In this article we try to explain what all the hubbub is about concerning Bitcoin Cash. Whether it is a debate of necessity or a war of egos, BCH’s impending fork (potentially occurring on November 15th) has attracted a lot of attention over the last couple weeks, causing a lot of the crypto community to put down their keyboards and pick up a tub of popcorn. For those on the sidelines, it is a dramatic spectacle worthy, full of Emmy-worthy performances. For those invested in the outcome, it is somewhere between a horror show and a life-or-death situation. We present to you both sides of the story here for your own enlightenment and consideration.

The ABC’s and SV’s of the BCH Hard Fork

Bitcoin Cash (BCH) started as a fork from bitcoin (BTC) in August 2017, inspired by a minority group of bitcoin miners who did not agree that bitcoin’s decision to adopt support for SegWit was the right course of action, and that bitcoin needed to increase the size of its blocks in order to scale for widespread adoption. What followed was a bloody civil war with the original bitcoin developers splitting into two camps: BTC and BCH. The former, interested in keeping bitcoin’s original block size (1 MB), pursued new ways to fit more transactions in one block, the most popular known as the Lightning Network. The latter, believing changes were needed to bitcoin’s core code in order for it to adopt to a bigger audience, launched its own version of the coin, with 32 MB blocks.

Now it appears that 32x bigger blocks may not be big enough for some, who want to fork BCH itself and implement 256 MB blocks (among other things). So, what compelled the need for this “fork-upon-a-fork?” At the center of the question are two unique, contrasting takes on what the “cash” in Bitcoin Cash should actually entail. Two of BCH’s primary selling points and supposed benefits over BTC were that its bigger blocks would enable it to have faster transaction times and that its transaction fees were inherently lower than those of BTC. With the implementation of SegWit and little-by-little the Lightning Network, BTC has proven itself to be scalable, finding ways to adapt and evolve without having to raise its block size. Indeed, average BTC block sizes are smaller today than they were at the beginning of the year, and transaction fees just a sliver of what they used to be.

BCH prices in terms of BTC (orange line) over 1 year. Source: Coingecko.com

 

Regardless of which fork comes out on top, one thing that’s certain is that the strife within BCH’s ranks has not been beneficial for its price, which is now considerably less than 10% of BTC’s price – a low point not seen since December 2017. If a fork does happen (and its looking more and more likely with each passing day), its is all but assured that BCH will continue its price decline as its core user base will be split into two competing factions. There are already a number of different Bitcoin ABC client software versions, but for the moment, they are all compatible. However, this might all change on November 15th, the date ABC plans to implement their changes to the Bitcoin Cash full node client.

Source: coin.dance

 

What are the differences between the two competing version of BCH? We’ll outline them for you here:

Bitcoin ABC

Though confusing by name, this is Bitcoin Cash’s main client software, as forked from the Bitcoin Core code back in August 2017. It is the most dominant  of 10 different node versions. On August 8th, its lead developers published a list of changes to be implemented to the client software on November 15th, 2018. The changes proposed include the introduction of a new “opcode” called OP_CHECKDATASIG (CDS), and the implementation of “canonical transaction ordering (CTOR),” as well as some minor bug fixes. The rationale behind adding the opcode was to enable the use of a greater array of DApp services for BCH, including oracle-type predictive services, which has been the primary source of controversy, as critics claim such a move will take Bitcoin Cash away from its primary goal of acting as an electronic version of cash.

Bitcoin SV

Designed and backed by blockchain research tech firm nChain, Bitcoin SV is the forked version of Bitcoin ABC which plans to go live on November 15th, which may or may not cause a split in the Bitcoin Cash blockchain. The acronym “SV” stands for “Satoshi’s Version,” meaning that its creators regard it to be representative of Satoshi Nakamoto’s original vision of what bitcoin should entail. Bitcoin SV proposes three major changes while bypassing Bitcoin ABC’s proposed changes. They are 1) restoring OP codes OP_MUL, OP_LSHIFT, OP_RSHIFT and OP_INVERT, 2) removing the limit of 201 OP codes per script, and 3) raising the maximum block size to 128 MB. The idea behind supporting such an incredibly large block size (compared to BTC’s maximum block size of 1 MB) is that Bitcoin SV would be able to scale to huge levels of demand, theoretically allowing several hundred transactions to occur per second and have them all be confirmed in the same 10 minute block.

Behind every great battle are two generals, who may or may not also be “great,” but at least wield tremendous power and resources dedicated to their battle strategy. Who are the two generals in the battle for Bitcoin Cash? We’ll give a brief description of them for you now:

Bitcoin ABC: Jihan Wu

Wu is founder and CEO of the Chinese ASIC manufacturing company, Bitmain. Bitmain holds an estimated $600 million worth of Bitcoin Cash and stands to gain or lose millions depending on how the current fork situation resolves itself. It also runs one of the bigger mining pools for the Bitcoin Cash Network, called Antpool. On the Bitcoin (BTC) Network side of things, Antpool was so tremendous that at one point it actually accounted for almost 50% of the entire network hash rate, creating temporary fears that they might be able to perform the dreaded (but largely theoretical) “51% attack,” meaning they could enforce changes in the content of the blockchain for their own personal gain.

By all accounts, Bitmain is a tremendously successful company, largely thanks to the leadership of Wu. However, its financial standing has taken a beating in 2018 due to a combination of waning miner sales and suffering an 80% loss on its BCH holdings, equivalent to roughly $328 million. Despite this (or because of it), Bitmain is set to launch its own IPO, making it a publicly-traded company, in less than two months time. In a worst case scenario opinion, it is speculated that Wu’s company needs to raise funds to cover its staggering bear market losses in order to remain afloat, but this has not been the reason publicly given by Bitmain. Wu is decidedly backing Bitcoin ABC’s changes to BCH, finding those sought by Bitcoin SV to be unnecessary and destructive. He has even gone so far as to lambaste SV on Twitter.

Bitcoin SV: Craig Steven Wright

Craig Wright came to fame within the bitcoin community (and international media) in 2016 when he made the astounding claim that he was the inventor of bitcoin, Satoshi Nakamoto. Though this has been debunked and now regarded as a hoax, Wright never explicitly backed down from his claim, instead issuing a half-hearted apology letter that ended with the words, “I’m sorry” (his short-lived saga as “potentially Satoshi Nakamoto” was covered at length in an earlier article on CoinClarity). Wright had been involved in the bitcoin space for some time before this point and was drawn to Bitcoin Cash from the get go. He teamed up with billionaire Calvin Ayre, who made his fortune constructing online gambling casinos, to promote the use of Bitcoin Cash around the world. Ayre also own Bitcoin Cash’s biggest mining pool, Coingeek, which is currently responsible for providing around 25% of the total amount of hash power to the Bitcoin Cash network.

Though the reasons why aren’t abundantly clear, Wright has been staunchly against ABC’s decision to implement OP_CHECKDATASIG, fearing that not only would it drive Bitcoin Cash away from truly acting as “cash” by unnecessarily complicating it, but that it would lead to BCH being widely used for the purpose of “unlicensed gambling.” As nChain’s chief scientist, Wright was behind the engineering of Bitcoin SV, perhaps even lending his creative touch to its naming process as well. With Ayre’s support to back him, Wright issued a stark warning to ABC not to introduce what he regarded as unnecessary risk to the future of Bitcoin Cash, firmly dividing the community into two camps.

Wright’s threats have not been taken lightly as he continues his all-out assault on ABC developers, and for the moment, the BCH community has ceased attacks on its usual enemy, BTC, in order to concentrate on fighting among themselves. Vitalik Buterin, Ethereum’s original developer and no fan of a BCH split, soon weighed in with his feelings on Wright, taking to Twitter to compare his version of Bitcoin Cash to the now-defunct Bitconnect scam.

Though ABC dominates in terms of nodes, the Wright-backing Coingeek mining pool continues to have the most hash power. This could easily change if Wu decides to direct more Bitmain-driven hash power to ABC pools, and for now, ABC seems to be willing to risk splitting its chain in the face of Wright’s opposition. With so much at stake in the future of Bitcoin Cash, neither side seems to be backing down, and if a fork doesn’t happen, something even worse could occur: one chain might be abandoned entirely, rendering any coins mined on it worthless after the victorious chain remains as the only BCH. For the sake of ordinary investors and users, a third option could emerge: a compromise between Wu and Wright. A lot of nasty words have been said, however, and it may take an outside force that puts both parties at risk before they begin to come up with a compromise.