Bitcoin Cash is not Bitcoin. However, their history is also the history of Bitcoin, because until August 1, 2017 they were the same cryptocurrency: Bitcoin Cash is the first direct fork of Bitcoin. This means that the original code of the first blockchain and its transactions were cloned up to a certain point - specifically, up to block number 478,558. From there, a new blockchain was created with different rules and therefore a new digital currency separate (and not instead of) from Bitcoin. The main offering of Bitcoin Cash is written in its name (cash): being a much faster payment method than the original Bitcoin. In order to meet this goal, its developers decided to make a significant increase in the size of the original network blocks, going from 1 MB to 8 MB and from there to the current 32 MB. To understand why exactly this was the chosen option and why a new cryptocurrency had to be created rather than the same measure being implemented in Bitcoin, we must review the background that led to that result.
Origins and history
Satoshi Nakamoto built the first blockchain with 1MB capacity per block, which would allow only around 7 transactions per second. From the beginning, it was known that this would be a rather temporary capacity because, as more people used the network under these conditions, the speed would decrease and the commissions would skyrocket. And that was exactly what happened. Already in 2016, the scalability (growth) problems in Bitcoin were becoming more and more noticeable. The adoption of the currency began to multiply, resulting in a significant slowdown in the network. During one of the busiest weeks in its history, there were even tens of thousands of transactions pending confirmation. This gave rise to the so-called “commission market”: many users had to pay a higher amount of commission to the miners, in order to see their transaction confirmed as soon as possible. If it was decided to pay the lower amount, the transaction could be on hold for days or not go through at all. Thus, small transactions became impossible, as each movement could exceed 15 dollars.
One thing was more than clear: Bitcoin had to scale, its capabilities had to be improved as soon as possible in order to continue working with a greater number of users. The whole community agreed on this, but how it was quickly divided. Larger or more efficient blocks Two groups emerged in 2017 with the same objective, but with different proposals to achieve it: those who wanted to increase the size of the blocks and those who preferred a different alternative, which would improve their operation without the need to increase their size. In the first group were the supporters of Bitcoin Unlimited, the organization that maintains the Bitcoin client of the same name, led by the entrepreneur Roger Ver. His proposal was to carry out a hardfork (hard fork) to eliminate the limit on the size of the blocks: this would be adjusted according to the needs of the network.
The second group was led by the developers of Bitcoin Core, the main client of Bitcoin. The solution they presented was Segregated Witness (SegWit), a method through which transaction signatures were relocated within the block, thus optimizing space and allowing a capacity of up to 2 MB. To activate it, you would only have to perform a softfork (soft fork), less drastic than a hardfork because it maintains compatibility with previous versions of the Bitcoin client.
However, to carry out either of the two options, as is mandatory in the Bitcoin system, it was necessary to reach a consensus in the community, made up of the nodes and the miners. The controversy began then. Divided community The developers of Bitcoin Core maintained their position, mainly due to two factors: the flexible blocks that Unlimited proposed had not been sufficiently tested, therefore, implementing the proposal would not be very safe for the network; and increasing the size of Bitcoin's blocks would lead to more centralization, as more sophisticated equipment would be needed to support them. That way, a few companies could come to control the cryptocurrency.
For their part, from Unlimited they also stood firm, claiming that SegWit would hardly be a temporary solution and not a definitive one. Everything pointed to a hardfork that divided the network, the miners and the Bitcoin nodes, creating an additional cryptocurrency with which price, community and credit would be shared, as happened with Ethereum. To avoid this scenario, around 58 companies in the ecosystem, including such important names as Blockchain, Bitmain, Coinbase and Circle, reached a new agreement in May 2017: activate SegWit, but followed by a hard fork that increased the block size to 2 MB. This proposal was SegWit2x and, in the end, it would not be realized.
The Birth
In July, perhaps suspecting the result, a group of mostly Asian investors and entrepreneurs led by the exchange house and mining group ViaBTC (Bitmain being the largest investor of that company), decided to carry out an independent hardfork to the community of Bitcoin to create a new cryptocurrency based on the same code, but that would have the substantial differences that the Core team was not allowing. The first implementation of this protocol, called Bitcoin ABC (for Adjustable Blocksize Cap - Adjustable Block Size Limit), was presented by its main developer, Amaury «Deadal Nix» Séchet, during the conference “The Future of Bitcoin” held in Arnhem (Netherlands) in early July.
Shortly after, on August 1, the hardfork was made and the genesis block of Bitcoin Cash was mined at six hours by ViaBTC, with a size of only 1.9 MB, despite an initial limit of up to 8 MB. Each Bitcoin Cash (BCH) began to be traded on the Kraken, ViaBTC and HitBit exchanges at an average price of $214.38.
Bitcoin was not affected further by the event. The only difference that its users could notice was that their balance in BTC doubled in BCH. This was only due to the hardfork, which copied the original chain. After that date, both cryptocurrencies are acquired and traded separately.
Fight for the name of Bitcoin Despite the fact that, from the beginning, Bitcoin Cash was considered as an altcoin and was far from competing for miners and nodes with Bitcoin, its developers tried to legitimize it as the “real Bitcoin”, and even kept the original White Paper of the first cryptocurrency on your page as if it were Bitcoin Cash. As stated on its official site: Bitcoin Cash offers a strong currency to the world, fulfilling the initial promise of Bitcoin as electronic money from user to user (…) Bitcoin Cash is usually represented by the symbol BCH and is considered by its supporters as the legitimate continuation of the Bitcoin project as user-to-user digital money.
The one who has been seen most amid the controversy over the name has been Roger Ver, CEO of the mining group and news page Bitcoin.com and a strong supporter of Bitcoin Cash. To begin with, on this page, it is not allowed that Bitcoin Cash is named in any other way that does not include the word "Bitcoin", because, for them, Bitcoin Cash is the legitimate continuation of the first blockchain, and that is how they seek to promote it. Many users and companies, on the other hand, use the term "Bcash" to refer to the new cryptocurrency, which was quickly clarified, in order to continue to keep the term.
If your wallet or exchange uses the term "bcash," they are likely referring to Bitcoin Cash; But it should be noted that "bcash" is not the proper name, nor a commonly used abbreviation for Bitcoin Cash, and is a hostile attempt to confuse users. It would be best to proceed with caution when dealing with anyone who uses the term "bcash" instead of the currency's actual name, Bitcoin Cash. With the same intention of preserving the name and even the acronym of Bitcoin, on numerous occasions, this site has made clear attempts to assign itself such credit.
Thus, for example, the controversy occurred when the blockchain explorer available on this page began to refer to BCH as "Bitcoin" to dry, while BTC was designated as "Bitcoin Core". Similarly, in a promotion for the purchase of BCH with a credit card, the acronym "BTC" appeared instead of the corresponding one. Since January 2018, the conflict also included the Twitter account @Bitcoin, one of the most popular in the crypto world, with more than 600,000 followers by that date. This account was created in 2011 by an unidentified person, and after a hiatus in 2017, it started posting again in early 2018. The problem that many Bitcoin users noted was that the new posts had a clear bias towards Bitcoin Cash. and articles from the Bitcoin.com site (something that continues to December 2018).
As a consequence, allegations began against Bitcoin.com about taking over that account to confuse unsuspecting users. Something that was denied from the portal, claiming that whoever is behind @Bitcoin, simply changed their perspective on which chain to support. Following this controversy and numerous reports, @Bitcoin was suspended in early April; although it was re-established shortly thereafter and is now open and publishing on Bitcoin Cash.
The problem did not stop, but continued between April and May, with many users and developers accusing Bitcoin.com and Roger Ver of fraud for trying to get hold of the Bitcoin name, to the point of organizing themselves to prepare a lawsuit with more than 1,100 supporters. Only in the face of such a threat, the misleading data was removed from Bitcoin.com. But, since it could not be proven that @Bitcoin is under the control of this portal, the changes in said account were non-existent.
Despite everything that happened, in September 2018 an article titled “Why Bitcoin Cash is Bitcoin” appeared on Bitcoin.com, which summarizes a presentation by Roger Ver and lists certain qualities that, in his opinion, are “things that make Bitcoin, Bitcoin ”. These are to be a user-to-user electronic cash system, low fees, fast payments, reliable payments, scalable chain, non-reversible payments, chain of digital signatures, enabled opcodes, SHA-256 algorithm, and be the longest chain, with the greatest proof of work.
A result, at the very least, highly debatable, and, at best, totally wrong. Forks The first Bitcoin Cash hardfork was an upgrade without any further consequences, mainly to fix the mining difficulty algorithm. That first protocol caused the level of difficulty to create new BCH to suffer very marked ups and downs, as it was designed to increase or decrease according to the number of miners present on the network and they constantly moved their computational power between Bitcoin and Bitcoin Cash, adhering to the chain that offered the most profits at that time.
To solve that problem, the old algorithm was replaced on November 13, 2017 by one that would avoid extreme fluctuations in difficulty, but would continue to adjust to current computational power. A few months later, on May 15, 2018, another hard fork was made to increase the block size to 32 MB. This measure was given despite the fact that, to date, the maximum registered in the filling of a block was barely 4.7 MB; presumably with a view to becoming widespread in the future.
Bitcoin Cash and Bitcoin SV
For November 2018, the Bitcoin ABC developer group planned a new hardfork with the intention of upgrading Bitcoin Cash to implement smart contracts and validations outside of its blockchain, still keeping the block size at 32MB. This initiative was taken as an affront to other community leaders, who decided to launch another protocol in order to counteract this update and keep the BCH solely as a means of payment.
In the first group, supporting Bitcoin ABC, Roger Ver and Jihan Wu, CEO of Bitmain, the company that holds the title as the world's largest manufacturer of ASIC equipment for cryptocurrency mining, were positioned as leaders. Meanwhile, the leaders of the second group were Craig Wright, self-styled Satoshi Nakamoto and Chief Scientist of nChain; and billionaire Calvin Ayre, owner of the largest Bitcoin Cash mining pool at the time, CoinGeek.
In addition to not allowing changes that they considered unnecessary, the version led by the second group and titled "Bitcoin SV" (Satoshi Vision), would increase the block size to 128 MB. Reflecting its mission to fulfill the vision of Bitcoin founder Satoshi Nakamoto, the name of the project represents "Satoshi's Vision" or SV. Created at the request of leading BCH mining company CoinGeek and other miners, Bitcoin SV is designed to provide a clear BCH implementation option for miners who support the original vision of Bitcoin, rather than implementations looking to make unnecessary changes to the protocol.
Since the updates of ABC and nChain are incompatible, the Bitcoin Cash network was divided in two on November 15, when the hardfork was made, leaving two different cryptocurrencies in existence. Unlike the fork that separated Bitcoin Cash from Bitcoin, this time the two cryptocurrencies are competing as equals for price, computational power, and even name. Thus, while on November 14 Bitcoin Cash was priced at $425, the next day it had dropped to $289 and Bitcoin SV started trading at $96. The only advantage of the ABC group was that the exchange houses kept their cryptocurrency with the acronym BCH, a kind of anointing as the "real" Bitcoin Cash.
At the end of November, the BitMEX research center, which had been tracking the conflict, reported losses for the promoters and miners of both chains of at least $8.9 million. Despite this, the chains continue to compete in the so-called “hashes war”, where the community will decide which of them will have more computational power (hashrate). Although in principle ABC showed an advantage, by December 8, 2018 SV surpassed it by 36.5%; while their prices, according to CoinMarketCap, remain rather close at $105 for BCH and $92 for BSV. For its part, BCH maintains the advantage in the number of nodes in operation: 1,032 against the 527 of Bitcoin SV.
Who is behind its maintenance?
As stated on their website, there are multiple teams of developers dealing with Bitcoin Cash, including the aforementioned Unlimited and XT. Amaury Sechet continues to be the development lead of Bitcoin ABC and Daniel Connolly is the development lead of Bitcoin SV. The companies nChain and CoinGeek, meanwhile, are now dedicating their efforts to Bitcoin SV; while Bitcoin.com and Bitmain hold on to BCH.
Among the developers with the most contributions are Josh Ellithorpe, a software engineer at Coinbase, with 252 reviews (commits) to the code; Shammah Chancellor, with 60 reviews, but who resigned from Bitcoin ABC in early December; CoinSpice's Corentin Mercier, with 29 reviews; Cláudio Gil, Portuguese software engineer, with 5 revisions; and Jason Cox, from the ABC group, with 4 revisions. In addition, in total, there are up to 98 collaborators from various countries.
Differences with Bitcoin
For any user, at first glance, there is not much difference between Bitcoin and Bitcoin Cash. However, they are two totally different cryptocurrencies, with different chains, so funds in BTC should not be sent to a BCH address or vice versa. Here are the most important differences:
Of course, both cryptocurrencies have their own logo and acronym. Bitcoin kept its original logo and acronyms after the hardfork (BTC or XBT), and this is how it is represented in all exchanges and wallets. For its part, as for Bitcoin Cash, although at the beginning it was very common to assign the acronym BCC to it, it did not take long to change to BCH, mainly due to the fact that the BitConnect currency was already represented with BCC. The Bitcoin Cash logo, in addition to the classic orange circle with the white B, tilted to the right, is surrounded by two rectangular figures that simulate a kind of banknote. To differentiate it from Bitcoin, some portals and wallets, such as Jaxx and Exodus, dispense with those figures and choose only to change the color to green.
Commissions
The main purpose of increasing the block size in Bitcoin Cash was to reduce the fees that users pay to miners each time they make a transaction. This objective was achieved, because as of December 2018, the commissions of trading in BCH are 39% cheaper than doing it in BTC; However, the number of transactions in Bitcoin Cash represent only 3% of those made in Bitcoin. It is worth mentioning that, in both cryptocurrencies, these commissions are well below the dollar.
Despite this, that difference may be temporary. As early as June 2018, Bitcoin had lower fees than Bitcoin Cash, thanks to the increasing adoption of SegWit and batching transactions.
Mining
Both chains use the Proof of Work (PoW) system with SHA 256 algorithm to create new coins and validate transactions. Using this tactic, the miners (who grant their computational power) must use their computers to perform billions of calculations per second, in order to try to find the answer that will create the new block. Bitmain's Antminer S9 is one of the devices with which Bitcoin Cash can be mined.
Bitmain
Despite this, the algorithm used to adjust the difficulty in Bitcoin Cash was, from the beginning, different from that used in Bitcoin. The first to be implemented was the Emergency Difficulty Adjustment (EDA), designed so that this chain could remain as the minority, by automatically adjusting the difficulty at the exit or entrance of miners, but in return producing strong fluctuations in computational power. These, in turn, caused slow confirmations and affected the timing of the issue of the coin.
Due to such problem, the EDA was changed to the Difficulty Adjustment Algorithm (DAA), which avoids strong fluctuations when the computational power is stable, but allows rapid changes in the difficulty when it changes. Unlike Bitcoin, which adjusts its difficulty approximately every two weeks, this algorithm allows modifying it every 24 hours.
As of December 2018, the reward for Bitcoin Cash miners is 12.5 BCH per solved block. By April 2020, approximately, this will be cut in half, that is, 6.25 BCH. On the other hand, the commissions that BCH miners receive from users reach only $ 0.14 per block, on average, against the approximate $ 500 that Bitcoin offers.
Scalability
Both chains have the objective of becoming widespread, so their respective developers have presented plans to improve the capabilities of each one. Of course, their methods are quite different. In Bitcoin Cash it was decided, from the beginning, not to implement SegWit and to take the route of increasing the block size as necessary. Second layer solutions like the Lightning Network, at least to date, have also been out of the question.
Wallets
To use Bitcoin Cash, as with any other cryptocurrency, you need to get hold of a wallet. According to its official page, up to 26 wallets can store Bitcoin Cash. Cold wallets include Ledger, Trezor, and KeepKey. Among the mobiles are Coinomi and BitPay; for desktop include Exodus, Copay and Jaxx; and those found only online include Coinbase and WebMoney.
Exchange houses In these portals the cryptocurrency can be acquired, sold or traded with it, according to the options and prices they offer. On the official Bitcoin Cash page, 40 exchange houses from various parts of the world are numbered, which operate with different currencies, options and service commissions. The most widely accepted fiat currencies in trading are the euro and the dollar, although the Japanese yen, the Chinese yuan and certain Latin American currencies are also among the options. Besides, beyond the pure exchange, some of these portals, such as Poloniex and Kraken, offer tools for trading. Among the most recognized exchanges where you can trade with BCH we can mention Bittrex, ShapeShift, Bithumb, Changelly, bitFlyer, Bitstamp, Coinbase and Buda.com (formerly SurBTC).
Likewise, the P2P platform LocalBitcoinCash is available, quite similar to LocalBitcoins, where users trade directly with each other but with an extra layer of security. Not all cryptocurrencies are decentralized and, although it is an ideal feature, it is not mandatory either: each user can decide what he or she likes best. However, the great ideal of Bitcoin is to eliminate all intermediaries and allow person-to-person transactions in a secure way, without anyone being able to fully control the network, and, therefore, modify it or establish rules to the detriment of users. Bitcoin Cash, being considered by some as the "true" continuation of that ideal, must certainly be decentralized.
In fact, as read on its official website, its development is decentralized: With multiple independent teams of developers providing software implementations, the future is certain. Bitcoin Cash is resistant to political and social attacks in protocol development. No single group or project can control it. Bitcoin cash Despite all this, Bitcoin Cash, along with its supporters and developers, have been repeatedly accused of centralization in the network, which implies that, contrary to what is established on its page, a few groups and projects may be controlling it. Such was the main reason for the Bitcoin Core developers to refuse to increase the size of the blocks: needing more advanced equipment to mine, this task would fall only to the miners with more resources.
Among the most serious accusations we can recall that of the Bitpico group of developers, who have dedicated themselves to stress testing both Bitcoin and Bitcoin Cash. According to its discoveries in July 2018, up to 98% of the nodes associated with this network were physically very close to each other, and 49% of them were operating within the facilities of the Chinese conglomerate Alibaba. This could allow the entity that owns those nodes to attack the network. Although these results were controversial, it has also been theorized that Alibaba maintains a certain partnership with Bitmain, a company strongly related to Bitcoin Cash. Other accusations include that of cryptographer Nick Szabo, who has been suspected of being the creator of Bitcoin, and who even called the Bitcoin Cash network "a centralized puppet." The demand What is perhaps the most serious allegation came this year in the form of a lawsuit by the Florida-based company United Investment Corp, specifically against Roger Ver, as CEO of Bitcoin.com; Jihan Wu, as CEO of Bitmain, Jesse Powell, as CEO of Kraken and Amaury Sechet, Shammah Chancellor and Jason Cox as developers of the Bitcoin ABC group, in charge of the latest hardfork. According to the document: This action involves a close-knit network of individuals and organizations scheme to manipulate the Bitcoin Cash cryptocurrency market, effectively hijacking the Bitcoin Cash network, centralizing the market, and violating all accepted standards, protocols, and associated course of conduct. with Bitcoin since its inception. Bitcoin cash According to the same text, this company, rather unknown, would have invested millions of dollars in infrastructure to mine Bitcoin Cash and would have suffered significant losses due to said manipulation of the network during the last hardfork.
Due to this, among its demands to repair this damage is to return the Bitcoin Cash code to its previous state. Interestingly, both Craig Wright and Calvin Ayre had previously mentioned upcoming demands for the ABC team. At the time of writing, there is still no outcome on this conflict. Perspectives The vision for the future of Bitcoin Cash as a cryptocurrency, according to the group of developers Bitcoin ABC, is to become widespread throughout the globe, with almost immediate and free transactions, and, additionally, to have its own economy of tokens created within the same blockchain; something very similar to what is offered by Ethereum. To achieve this, they have planned a series of updates that would be given every 6 months, each of which would include new features such as adjustable blocks of up to 1 TB, fractioned satoshis, improvements in commissions, a pre-consensus function , the activation of operation codes (opcodes) to allow more advanced features and a new transaction format.
According to its official page: We believe that the basic design of Bitcoin Cash is solid and does not need any radical changes. However, this does not mean that it is perfect. It is prudent to make incremental improvements to the system with a technically sound design and careful engineering. By implementing optimizations and protocol updates, we can enable user-to-user digital cash to scale many orders of magnitude beyond current limits. Bitcoin cash Despite all these plans for the future, as of December 2018 Bitcoin Cash was facing a difficult time, where it was still competing against the newly created Bitcoin SV to get the support of the community. Meanwhile, its main promoters and developers seem to have a legal conflict ahead in which, with difficulty, a peaceful agreement can be reached. Now, whether Bitcoin SV takes the name Bitcoin Cash remains doubtful. For now, the blocks that Bitcoin Cash insisted so much on continuing to increase remain well below capacity, most without even reaching MB in size. Whether or not adoption increases in the near future remains to be seen.
