Ethereum: What Happens to Coins after the Bitcoin Cash Fork?
On August 1, 2020, the world’s second-largest cryptocurrency by market capitalization, Ethereum (ETH), will fork into two separate blockchains: Ethereum Classic (ETC) and Bitcoin Cash (BCC). This decision aims to provide a more secure, decentralized, and censorship-resistant blockchain for users who want to maintain their existing investment in ETH.
Background
Ethereum is not a cryptocurrency; it’s a decentralized application platform that enables developers to create smart contracts and decentralized applications (dApps) on its blockchain. The Ethereum network is the largest distributed computing project in the world, with over 70 million users and an estimated $500 billion market capitalization at its peak.
Bitcoin Cash: A fork from Bitcoin
Bitcoin Cash (BCC) is a spin-off of the Bitcoin network, but it has distinct differences compared to Bitcoin. The original Bitcoin protocol has been criticized for its slow transaction processing times, high fees, and limited scalability. To address these issues, developers created BCC, which aims to improve the speed, security, and usability of Bitcoin.
The Fork: ETC vs. BCC
On August 1, 2020, the Ethereum community will fork into two separate blockchains:
- Ethereum Classic (ETC): This will be a full-featured blockchain with its own scripting language, EVM (Ethereum Virtual Machine), and smart contract functionality.
- Bitcoin Cash (BCC): As mentioned earlier, this will be a lightweight, fast, and low-cost cryptocurrency with some differences from Bitcoin.
What happens to coins after the fork?
The outcome of the fork will depend on individual investors’ decisions. Here are some possible scenarios:
- Investors who want ETC: If you’re an Ethereum investor who wants to maintain your ETH investment and stay loyal to the original Ethereum blockchain, you’ll need to upgrade to ETC using a hardware wallet or a compatible software wallet.
- Bitcoin Cash (BCC) investors: Those who prefer BCC will get their coins automatically when they fork into the new blockchain. If you’ve already purchased BCC through an exchange or a third-party service, your transaction will be reflected on both blockchains.
- New users: If you’re new to cryptocurrency investing, you may need to explore alternative options and research each coin’s features, risks, and potential returns.
Key differences between ETC and BCC
To illustrate the main differences between ETC and BCC:
- Scalability: ETC is designed for high-traffic applications, while BCC is more suitable for light users.
- Security: ETC uses a hybrid proof-of-work (PoW) system, which combines traditional PoW with SHA-256. BCC uses the lightweight BIP39 seed system for seed-based wallets and has improved security features compared to Bitcoin.
- Transaction fees: BCC is significantly cheaper than Bitcoin’s transaction fees.
Conclusion
The fork of Ethereum into ETC and BCC marks an important milestone in the evolution of decentralized finance (DeFi) and the cryptocurrency space. While there are risks involved, many investors have successfully migrated their coins to either ETC or BCC. As with any investment decision, it’s essential to do your research, understand the differences between ETC and BCC, and consider your individual financial goals before making a move.
Disclaimer: This article is for informational purposes only and should not be considered as investment advice. Always conduct thorough research and consult with experts before making any decisions about cryptocurrency investments.