The Bitcoin Split: Will The Latest Cryptocurrency Bitcoin Cash Enter Indian Market?

Hard-forking in the cryptocurrency world is not an entirely new event. We have seen this in 2016 when another cryptocurrency Ethereum forked into two blockchains and created a new currency Ethereum Classic. Recently, post the ‘SegWit’ development in Bitcoins, backed by Chinese exchanges, some of the developers and miners aggressively went on to develop a parallel blockchain that would allow block sizes 8x bigger, in contrast to 2x, as backed by the SegWit community. While a majority of miners and developers agreed with the ongoing SegWit i.e. the BIP91 proposal, some went ahead with the BIP148 proposal which we have already covered with the Bitcoin split event unfolding in detail, last week.

July 23 has come and gone and big block supporters have joined hands to hard fork under the Bitcoin Unlimited project. The move has been largely welcomed in China and parts of the Japanese and Russian markets. However, Indian Bitcoin wallet providers/exchanges aren’t enthusiastic about the new Bitcoin Cash (BCC) in India and have mutually agreed to stay away from the split and not accept Bitcoin Cash.

Sathvik Vishwanath, co-founder & CEO of Unocoin Technologies, one of the largest Bitcoin exchanges in the country said, “Within India, I don’t see any traction or inclination towards BCC. We will have to carefully observe BCC valuation and stability, first. So far, there has been no BCC transaction in India.”

In contrast to the Bitcoin which is trading at an all time high $3,400, the newly-forked clone coin BCC has been fluctuating between $100-$300 and expected to go down further. However, India’s leading Bitcoin exchange Zebpay is open to the idea of accepting BCC, given that there is local demand. On August 4, 2017, the company announced that it would allow users to remove Bitcoin Cash even though they had earlier refused to support it.

As Sandeep Goenka, COO, Zebpay articulated, “Zebpay, along with other Indian exchanges and major global exchanges, had mentioned that we cannot support Bitcoin Cash. It takes a huge technical effort to support a new cryptocurrency and most exchanges simply didn’t have the time. All exchanges had advised users to withdraw Bitcoins to a wallet in which they control the private keys instead of keeping them in a trusted wallet like exchanges provide. Since most users are not tech- savvy enough to do that they continued keeping the Bitcoins in wallets provided by exchanges. And so they now have to depend on the support for Bitcoin Cash by the exchange.”

Similar to what transpired during the Ethereum spin-off, exchanges also expressed concerns over the risk of transaction replays i.e. instances where a transaction broadcast on one blockchain might be included in the second one. On March 10, 2017, a group of around 20 exchanges had released a statement and informed BCC developers about the potentially harmful situation. “We insist that the Bitcoin Unlimited community (or any other consensus breaking implementation) build in a strong two-way replay protection. Failure to do so will impede our ability to preserve BTU for customers and will either delay or outright preclude the listing of BTU.”

The issue of transaction replay has been sorted out, according to Sandeep. “Bitcoin Cash has replay protection built in and it seems to be working. We have not seen any reports of transaction replay issues.”

Meanwhile, in a separate development, India’s Inter-disciplinary Committee has submitted its report regarding digital currency to the Finance Minister, Arun Jaitley. And, according to the Financial Express, the report is not encouraging for the cryptocurrency startups in India. Earlier there were reports that the Indian government might decide in favour of legalising the cryptocurrency.

Nilam Doctor, President of GreenCoinX Inc commented in conclusion, “As the committee’s report on cryptocurrency is not convincing, the government of India is not very keen to validate or endorse Bitcoins either as currency or an asset, largely due to identification issues. Hence, at present, Indian users and exchanges are more concerned regarding government policies rather than the Bitcoin split story.”