Bitcoin faces large changes on Tuesday as digital miners begin the process of splitting the cryptocurrency. This will create a new asset, called Bitcoin Cash, which could be worth a fraction of the original bitcoin.
Digital miners, users who solve complex math problems and create bitcoins, could finish coding the new Bitcoin Cash blockchain, or digital ledger, by 10 a.m. ET on Tuesday--the same day users voted to create the new asset class, analysts told CNBC. Members of the bitcoin community who were unhappy with the direction of the digital currency--specifically, the backlog of transactions--established a node, a program that validates transactions to speed up the process. The creation of the new node, called Bitcoin ABC, caused the digital ledger to split in two, leaving the original bitcoin and spawning Bitcoin Cash.
In other words, it's akin to a stock split--the process whereby a company issues more shares to its existing shareholders that are roughly equivalent to the value of their current shares. But instead of getting more of the less valuable Bitcoin Cash to equal the amount of bitcoin users currently own, they'll get the same number of Bitcoin Cash tokens. The original digital currency was trading around $2,778 on Monday, but future values for the new asset are expected to be roughly $288, just about a 10th of the original bitcoin, according to Coin Market Cap.
This devaluation has led customers to post angry comments on Coinbase, a San Francisco-based bitcoin exchange company, accusing it of stealing their property. Tim Wu, a legal scholar who writes about technology, tweeted that this could pose serious problems for Coinbase.
In my opinion, @coinbase is courting serious, maybe ruinous legal trouble if it doesn't give its users the full value of the Bitcoin fork-- Tim Wu (@superwuster) July 30, 2017
Imagine a stock split where the broker declined to issue the new stock to its owners-- that the @coincase position right now-- Tim Wu (@superwuster) July 30, 2017
Coinbase told Fortune that it has no intention of holding users' Bitcoin Cash for itself. What's more, it added that if the company decides to support Bitcoin Cash, it will spread the balances that accrue at the time of the split.