction Fees: Fast Facts About Bitcoin Cash

Forks, transaction fees and altcoins, oh my! November is turning out to be a roller coaster for bitcoin users, especially rookies. Bitcoin cash briefly skyrocketed to $2,500 on Sunday, then settled down around $1,342 by Tuesday. The original bitcoin is still king of the cryptocurrency market, selling for $6,572 according to Coin Market Cap. On the other hand, BCH is proving to be one of the most successful bitcoin forks since it split off in August.

For all those cryptocurrency newbies out there, here is everything you need to know about BCH and what's in store for the future of bitcoin itself.

1) Cryptocurrency is not Lord Of The Rings. There isn’t one bitcoin to rule them all.

Bitcoin forks spark a lot of heated debate online, sometimes even online harassment. This isn’t just about differing opinions on the technology itself. The open source bitcoin network runs on user participation. So bitcoin becomes more expensive and time-consuming to use when participants abandon the original chain to flock to a new network. Some bitcoin transaction fees skyrocketed to around $300 dollars over the weekend when miners pivoted en masse to temporarily capitalize on BCH.

Regular bitcoin fees are usually closer to $3 or $10 per transaction, although they clearly vary depending on the circumstances. Bitcoin cash transactions cost just a few cents each, for now. “You could make the same claim for any other cryptocurrency outside of bitcoin and Ethereum,” BitGo engineer Jameson Lopp told International Business Times. “They have extremely low fees for the transactions. That’s because nobody is using them. There is no contention over the scarce resource that is in the block space being used to maintain the ledger consensus of what is going on on the network.”

Nobody is in charge of bitcoin. It is a peer-led community project inspired by an anonymous white paper. There may be up to 11.5 million active cryptocurrency wallets, not to mention the possibility that millions more users might keep their digital loot on an exchange instead of a prudent wallet. All bitcoin users have to wait in the same lines for volunteer node hosts and miners to process their transactions. Earn.com estimates there are just 11,060 bitcoin nodes worldwide. The network can only handle a handful of transactions at a time. The bitcoin community needs to figure out how those lines can handle more volume.

People who supported SegWit2x and BCH believe bigger foundational “blocks” will improve the blockchain network. Bitcoin traditionalists prefer a more cautious approach to updates, not necessarily anti-big block but certainly anti-big block right now. Regardless, the cryptocurrency we call “bitcoin” today may not keep the iconic name in the future.

“Now we are entering the ‘messy divorce’ phase where the two existing bitcoin blockchains, Bitcoin Cash and Bitcoin Core, will battle it out for name recognition as ‘Bitcoin,’” Peter Rizun, BCH advocate and chief scientist at the nonprofit software provider Bitcoin Unlimited, told IBT. “It is unlikely that both Bitcoin Cash and Bitcoin Core will survive long-term, unless one switches to a different PoW [proof of work algorithm].”

Bitcoin isn’t the only cryptocurrency to undergo tricky forks. Don’t get distracted by social media feuds. Most cryptocurrency experts respect their rivals and support their right to fork, even if it is inconvenient for bitcoin traditionalists. Healthy competition can become a catalyst.

“It’s the first inning, basically, in the decentralization space,” Joe Lubin, Ethereum co-founder and head of ConsenSys, one of the world’s largest blockchain businesses businesses, told IBT. “We’ve got some early approaches to things, but we need to explore the space broadly and we have lots and lots of projects out there driven by creative, capable people….I think forks are great.”

2) Be careful about sending bitcoin cash. Always double-check the address.

Bitcoin and BCH are extremely similar. However, bitcoin will use a solution called SegWit to boost scalability over the next year or more. BCH doesn’t incorporate SegWit, so thousands of people have accidently lost cryptocurrency by mistakenly sending BCH to a SegWit address.

“I think the big problem is bitcoin cash forked off and did not change the address format,” Lopp said. “Lots of humans are going to have a dyslexic error, or they are just going to not be careful enough...this has just been a learning experience because this is really the first time that a fork like this had happened at this scale.”

Future projects could benefit from the list of technical issues the bitcoin community confronted, from replay protection to address formatting, throughout this year of forks. For now, it’s important for cryptocurrency users to proceed thoughtfully. “My advice to bitcoin investors is to simply hold bitcoin cash and bitcoin core in equal proportions and let this play out over the coming months,” Rizun told IBT. “Only time will tell which will prevail.”

3) The global community will decide the future of bitcoin technology. Vote with your behavior.

Many experts are confident the original bitcoin will continue to be the most valuable and popular cryptocurrency in 2018 and beyond. “A lot of what this is turning into, from my perspective, is short-term thinking versus long-term thinking,” Lopp said. “Bitcoin cash can probably do pretty well for the next six months to a year. Then, as we start seeing payment channel technology coming out and being production ready, we’re going to see the promise of instantaneous, trustless, off-chain transactions. And those are going to probably be even cheaper than the on-chain bitcoin cash transactions.”

SegWit paved the way for solutions such as the Lightning Network, which creates a layer for bitcoin transactions to zip across the world without waiting in the main chain line. Some BCH supporters still aren’t convinced this is the right way to go.

BCH is now one of the top three cryptocurrencies, at least according to price and distribution. There is still a long way to go if BCH supporters want to develop a network as vibrant and diverse as bitcoin itself. “Bitcoin Cash has the disadvantage that a lot of the business infrastructure would have to shift in order to fully support it,” Rizun said. Coinbase, one of the world’s most popular cryptocurrency exchanges, plans to start supporting BCH as well on Jan. 1, 2018.

No matter what they think about bitcoin forks, people on all sides of these debates generally agree that understanding what you invest in is more important than chasing quick profits.

“There are so many ways you can screw up and lose your money,” Lopp added. “It’s very important to educate yourself, do plenty of research before you jump in.”

Update: This story was updated to clarify bitcoin transaction fees are often the equivalent of just a few dollars. There are so many factors at play, from the growing number of users to external market forces, that these examples are merely hypothetical and do not represent standard or average transaction fees.