“Bitcoin Cash” will spin off on August 1st, but support is modest.
The Bitcoin community has finally done what for years seemed impossible, pulling together to approve a software upgrade, known as Segwit2x, intended to increase network capacity. That has forestalled the looming threat of a potentially damaging “fork” that could have split the network.
But, unsurprisingly, not all of Bitcoin’s players are happy with the solution. A relatively small faction, spearheaded by former Facebook engineer Amaury Sechet, still believes that Segwit2x doesn’t go far enough in scaling Bitcoin’s capacity. Sechet’s faction says that on August 1st, they’ll launch a fork known as Bitcoin Cash, and take some of Bitcoin’s processing power with them.
Bitcoin Cash is planned to have a bigger “block size” than Bitcoin after Segwit2x, ostensibly giving it more capacity to handle transactions with low fees. But it won’t implement the SegWit upgrade that allows more transactions to be handled by secondary systems.
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Bitcoin proper will be basically unaffected by the creation of the new cryptocurrency, and all holders of Bitcoin will get equivalent funds in Bitcoin Cash on the day of the fork. A futures market for Bitcoin Cash has already emerged, and currently values it at around 13% of Bitcoin’s price. That means that when the split happens, something like $6 billion in new market value will be created from thin air.
Whether that value lasts, though, will hinge on whether cryptocurrency leaders and investors believe in Bitcoin Cash’s technical vision—and so far, the signals are decidedly mixed. Many prominent cryptocurrency exchanges, including Coinbase and Bitstamp, have said they won’t support Bitcoin Cash. Investors who want a piece of the action are being advised to move their Bitcoins either to a wallet they control directly, or to an exchange that has pledged to pass Bitcoin Cash along to them, currently including Kraken and Bitfinex.