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Why Did Bitcoin ‘Fork’ Today and What is ‘Bitcoin Cash?’

Bitcoin prices are holding steady after a splinter group within the cryptocurrency community broke off and formed their own secondary version of the digital asset.

Called "Bitcoin Cash," the Bitcoin variant aims to speed up how quickly transactions are processed.

Bitcoin was trading around $2,700 before and after the split, also known as a "fork." The new variant has fluctuated between around $200 and $400, according to coinmarketcap.com.

How Does Bitcoin Mining Work? 0:42

A different software upgrade set to go into effect this fall to achieve the same result was accepted by a majority of the members of the Bitcoin community after a vote on the change was held this morning.

Bitcoin transactions, grouped into "blocks" linked together in a "blockchain" have always taken on average 10 minutes each to process. But as the virtual currency's popularity has grown, used for everything buying pizza to anonymously buying illegal drugs on online black markets, the transaction network has started to get bogged down.

Members of the Bitcoin community, called "miners," who connect their computers to provide the computational power used to verify transactions in exchange for winning Bitcoins had disagreed about how to solve the scaling issue.

"Each of these digital currencies use open-source software protocols with independent development teams responsible for changes and improvements to the network," wrote David Farmer, director of business operations for Coinbase, one of the most popular digital wallet sites, in a blog post.

"When a change is proposed to a digital currency protocol, users need to show their support for the new version and upgrade — in a similar way to people regularly update applications on their computer. In order for these changes to get approved many people need to agree, just as changes to cellphone networks require many phone companies to agree."

When one part of the group goes one way and the other another way, it can "fork" and create two different kinds of Bitcoin.

Whether the change has any impact on Bitcoin holders depends on where they store their cryptocurrency.

Many different digital wallets and online cryptocurrencies announced they would not support Bitcoin Cash. But users on those that did will see themselves credited with additional Bitcoin Cash tokens, which can then be sold online for U.S. dollars.

There are now over 1,000 different cryptocurrencies in existence, according to coinmarketcap.com, with values ranging from Bitcoin's thousands to fractions of a penny.