Warring factions are splitting Bitcoin in 2. Here's what you need to know.

On August 1, 2017, the preeminent cryptocurrency is set to break in two. Two warring factions, fundamentally divided on Bitcoin's future, are coming to a head — and the impending split could either save Bitcoin or doom it.

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The split, called a hard fork, will result in two separate and distinct cryptocurrencies: Bitcoin Cash and Bitcoin. Oh, and it also has the potential to create billions of dollars worth of new cryptocurrency out of thin air.

But that's not what this is really about. Bitcoin as it currently stands is in trouble, and with so much money on the line opposing parties have naturally come forward with plans to save it. And, surprise, they all don't agree on the solution.

That resulting disagreement is set to play out in full force at 5:20 a.m. PT on August 1 with the launch of the Bitcoin Cash protocol, and many in the Bitcoin community have no choice but to hold their breath and wait to see how it all goes down.

So what, exactly, is going on here? Why is Bitcoin set to fork, who are the players involved, and what does this mean for the future of the cryptocurrency?

Bitcoin at a crossroad

Fundamentally, at issue is something called block size. The Bitcoin of today has a limit of 1MB of data per block on the blockchain, and back when BTC was first created this was more than enough to process every transaction in a timely manner.

However, as the popularity of the cryptocurrency has grown so has the trading volume. As it now stands, the number of transactions is limited to around 3 per second, and a single transaction on the blockchain — essentially the act of making a payment — can be delayed for extended periods of time as it waits for available space on the next block.