Is Bitcoin Broken? No, it’s Completely Forked

Bitcoin splits into two

OK, grammatical puns aside – it has forked, permanently. Split into two, diverged, arrived at a crossroads and went both ways.

On 1st August 2017, Bitcoin split into two distinct cryptocurrencies. The original Bitcoin (BTC), plus a new token – Bitcoin Cash (BCH), with its increased transaction capabilities. So, a lot of us have heard of Bitcoin, and others like Ethereum and Litecoin, but why is this “off-shoot” coin significant? Well, if you’re not yet familiar with Bitcoin – sums it up nicely. But the significance of the split? Take your pick!

In short, anybody who had (x) amount of Bitcoin on 1st August, will now automatically have (x) amount of Bitcoin Cash. Don’t think that Bitcoin owners have doubled their money though. Four days after the split, reported that Bitcoin Cash had lost 30% of its original value. And that’s not to say it was worth much to begin with! At the time of writing, one BCH was worth around 10% of one BTC.

For me, the significance is trust. The teccy term for the recent split is a User Activated Hard Fork (UAHF). Note “User Activated“. So, one of the features of Bitcoin is that it is controlled by its users. As a semi-enthusiast myself, this was one of the big pluses that drew me in. No government, central bank or any other single entity would be able to manipulate it. I guess that’s still true. However, I am a Bitcoin user, and I knew of the impending fork only a few days beforehand. And I for one didn’t activate it.

Confidence in Cryptocurrency

Before the fork, one of the most established cryptocurrency exchanges, Coinbase, stated it would not support Bitcoin Cash. One Coinbase investor, speaking to, supported this stance because it encouraged more faith in cryptocurrencies – particularly by potential, less tech-savvy users.

But the fork went ahead anyway, without the blessing of at least one major exchange.

And what happened? Coinbase now recognises Bitcoin Cash, and plans to support it fully by January 2018.

I guess we can assume that Coinbase didn’t activate this “hard fork”. So if neither the casual Bitcoin user nor the Bitcoin exchanges created the fork, then who did? The answer is the miners. The group of users who both calculate (create) the Bitcoins in the blockchain, and process all the daily transactions.

Crytocurrency mining equipment

A modest cryptocurrency mining operation

Now there are miners, and there are miners! Some are individuals at home using their PC, and others, according to, multi-million dollar operations. The latter mining with warehouses full of custom-built devices. Still more miners are part of a pool, where the increasingly complex calculations are divided up between all the pool members’ devices.

So yes, Bitcoin is controlled by its users. But more specifically, a minority subset of users, who have potentially both a technological, and a financial interest in the cryptocurrency.

Bitcoin or Bitcoin Cash?

Well neither, or perhaps both! I’m not sure how you’d pick one over the other. The less cynical among us will accept the technical advantages of BCH over BTC, and choose that. But then this only applies to new cryptocurrency users. And this is where I believe Bitcoin is damaged. It’s fine for us existing holders of BTC, who now have the equivalent BCH – to an extent we can afford to wait and see. To be sure of not “losing out”, new users must invest in both coins.

And the option of investing in neither? On the day of the fork I thought there was a fair chance that BTC would begin to slide. But the opposite has happened, and on 5th August 2017, the value of one Bitcoin reached and breached the US$3000 barrier – an all-time high. Perhaps a coincidence, but unexpected to say the least.

Bitcoin shaped cloud over man & laptop

Bitcoin (BTC) has never been more valuable

Perhaps the question to ask is this. If, as reported, 80% of Bitcoin’s mining contributors supported the UAHF, and if that were purely for technical reasons, why is BTC now surging? Perhaps investors are attracted by the possibility of “free” BCH coming with their BTC purchases. However, it’s not clear whether you would receive those BCH when buying BTC after the fork!

Who could blame potential new users for staying away? Stuck between the perhaps over-valued BTC, and the fledgling, comparatively cheaper BCH, what would you do? Not forgetting that ultimate control of both appears to rest with the miners.

Considering the events of the last few days, we can’t say that Bitcoin is broken. Quite the opposite it seems. What might have been broken is the promise made by cryptocurrencies – that they’d be for everyone, and controlled by everyone.

We hope this post was useful to you! Please add your own views and questions in the comments, or contact our team via the Facebook messaging button. Click the “Like” button in the Facebook sidebar if you’d like to connect with us on a regular basis.

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *