Bitcoin Cash Already The 3rd Most Valuable Cryptocurrency
Bitcoin cash, the offshoot of cryptocurrency bitcoin that was created yesterday, is now worth $7.6 billion, according to data provider CryptoReport. That pegs the value of all the bitcoin cash in circulation at 17% of bitcoin’s total market value of $44.4 billion. This makes bitcoin cash the third most valuable cryptocurrency, behind bitcoin and ethereum. It trades under the BCH symbol on most exchanges, while bitcoin retains BTC.
Bitcoin cash’s vault up the valuation charts can be explained by its provenance as a fork of bitcoin—think of it like the splitting of an amoeba in two. The market value of all the coins in circulation—usually referred to as the “market cap” in cryptocurrency jargon—is calculated by multiplying a coin’s price by the total supply of coins in circulation. When bitcoin cash splintered off from bitcoin, it also inherited the supply of coins in circulation. In other words, there is roughly the same amount of bitcoin cash in circulation as bitcoin, and both cryptocurrencies each currently have 16.5 million units in circulation.
There are slightly more bitcoins in circulation than bitcoin cash—a difference of 474 coins—because when bitcoin cash forked, there was a period of several hours when no new bitcoin cash blocks were mined. In the meantime, bitcoin miners continued to find blocks, introducing new coins to the circulating supply.
What exactly happened on Aug. 1?
A chain split is a slow and confusing event, even with a deadline. Bitcoin cash had a much publicized deadline of Aug 1, 12:20 UTC (or 8:20am US Eastern time) for the split to occur. Yet it wasn’t until hours later that the split actually took place.
The reason for this confusing state of affairs is as much about semantics as technicalities. Firstly, the bitcoin cash software uses a particular calculation for time called “median time past” that’s based not on clock time but on the number of blocks mined after the 12:20 deadline. Since there is an element of chance that determines when exactly a block is mined, experts could only estimate when the bitcoin cash software would kick in. In practice, this meant that the bitcoin cash software would only activate about an hour after 12:20 UTC, which was the case.
Once bitcoin cash was activated, the bitcoin cash blockchain stopped growing for several hours, while the bitcoin blockchain continued to add new blocks as normal. This activation happened at 12:37 UTC when both blockchains had just mined block number 478,558—this would be the last common block shared between bitcoin and bitcoin cash. All future blocks would send the coins on their independent trajectories.
There was confusion as the bitcoin cash blockchain stalled at block 478,558. What would normally happen is that a new block would have been mined—478,559—in about 10 minutes. But as hours went by, it became clear that not enough miners were committing processing power to the new blockchain to discover a new block. This was because the new chain also inherited the difficulty threshold for finding a new block from the bitcoin blockchain, meaning a massive amount of processing power would be required.
At this stage, although the chains have split, the new chain didn’t yet have any new blocks, so was technically simply a stalled version of the bitcoin blockchain. Most observers in the bitcoin world thought it would take hours, or even days, for miners to devote enough processing power to the bitcoin cash blockchain to discover a block.