The creation of a second Bitcoin asset

03/08/2017 01:09 false Australian Financial Review The creation of a second Bitcoin asset this week did almost nothing to dilute the original price, instead the value of the new asset rocketed skyward, generating almost $US7.5 billion out of thin air. This week, a group of Bitcoin activists and developers , within a few hours, the value of the new unit - Bitcoin Cash - leapt to over US$600. The original Bitcoin price however, remained fairly steady, still trading at around $US2700 a coin, despite an almost 1:1 duplication of itself. "Everyone who has Bitcoin, now has Bitcoin Cash and because the market reckons this is worth $600, it's almost like free money!" crowed one Reddit user. The "fork" - instigated by some Bitcoin miners as they ran different software to generate different sized blocks - meant Bitcoin Cash essentially inherited a similar amount of coins in circulation: around 16.5 million units. Calculating the market capitalisation of cryptocurrencies is similar to that of a stock's: you multiply a coin's price by the total supply of coins in circulation. But unlike when a company issues more stock and the price re-rates, Bitcoin simply cloned itself and the market instantly ascribed value to the new asset. Investors who held on to Bitcoin - and who clearly weren't frightened off by the fork because there wasn't a selloff - are now credited with an equal amount of Bitcoin Cash. Bitcoin's is around $44.8 billion and as of Thursday morning, Bitcoin Cash is around $7.2 billion. Bitcoin exchanges around the world are and allow withdrawals, but the risk of an almost inevitable run on the exchange has many wary. BCH deposits + withdraws may not be available for several days. We won't enable funding until we think it's safe. Y tho? This week's fork is a culmination of months of. Slow transactions and soaring fees had Bitcoin miners - those that decipher algorithms and reaffirm the legitimacy of the blockchain - wanting to expand the size of each block, so transactions would flow more easily. A compromise was reached between the Core developers of Bitcoin - those that maintain the underlying technology - and the miners, but some miners decided to branch out and run their own software, that increased the blocksize quicker. These new miners have developed Bitcoin Cash.