Bitcoin cash, the cryptocurrency that split off from bitcoin earlier this year, jumped against the dollar on Friday.
Bitcoin cash was up 30% against the dollar to $870.90 as of noon GMT (7 a.m. ET):
Analysts say the surge is down to developers abandoning plans for SegWit2x, a planned upgrade to the software underpinning regular bitcoin that was designed to improve the speed of transactions on the network.
Joshua Raymond, a director at the foreign-exchange and CFD broker XTB, told Business Insider: “The delay to Segwit2x has damaged confidence amongst bitcoin investors concerning the much-needed resolution to speed up bitcoin’s slow processing speed.
“Everyone was hoping the Segwit2x would address this but unfortunately, the delay due to a lack of consensus on the mechanics has affected confidence. Confidence on transaction speed in Bitcoin has deteriorated significantly in recent months. As Bitcoin Cash enjoys much faster transaction speeds, we have started to see a recycling of positions out of Bitcoin into Bitcoin Cash as a consequence.”
Bitcoin cash was created in August by “forking” the blockchain record that underpins bitcoin, creating a parallel network. Bitcoin cash allows for bigger “blocks” of transaction to be processed, speeding up the network.
SegWit2x was intended to speed up transactions on bitcoin’s network, but not enough participants agreed on the proposal, and its implementation risked splitting the network again. As a result, the project was abandoned Wednesday.
Mati Greenspan, an analyst with the trading platform eToro, said: “After the 2x hard fork was called off, BCH is now being seen as a favourite to one day replace BTC. If the Bitcoin community doesn’t come to a consensus about how to scale the network soon, it may run into congestion, in which case people will need an alternative.”
Bitcoin fell to a five-day low Friday as people cycle into bitcoin cash. Bitcoin was down 3% against the dollar to $6,893.98 at 12.10 p.m. GMT (7.10 a.m. ET):Markets Insider
Get the latest Bitcoin price here.>>