Plunged into Chaos: Virtual Currency Exchanges to Put Deposit and Withdrawal on Hold

With one day before the creation of Bitcoin cash (BCC), the virtual currency market was plunged into chaos. As the uncertainty widened as the BCC group was divided into the BCC and “Segwit” about the upgrade of Bitcoin, domestic virtual currency exchanges suspended bank coin deposit and withdrawal.

On August 1, a new coin called BCC which uses a new blockchain will be created from Bitcoin. Both Segwit and BCC are a kind of upgraded solution to eliminate a Bitcoin network overload. The Segwit is the main improvement plan in the market that secured the support of the majority of users. It is BCC that some users in China came up with after deciding to their own way.

Unlike Segwit, which is based on a consensus of the vast majority of market participants, there is growing concern that Bitcoin ecosystems may collapse with the introduction of new Bitcoin BCC by a specific group in the market.

Bitcoin has been confronted with various limitations such as delays in a transfer process due to its low capacity of only 1 MB. Therefore, Bitcoin needed to be upgraded to improve an overload.

Segwit is an upgrade method introduced to address this problem. Segwit separates digital signatures contained in existing blocks of Bitcoin, making it possible to include as many transactions as the amount.

However, the situation became complicated when Chinese enterprise-type miners began to oppose Segwit. As Bitcoin is not controlled by a company or a country, it is not possible to enforce the use of Segwit and this is why members need to agree.

According to industry sources, this group called “Bitcoin Unlimited” took issue with Segwitt on the grounds that it is impossible for them to use their expedient to make profits with Segwit, and decided to introduce coins advantageous to them called BCC.

The industry is criticizing the introduction of BCC, saying that some groups that made profits using Bitcoin mining are confusing the ecosystem, but the creation of BCC is almost certain on August 1st.

“A hard fork according to Bitcoin ABC to adjust the size of Bitcoin blocks will be implemented on August 1,” said a representative of CoinOne, a virtual currency exchange. “If the hard fork proceeds, Bitcoin Blockchain is divided into two types. In a new chain, people will use a new virtual currency called BCC.” A hard fork means a separate upgrade that is incompatible with existing Bitcoin.

As a result, virtual currency exchanges such as CoinOne, Korbit, and Bithum decided to stop trading around August 1. CoinOne put a limit on Bitcoin deposit and withdrawal functions from 6pm on July 28, and Bithum put Bitcoin deposit and withdrawal on hold from 0:00 am on July 31. Korbit is planning to halt depositing and withdrawing Bitcoin several hours before 9 am on August 1. The shutdown of these exchanges will continue until their networks and ecosystems stabilize.

The reason for stop trading is to protect users’ Bitcoin. This is because it is difficult to predict how much the value of Bitcoin will change after August 1 or what errors will occur in transactions due to network instability.

 

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