On 15 November the network witnessed a Bitcoin Cash hard fork (a hard fork is the process of changing the software codebase that completely alters the block’s structure and a new blockchain is formed). The blockchain split into 2 chains at block 556767: BCH ABC and BCH SV.
The planned blockchain upgrade led to a full-fledged war in the blockchain world with the market still feeling the impact of these events. Crypto evangelists have nicknamed it the Hash War that has made the market bleed.
This article will discuss the causes of the conflict, what each branch stands for and sum up the Hash War’s provisional results.
BCH, ABC, SV: who is fighting and what for?
First, let’s get to know the parties to the conflict and figure out what they are trying to achieve. Let’s look at what Bitcoin Cash is and why hard forks are conducted in the Bitcoin Cash network.
Bitcoin Cash cryptocurrency emerged on 1 August 2017 when it separated from the bitcoin’s original blockchain after a hard fork. The blockchain split was an attempt to the resolve scalability issue of the bitcoin network. Part of the Bitcoin community eager to get a new enlarged block in the bitcoin blockchain united under the leadership of Roger Ver: they wanted to see Bitcoin as a means of transactions but not an investment asset.
Their main argument was that one of the key specific features of a cryptocurrency is an anonymous nature of transactions in it, as stated in the Bitcoin White Paper. The community split into two groups and, due to the resistance of the remaining part, a hard fork became the only option to create a new currency. This is how Bitcoin Cash emerged.
Twice a year, the BCH network runs a ’scheduled’ hard fork as a way to improve the software code. The latest hard fork scheduled for 15 November was grossly disrupted by a competing offer. These developments contradicted the road map.
In the run up to the hard fork, the BCH community split into 3 factions: Bitcoin ABC, Bitcoin Unlimited and Bitcoin SV, generating, in fact, three concepts of Bitcoin Cash network implementation. Let us review each faction in detail.
Bitcoin ABC led by Roger Ver is a kind of conservative wing and it motto is: «No» to radical changes«. Initially, big exchangers — Bitmain, Binance and Coinbase as well as Bitcoin.com mining pool supported Roger Ver’s Bitcoin ABC.
According to the Bitcoin ABC philosophy, the Bitcoin Cash structure does not need any sharp changes, there may be just minor upgrades to cut transaction costs. The improvements will also include smart contracts opportunities, Oracle services and better scalability.
The developers’ three core ideas are the following:
- Improving zero confirmation transactions to ensure payment instant receipt without changing the consensus mechanism;
- Enabling massive on-chain scaling through the removal ofthe mempool admittance code and mining RPC;
- Improving interchangeability.
Bitcoin SV (Satoshi’s Vision)
Bitcoin SC is a liberal wing with its adherents seeking to restore Satoshi Nakamoto’s initial idea. Сraig Weight, the torch-bearer, has repeatedly claimed that he is Nakamoto. There are CoinGeek, CalvinAyre and Bitcoin.org in the Bitcoin SC support group.
Bitcoin SV followers lobby for a dramatic change of the Bitcoin Cash code. Specifically, they want to see the block size increased from 32 MB to 128 MB as this move should, in their opinion, improve the network’s throughput capacity and scalability.
Bitcoin Unlimited is a neutral wing which under the leadership of Andrew Clifford is pushing for the ‘developers’ right to vote’.
This compromise solution, offered by the Bitcoin Unlimited lead developer Andrew Stone, seeks to minimise risks associated with splitting of two blockchains. This upgrade version should allow to make changes both in Bitcoin SV and Bitcoin ABC.
Hash war: the conservatives are winning
The fork started on 15 November and the first to be found was ABC block in the Bitcoin.com mining pool on block 556767. A few minutes later, at 1:22, the miners processed the SV block on block 556767. Thus, BCH simultaneously split into two new blockchains. The winner in the hash war will be the one who gets broader miners’ support, because they are the ones who provide viability to blockchain.
It is believed that one of their supporters, Cihan Wu, co-founder of the Bitmain Mining Pool, redirected a significant portion of his mining capacity in order to keep the BTC ABC in the lead. He states on Twitter that ‘he did not intend to start a hash war, because if he redirects mining capacity to BCH, then BTC will plunge below the all-year support level. But since Craig Wright is adamant, he has to go all the way’.
Bitcoin.com, another mining pool owned by Roger Ver, allegedly announced that hash forces would be redirected from the BTC to the BCH ABC, even just for one day. In response, Craig Weight stated that the winner would be the project which is continuously mined. «The war will go on until one of us dies,» he announced on Twitter.
According to the statistics onfork.lol, portal, BCH’s total hash rate increased from 9.54% to 15.43% between 10 and 17 November — the period when the greater part of the hard fork war was waged.
Bitcoin hash rate dropped 7% within this period from 90.46% to 84.57%. This fact confirms that most of the mining capacity was indeed switched from BTC to BCH at the peak of the conflict in the community. It is precisely this event that, according to numerous analysts, has had a negative impact on both the Bitcoin price and the entire crypto market. And we are still witnessing the deplorable results.
Many exchanges suspended BCH trading when the ‘war’ broke out due mainly to a lack of replay protection — that is transactions were valid in both blockchains which could lead to chaos and disruptions.
What is the outcome of the Bitcoin Cash hard fork? Is the war over?
Both sides suffered losses in the war. A week after the end of the hash war, Bitcoinist portal summed up that both sides had spent $12mn to support mining. And it turned out to be unprofitable, since the BCH price reached its all-year low as a result of all these developments.
According toCoin Dance, the aggregator of cryptocurrency information, ABC continues to outpace SV in hash volume. Large crypto exchanges have started to assign the BCH ticker to the ABC chain.
Now, on Coinmarketcap, ABC blockchain is called Bitcoin Cash under the BCH ticker while Craig Wright’s one is called Bitcoin SV under the BSV ticker.
SV drops claims to BCH.
After the Bitcoin SV team on 25 November announced that it was dropping all claims to the BCH original chain and shared information on launching its own road map, the BSV price climbed by over 70% within 24 hours.
Calvin Ayre, one of the co-owners, shared his vision of the cryptocurrency’s future. He stated that the two new blockchains had nothing in common. He declined to claim the BCH name and believes that it is precisely BSV is the very bitcoin Satoshi conceived.
After a while, Craig Wright shared his ambitious vision promising to increase a block from 64 MB to 512 MB in six months, and to 2 GB — a year later.
When the block size reaches 2 GB, miners will receive $8,000 for each block obtained but to achieve this, Bitcoin SV price at exchanges should be $640.00. He promised to increase, in 2 or 3 years, a block to 1 TB and process up to 6.5 million transactions per second.
These statements have appeased the market and put a stop to the protracted war.
Many experts believe that the BCH hard fork was the cause of Bitcoin’s fall to the all-year low, especially so since Roger Ver had earlier speculated on the original Bitcoin’s fork. Many believe that this time some interested parties, i.e. big pools and mining equipment producers, initiated these events.
There are always winners and losers in every war. The entire crypto market has suffered from the hash war with the top Coinmarketcap invariably painted red lately. As a result of the developments discussed in this article, Bitcoin has lost nearly 40% against its price on 15 November 2018 while BCH plunged by 77%.
At the time of writing, many big coins lost up to 100% of their all-year minimums and this event may lead to redistribution of market shares.
However, such events, that seem negative at first glance, may become a springboard for young undervalued projects. Quite possibly we will soon see many new and promising cryptocurrencies among the leaders.