Bitcoin Cash fork
On November 15, 2018, less than a week from now, Bitcoin Cash is going through its first contentious hard fork much like the one that originated BCH itself little over a year ago.
Forks are not an uncommon event in the world of cryptocurrencies. In fact, forks - both soft and hard - are a regular feature of software in general. Bitcoin, being an open-source software, has been through more forks than a Christmas turkey, with estimates hovering around 17 splits.
It must be stressed, though, that a fork (even a hard one) doesn’t necessarily result in a split community, or even in a new currency branching out from the original network. Quite often a fork is just a way of implementing new features or updates (like Segwit), or as a platform for a completely unrelated software vision (such as Litecoin or Zcash).
Altogether, Bitcoin has been successfully forked at least 17 times, most of them in a relatively peaceful way. However, some forks have harder teeth and such was the case of the Bitcoin Cash one. In this case, the divide wasn’t only over technical features, nor was it intended to create a new coin. It was an ideological clash over a vision for the future - and the very identity - of Bitcoin itself.
After a year, BCH has proven itself quite successful both in terms of market cap (currently the 4th biggest cryptocurrency) and user base. But even though the worst part seems to have passed, to this day the two communities don’t quite see eye to eye.
What does it change?
The very roadmap for Bitcoin Cash included periodic hard forks, due to happen every six months, to push upgrades to the whole network. This was possible due to BCH’s more centralised nature, with most development being pushed by Bitcoin ABC, the main implementation of the BCash software.
While consensus around even the smallest changes can take years in a more decentralised network, Bitcoin ABC could - and did - simply push upgrades in a top-down fashion. The latest version, ABC’s version 0.18.0, which was announced in August and should be implemented by November 15, contains the following changes:
- A new opcode called OP_CHECKDATASIG that improves the BCH scripting language to permit the validation of messages from outside the blockchain. This will enable uses such as the use of oracles and cross-chain atomic contracts.
- The introduction of canonical transaction ordering. This is a technical building block that lays the foundation for massive scaling improvements in the future.
- Improving fungibility. As a cash system, Bitcoin Cash should embrace methods to improve its fungibility.
These changes aim to: 1) Add new functionalities to the network (like allowing for oracle input and opening the doors to smart contract-like programming); 2) optimise the blocks to allow for future on-chain scaling; and 3) generally give BCH more cash-like fungibility (e.g. make individual units more interchangeable).
Also, ABC does not intend to make changes to the 32 MB block size limit for now, as there is currently no obvious need for bigger blocks in the network.
Bitcoin ABC vs. nChain
Although this system has worked more or less smoothly for the first year, this appears to no longer be the case. But then again, as the network grows in both users and value, this is no longer just about technical features. It’s about power.
Bitcoin Cash’s secession from the original chain was pushed mostly by Chinese mining pools and championed by Bitmain, the world’s top mining equipment manufacturer, and Bitcoin.com, a company led by investor and BTC early adopter Roger Ver. Largely under the influence of this group, Bitcoin ABC was born shortly after the split and has since exerted control over the network’s development.
In the early days, Bcash has taken in as many allies as it possibly could. One of the most prominent ones was nChain, a company led by Craig Wright, who has notoriously proclaimed to be Satoshi Nakamoto (creator of Bitcoin) a few years ago. This claim, while widely dismissed as “lacking convincing evidence” and even an outright fraud, has initially found a friendly audience in Bcash’s fledgling community.
This controversial figure is now leading an insurgence amongst Bitcoin ABC’s dominance, promoting the hard forking of BCH into the perhaps unsurprisingly dubbed Bitcoin Cash SV, or “Satoshi Vision” - a competing full node developed by nChain.
Wright, with the backing of Bcash’s biggest mining pool Coingeek, has fiercely rejected the proposed changes, going so far as to accuse ABC of supporting child pornography and even threatening former ally Roger Ver.
In Wright’s view, DSV (one of the changes proposed by ABC) will add criminality into the system and “kill the chain to the authorities.” They also support a block increase from 32 to 128MB.
Sounds like a full-fledged civil war in camp Bcash.
What happens with my coins?
Same as when Bitcoin Cash was forked from BTC, all users that hold any BCH in their wallets during the split should get the same balance in both chains. So, say you have one BCH - after the fork takes place, you should end up with one BCH-ABC and one BCH-SV.
There is, however, a big caveat to this. Your coins must be held at a wallet that supports the fork for you to get access to the new coins.
If your coins are kept in a service that has explicitly stated that won’t support the fork, or that hasn’t planned to offer future support, you might not get anything. So, in order to ensure you’ll get the coins, we advise you to move your holdings to a supporting wallet.
Six of the top exchanges have confirmed their support for the fork, lending credibility to the challenging chain - amongst them, Binance, Coinbase, Coinbase Pro and Huobi.
Which chain will prevail?
Hard to tell yet. While SV has managed to onboard the biggest mining pool, the ABC side accounts for most the nodes. Moreover, even if these are the biggest factions within the community, there is a substantial part that opposes any of the proposed changes - both SV and ABC.
But the fork itself won’t likely be the end of it. Even after the split, it will take time for the networks to accommodate and the market to assess the resulting groups.
One would feel tempted to believe that the incumbent has the advantage, but that is not always the case. Even if most Bitcoin forks haven’t been able to scratch BTC’s dominance, in the case of Ethereum (who split after the DAO incident a few years ago) the forked network is the one who actually prevailed, with the original chain moving on to become Ethereum Classic - not a failure by any means, but far from it’s “spawn.”
So, if history is any indicator, the prevailing network will be the one that manages to appeal to most regular users.
With the date of the fork quickly approaching, there is still plenty of room for developments, and the Cloudbet Blog will keep an eye out for updates.