On August 1, 2017, at about 2:14 PM New York time, after block 478,558, miners managed to achieve the fork of Bitcoin and form Bitcoin Cash. Twelve months later, a new coin with its own blockchain won the trust of many users, and on the day of birth it traded at $765 with a market capitalization of $13,219,209,824 and ranked fourth in the overall list. How was the Bitcoin Cash project able to achieve such indicators and is this cryptocurrency the main competitor of Bitcoin?
How the Schism Took Place
Bitcoin Cash can rightfully be called the most famous and successful hard fork, or Bitcoin's "User-Activated Hard Fork" (UAHF), "the legitimate successor of PTS" with a changed BCH ticker and the renamed SIGHASH_FORKID hashing algorithm. The separation of the system became necessary due to the achievement of the invisible wall of Bitcoin, when the market price of the first digital currency and commission increased, and users could not confirm their transactions for a long time. It was at this moment, according to the data aggregator Coinmarketcap, that the Bitcoin dominance in the market of cryptocurrencies decreased from 70 percent to 33 percent.
Therefore, the most important goal of the competing protocol was to increase the block size from one MB to a larger volume. The development team led by former Facebook engineer Amaury Sechet at the conference in the Netherlands presented the first software implementation of the Bitcoin Cash Bitcoin ABC protocol with a block of eight MB. At the same time, the researchers abandoned another SegWit2x technology designed to increase the scalability of Bitcoin to two MB, which would not solve the problem but would only disguise it for a while.
"Eight MB is enough to ensure that we have a mechanism for adjusting the system by the time the network approaches the limit. The Bitcoin network has experienced a lot of spam in the last year, so no one excludes attempts to steal Bitcoin Cash. We recognize that increasing the size of the block is not an ideal security solution, but this is some improvement, as it is more expensive to attack at eight MB," said Sechet after the implementation of the Bitcoin ABC protocol.
The first block of the newly-formed chain, the size of which was 1.9 MB with about 7,000 transactions, was extracted by the ViaBTC, a mining group. Its head Hypo Yan repeatedly spoke about the effectiveness of big blocks. But the developers of Bitcoin ABC did not stop there and in May 2018, they introduced a new upgrade of the network, which increased the size to 32 MB, that is, Bitcoin Cash started to have its own hard forks.
Civil War between Bitcoin and Bitcoin Cash
All users who had Bitcoin received an equal number of Bitcoin Cash coins a year ago. After that, many crypto enthusiasts began to express their suspicions and skepticism about the positioning of the coin as "digital cash" and its widespread use in everyday life.
"The real Bitcoin, first of all, is the preservation of value. I do not think it will be reasonable to use it for payments for a variety of reasons. You cannot use the name Bitcoin for other coins and denigrate the value of the first crypto," says Michael Moro, Genesis Trading executive director, and adds that the fork of the main digital currency is not a substitute for Bitcoin.
The main discussion with legal consequences for the right to be called Bitcoin developed among the supporters of Bitcoin Cash, led by one of the first investors in Bitcoin and multi-millionaire Roger Ver, and numerous followers of Bitcoin. In April 2018, on his Twitter, Ver started a dispute about the criteria by which one can determine the true Bitcoin. ShapeShift CEO Erik Voorhees said that Bitcoin is a chain originating from the genesis block with the highest evidence of work, therefore, Bitcoin Cash has never been and cannot become the real Bitcoin.
"In my opinion, this is a very short-sighted opinion. I do not think that the chain with the largest hash is the only characteristic inherent to the real Bitcoin. In my opinion, there are several such criteria," Roger Ver answered to the criticism and explained that the Bitcoin white paper states that it is an electronic payment P2P system and should act as money. This goal, according to Ver, is obviously pursued only by Bitcoin Cash.
Roger Ver repeatedly refers to Satoshi Nakamoto's "commandments" about the need for online scaling and the introduction of irreversible payments with a processed special mechanism in 10 seconds without waiting for confirmation, and Bitcoin also wins by these parameters over Bitcoin Cash.
"As a result, if these parameters have five points of importance, and the rest have 1 point, then Bitcoin Cash meets the requirements of this Bitcoin by 68 percent, and Bitcoin only by 32 percent. I'm not saying that Bitcoin Cash is the only true interpretation of Bitcoin," summed up Roger Ver in his video message.
Mocking comments repeatedly appear under the posts of the investor and multi-millionaire, in which users ironically mock the "blind faith" in the Bitcoin Cash scam project.
"If I worked for Ver, and if he paid me a salary in Bitcoin Cash, then I would compare it with punishment," jokes one of the opponents of the fork of the first digital coin.
But the supporters of Bitcoin Cash do not agree with such reproachful statements and are confident that increasing the block size is the best and easiest solution for the entire crypto industry.
"The last fork of Bitcoin Cash associated with increasing the block size to 32 MB actually eliminated the risk of network congestion due to scaling and paved the way for low-cost transactions," said Alejandro de la Torre, vice president of business operations at BTC.com.
He believes that the Bitcoin Cash system can be used to transform the traditional economy.
"In countries such as Venezuela, where monetary inflation is estimated at more than 40,000 percent, the benefit of the new blockchain space for opening up fast and inexpensive transactions as an alternative payment system at the local level was more than significant," added DeLaTorre.
In the Top No Matter What
Bitcoin Cash is one of the most popular and stable coins, the market capitalization of which is growing, as if immune to the negativity around its community. As a rule, the Bitcoin fork is mainly traded on Asian crypto exchanges, such as Huobi and OKEx. Users make transactions with lower commissions compared to Ethereum or Litecoin, although the blockchain of "digital cash" itself is loaded very poorly. For example, up to five KB, the average daily volume of transactions is about 14,000, which is 150,000 less than for Bitcoins. In addition, more than 95 percent of the nodes are monitored by one server, which means there can be no question of centralization.
Probably, as some researchers believe, Bitcoin Cash is held in the top ranks thanks to the mining pool Antpool, which is the division of Bitmain and the largest BCH earner and also burns 12 percent of transaction commissions. Artificially increased interest, however, cannot be hidden behind large figures of capitalization, as network developers have recently lost interest in this cryptocurrency. Only the creator of the Bitcoin ABC protocol Amaury Sechet is active and proposes a new consensus protocol, the essence of which is that the nodes agree in advance on the general form of the block without node information. This allows entering transactions with zero disclosure to make quick payments.
Of course, this innovation was criticized by the supporters of Bitcoin. For example, the head of nChain Craig Wright spoke out about the system quite harshly, stating that it allegedly cannot become reliable and is not focused on long-term prospects. Although in 2017, Wright, known as the "Faketoshi,” was confident in the success of BCH.
"2018 will be the year when we disclose the full potential of Bitcoin. BCH will be more secure, and it will have no limits in what it can achieve. Op_Codes will be available. The block size is unlimited. It's time to bring it to the world," Wright said in his tweet.
In general, the year-long existence of Bitcoin Cash did not bring innovations to the industry, which would radically change the system. So far, there is nothing that would speak about the great prospects of the currency and any technological breakthroughs. But despite this, BCH confidently stays at the top and is not going to give up positions. Therefore, on August 1, 15 countries celebrated the first anniversary of the famous fork of the digital gold.