ViaBTC plans to launch Bitcoin alternative, ‘Bitcoin cash,’ on August 1st

Much like Ethereum’s July 2016 split into ETH and ETC, Bitcoin appears to be unable to avoid having a pair of currencies with ideologically-opposed proponents behind either side.

For much of the last week bitcoiners have been focused on, and at times celebrating, a rare and important scaling advancement called BIP 91 (Segsignal). The hard-fought system upgrade has begun the process of Segwit activation, initially relieving fears of a hard fork that would lead to two competing versions of bitcoin.

At roughly the same time, however, the quiet launch of a Bitcoin clone without Segwit has been announced by the Chinese bitcoin exchange and mining pool ViaBTC. The company runs a top-ten Bitcoin mining pool and one of the newest bitcoin exchanges.

ViaBTC says that it will fork Bitcoin in little over one week’s time, creating a spin-off cryptocurrency called Bitcoin Cash (BCC). This fork is based on the idea of a User Activated Hard Fork (UAHF), first proposed by Bitmain in April as a “contingency plan” for BIP 148 (UASF).

Bitmain is a major investor in ViaBTC, and made a statement on Monday that it continue supporting the Segwit2x agreement, but will closely follow the “BCC movement,” and does not rule out the possibility of supporting both Segwit2x and BCC.

The first iteration of the alternative coin, initially called “Bitcoin ABC,” was proposed at The Future of Bitcoin conference in Netherlands and is a software led by developers who believe in increasing Bitcoin’s blocksize.

“Bitcoin ABC is a full node implementation of the Bitcoin protocol. We have removed the controversial SegWit code, replacing it with a simple, sensible, adjustable blocksize cap.” - Bitcoin ABC

Two days later, on July 17, ViaBTC stated their plans to create a product line and a new mining pool for what they call, “the possible split coin led by the activation of UAHF.” The proposed split will occur in a planned hard fork on August 1, at 12:20 p.m. UTC.

The young exchange also created a futures market for “BCC tokens,” which is only available to Chinese investors. At press time, BCC is trading for 2,864 yuan, or roughly US$424 on the exchange. Three other exchanges are planning to join ViaBTC in trading the cryptocurrency after the split; OKCoin’s OKEX, Huobi, and one of the world’s three largest Bitcoin exchanges by volume, South Korea’s Bithumb.

The official Bitcoin Cash website was launched around the same time, stating “On August 1st 2017, We the People will breathe new life into Bitcoin.” The company briefly explains why they are making a cryptocurrency specifically without Segwit. The company states that Bitcoin developers are unfairly “keeping blocks small,” at one megabyte. “Although technically simple to raise this limit, the community could not reach a consensus, even after years of debate.”

“A group of miners, developers, investors, and bitcoin users will upgrade the Bitcoin protocol as specified by the User Activated Hard Fork (UAHF).” - Bitcoin Cash

While the futures market for BCC coins show there maybe be a sustainable blockchain with some value, there is also an argument to be made that Bitcoin Cash is not likely to be traded on several exchanges. Blockstream’s Chief Strategy Officer Sampson Mow recently tweeted: “Any fool with a bit of hashrate can make a forkcoin [...] Exchanges are opening up a legal can of worms by supporting them & setting a precedent.”

Bitcoin has indeed been forked hundreds of times. However, current holders will automatically have access to the same amount in Bitcoin Cash. The catch is that users must have access to their own bitcoin private keys, which therefore can’t be held by a service like Coinbase or sitting on an exchange. In BCC’s case, on August 1, 12:20 UTC users will be able to use their private keys in a BCC-compatible wallet, assuming they trust its developers, to gain access to those coins.

Coinbase stated on Wednesday that the exchange will not support the new blockchain, or any associated coin. The company explained further that users, “will not be able to withdraw the UAHF version of any Bitcoin from Coinbase… Coinbase does not intend to support or interact with the UAHF chain. If this were to change, Coinbase would make those coins available for customers to withdraw, not keep them.”

Bitcoin Cash could also have several problems with its name. Not only is it deceptively close to “Bitcoin,” but there is also a company called Bitcoin Cash operating in South America. Bolivia’s government recently posted a warning that the company operates a pyramid scheme, and rioters reportedly stormed the local Bitcoin Cash office and burned their furniture in the street.

The currency ticker name BCC faces an uphill battle as well. Leading US dollar exchange BitFinex already has a BCC asset, which is a Chain Split Token representing Bitcoin Core. There has already been a case of someone mistakenly purchasing that token for more than five times the market value, believing that it represented Bitcoin Cash. The ticker symbol BCC is also in wide use for the digital asset BitConnect, across many exchange and industry trackers.

ViaBTC has not announced yet if it plans to change the name or ticker name by Aug 1 in order to avoid conflicts. The Bitcoin Cash website did, however, announce on Tuesday that they have added “replay attack protection” to their code. A number of exchanges have said that they will not consider listing any coin that does not have this feature, which makes theft across blockchains much harder.

Originally posted on Brave New Coin.