A new digital currency called “bitcoin cash” (BCC), created by splitting the bitcoin blockchain, has risen in price nearly 200 percent — despite not having crucial support from parts of the cryptocurrency community.
CNBC reported news that the digital currency token was created this week when a section of the bitcoin community forced the blockchain (the digital ledger which records every bitcoin transaction) to split into two separate chains.
“There’s no infrastructure available out of the box to support BCC,” warned Fran Strajnar, co-founder and CEO of data and research company Brave New Coin. “The network needs further support, and infrastructure needs to be as easy as bitcoin; otherwise it’s over for BCC.”
Everyone who held bitcoin before the split was entitled to the same number of “bitcoin cash” tokens, effectively receiving a free dividend. While in the hours after the split the price for the new token fell close to $214, it has since rallied and is currently trading around $628.37.
However, BCC is worth just a fifth of the original bitcoin, which is currently trading around $2,763.92. In addition, a big problem facing bitcoin cash is a lack of support from the cryptocurrency mining community. Miners are needed to verify transaction on the bitcoin blockchain, which requires a large amount of computing power. The process is meant to take about 10 minutes, but the less power that is available, the longer the process takes.
After the blockchain split, it took more than five hours for the first block of bitcoin cash transactions to be mined. So far, only 12 blocks of transactions have been completed, and only one of these blocks has taken advantage of the larger transaction limit offered by bitcoin cash.
This lack of support and long processing time means several digital asset exchanges are freezing deposits and withdrawals until the process time gets back to under one hour.
“There could be yet another split and a resulting third bitcoin branch,” digital currency investor Joseph Schweitzer told CNBC. “Like any open source code, the number of splits that can take place are limitless and really just a question of market viability.”