Bitcoin Cash, Bitcoin, Bitcoin SV: A clear point of the situation

Introduction

Since Bitcoin was born in 2008, many events have happened and we would like to summarize them as much as possible, despite the fact that the topic is quite broad. Let's start from the beginning: Bitcoin is a concept, a protocol, defined in the technical document (whitepaper) published in 2009 by Satoshi Nakamoto. There are several dozen implementations, but the three most known and relevant are: Bitcoin (BTC), Bitcoin Cash (BCH) and Bitcoin Satoshi Vision (BSV). With the word Bitcoin we will refer to the concept defined in the whitepaper, while when we refer to the coin we will use the abbreviation that distinguishes it (BTC, BCH, BSV).

How it works?

Basically it is a database replicated in many copies (one for each node of the network), kept consistent by the mathematical properties of cryptography which, as seals, make it impossible to alter the content. This database is updated through the connection of blocks of data consisting of valid transactions, each of which, as the protocol rules are defined, is generated on average every 10 minutes and appended to the previous block to form the blockchain.

A transaction consists of a message declaring the change of ownership of a quantity of bitcoins, established by the one who has the secret cryptographic key to which they were previously assigned. Once generated and signed, this transaction is published and disseminated to all the nodes of the Bitcoin network that accept it if it is valid, i.e. if the signature and the amount are consistent with the quantity contained in the previous blocks that make up the blockchain. If an inconsistent or invalid transaction is published, it will simply be ignored and discarded.

In the period of time between when a transaction is generated and published and when it is included in a block, the transaction is said to be unconfirmed or 0 confirmed. The number of confirmations indicates how many blocks have been added to the blockchain since its inclusion. The greater the number of confirmations, the greater the certainty that the transaction is valid, since in order to falsify, modify or cancel it, it would be necessary to recreate a number of blocks equal to the quantity of confirmations + 1, while the rest of the world continues to add new blocks. An operation almost impossible to carry out. When a transaction reaches at least 6 confirmations, it is considered practically safe.

A brief summary of the entire story

BTC was the first implementation of Bitcoin, which appeared on January 3, 2009. When in 2014 the adoption began to increase significantly, we found ourselves having to face the problem of scalability. In fact, at the beginning Satoshi Nakamoto introduced a rule that established the maximum size of 1 MB for the blocks that make up the blockchain. It was a temporary measure introduced to avoid abuse of the protocol when it was still in the experimental phase, and with the expectation of removing it following the increase in adoption, that is when the quantity of transactions had increased to the point of making it a limit.

It was obvious to everyone that the solution was to expand or remove that parameter but, at a specific moment, a group of people radically changed their opinion. It is a group of developers (core devs), many of whom joined when Bitcoin had already become quite popular, who had one thing in common: they were hired by a new company (Blockstream, which we will call BS from now on), financed by banks, insurance companies and financial institutions, and coordinated mainly by two exponents: Adam Back and Gregory Maxwell. The new strategy was based on media terrorism against protocol improvement, with funded propaganda based on the misconception that removing the 1 MB limit for block size would be destructive; they were trying to convince everyone that the right way to to scale Bitcoin was to use additional protocols on which to carry out transactions.

To achieve their goal, they launched a censorship campaign: the main forums used for Bitcoin discussions and disclosure (such as bitcointalk and the r/bitcoin subreddit) were acquired and censored, eliminating any possibility of debate and allowing only discussions tuned to their goal. The proof is that restrictive rules are still applied on these platforms and anyone who has a point of view slightly different from theirs is blocked, banished from the discussion and the related message deleted. Everything can be documented through a simple search.

Meanwhile BS and the core devs attempted to discredit one by one all developers who didn't agree to support their narrative through personal attacks. They sent away important people such as Gavin Andresen (to whom Satoshi Nakamoto had directly entrusted the continuation of the Bitcoin project), Mike Hearn who worked on the code since its dawn, and all those who understood what was going on.

Cleaning up all free thinkers, they reshaped Bitcoin's development project, changing its purpose from a peer-to-peer world currency to a digital gold and a safe haven, adding totally meaningless arguments that many people didn't understand and still don't understand. The most common belief is that the transactions should not have been stored on the Bitcoin blockchain but on the Lightning Network (LN for simplicity), a second layer protocol, which is extremely complex and which presents intrinsic criticalities in the operating system to the point of make it practically unusable.

In the eyes of an expert developer these problems were evident from the beginning, but being technically complicated, it allowed core devs to believe that this would be the definitive solution (to date, after more than 5 years of development, LN is still not working and very often vulnerabilities and attack vectors rise up).

Lies, lies, lies...

Core devs have spread a wide range of conceptually mistaken beliefs thanks to censorship and control of the main communication channels. For brevity we only describe the main ones, but there is ample documentation on uncensored channels (such as the r/btc subreddit).

Before delving into the next points, it is necessary to understand what a hard fork is: it is the method provided in Bitcoin to make an improvement of the protocol, a change that implies new rules which make it incompatible with the previous version, and which requires a software update of all nodes in the network. The blockchain is a structure that stores data made up of blocks, linked one to the other. On average, a new block of data is added every 10 minutes. Outdated nodes wouldn't be able to accept new blocks with new rules, only updated ones would. This situation could result in a split, i.e. the division of the blockchain into two branches, one consisting only of blocks with old rules and one instead with updated ones. The split considerably penalizes the branch on which there is the least amount of miners, creating an incentive to take sides with the majority branch . Eliminating the 1 MB limit means having to update the protocol rules and then carry out the so-called hard fork. At the time it was adopted, nodes that were not updated would not be able to accept larger blocks.

The first lie claims that hard forks are destructive and most likely cause a split. The Bitcoin protocol is engineered to prevent this from happening, unless the split is intentional. When most of the network (miners) implement the new rules, any branch that accepts only the old ones becomes dysfunctional, precisely because of the lower amount of miners present. In the minority branch, transactions would require very long confirmation times and the cost of mining would be so high that as a consequence it would be naturally abandoned. Regular hard forks occur in many alternative cryptocurrencies and these never caused problems. If, on the other hand, you want to intentionally split, you cannot avoid it anyway.

The second lie is based on the fact that all Bitcoin users should host a full node, that is, a computer that retains the entire blockchain. According to this lie, this is the only method that allows you to be sure that your transactions are reliable, as well as keeping the network honest and decentralized. In reality it is not necessary to own a full node because thanks to the mathematical properties of cryptography you can have evidence of the validity of transactions without necessarily retracing the history of the blockchain. This fact too is well explained in the whitepaper. Only those who mine or provide specific services (such as some wallet managers) need to host a full node.

The third lie concerns the belief that if the blocks were larger than 1 MB, Bitcoin users could not afford to manage a full node and decentralization would be lost. The cost of maintaining a full node can also significantly affect the domestic economy, but it becomes a negligible cost for professional operators (miners, wallet managers, various services). Hard drives are increasingly capacious and faster, as are computers and their memory. It will not be possible to increase the size of the blocks indefinitely, but certainly it wouldn't be a problem to bring it to hundreds of MBs (solution already manageable with today's computers) which would solve all scalability problems for several years, enough time to further evolve technologies and software to be able to support the global financial needs. What is the point of limiting the protocol to make it run on domestic systems that would cost less than the cost of a single transaction on the network? None. Without considering that such high commissions are a very strong deterrent to the spread of the use of this technology and not an incentive to keep the network decentralized.

With 1MB blocks, there is not enough capacity to accommodate even the transactions needed to use LN. With 8 billion people and an average capacity of 400,000 transactions per day, each person can perform one transaction on average every 54 years. Furthermore, since space is limited, miners select and approve transactions that offer higher commissions up to filling the block and leaving the others waiting, thus creating a kind of auction. In the history of Bitcoin, transaction fees have come to cost well over €50 despite the spread of the network is still tiny. Miners are financed by the creation of new bitcoins and by the sum of the fees offered by the transactions that they can include in the blocks. Since the number of transactions that can be included in the blocks is very limited and the creation of new bitcoins decreases over time tending to zero, the commissions will necessarily have to reach even higher figures, otherwise miners will abandon the activity, consequently reducing network security.

Another criticism against BTC is that in order to implement LN without carrying out a hard fork, they would have had to change the format of the transactions. They then used a stratagem (soft fork) to generate transactions accepted by all nodes, but whose functionality would be recognized only by the updated nodes. This solution was called SegWit and, at the price of having enormously complicated the Bitcoin code. It allowed to generate transactions with cryptographic signatures separate from the other information of the transaction itself, moreover canceling the concept of "digital signature chain" as the latter are no longer written in the blockchain but in a separate database. SegWit is a non-negligible technological burden since the nodes that stop supporting it would treat these transactions as "expendable by anyone", and therefore now that it has been introduced it can no longer be removed. Among the various strategies to convince the community opinion to accept SegWit, they exploited a further lie, that is, they made believe that the removal of the signatures from the blockchain would greatly reduce the space occupied by each transaction, to the point of being able to contain in 1 MB an amount of transactions equivalent to that of blocks from 2-4 MBs. Three years later, if you look at the statistics, we can see that the effective average is that in 1 MB blocks SegWit transactions allow the equivalent of 1.2 MB to be contained and only in very rare cases has reached 1.4 MB of transactions in the original format. SegWit transactions in January 2020 were 58% of the total, at the end of April the share dropped to 47%.

The reaction of the community

The tragic situation in which the community found itself, totally divided into two parts between the big blockers who wanted to remain consistent with the idea of ​​what Bitcoin should have become and the small blockers convinced that the 1 MB limit was an improvement, left no other choice: divide the blockchain before permanent changes such as SegWit would be implemented.

Most early adopters, i.e. those who knew Bitcoin in its early days and contributed to its development, organized themselves to try to save the future of Bitcoin as a peer-to-peer electronic cash through an intentional split, programmed to block number 478558 occurred on August 1, 2017, dividing the blockchain into two branches: BTC with SegWit, the 1 MB limit and the new rules, and BCH with a new temporary 8 MB limit on the blocks and with the support of the features that make Satoshi Nakamoto's whitepaper a revolutionary idea.

With a series of subsequent hard forks the BCH network further increased the maximum block size to 32 MB, a size that will continue to be expanded following people's need.

Additional features have also been added, including the reactivation of some commands used in programmable transactions, which instead core devs disabled. These features have allowed many improvements, including the creation of the Simple Ledger Protocol (SLP) to manage new tokens on the BCH blockchain. Schnorr Signatures have been implemented, which allow you to optimize the space needed on the blockchain for signing complex transactions and to develop new possibilities of use. The birth of BCH was designed to carry on the original vision of Satoshi Nakamoto and in fact its development proceeds rapidly as well as its adoption in the world.

Further confusion

The BTC/BCH split has been taken as an example by several other development groups, which have generated further splits that have created (in some cases even voluntarily) some confusion, even if they are practically irrelevant. For the sake of knowledge, we remember some of them, including BTG (Bitcoin Gold) and BCD (Bitcoin Diamond), which, however, have never obtained a real adoption. Just over a year later, however, another group of developers, with the support of Calvin Ayre and Craig Wright (the one who continues to claim to be Satoshi Nakamoto making blatantly false evidence), gave birth to a further split, BSV (Bitcoin Satoshi Vision) trying to take away from BCH the image of the original protocol of Satoshi Nakamoto. That created a lot of confusion. Not only the BSV protocol shows no functionality improvements, but it also took away what had been implemented for quite some time, such as P2SH (Pay To Script Hash). This involution makes it impossible to implement joint/disjoint signature schemes and the programmability of payments. BSV has been removed from almost all exchanges, it is supported by very few companies and very few services, and is totally irrelevant. To simulate consistent activity on the network, someone is filling his blockchain with unnecessary data, including weather measurements.

False myths

While all the coins generated by the various forks are practically ignored by the BTC community, BCH is constantly being attacked and defamed with meaningless accusations. Let's see what are the most popular falsehoods.

Falsehood 1: BCH is centralized

Nothing more foolish. Main mining pools that gather a significant computing power are more than 10, a situation very similar to BTC one. In addition, BCH has several teams that independently develop its software, making it more decentralized and secure.

Falsehood 2: Roger Ver is BCH's CEO

Roger Ver was among the first people to understand and believe in Bitcoin as early as 2011. He invested in many startups operating in the crypto and fintech sector, and has always supported Bitcoin as a peer-to-peer payment system. He didn't create BCH, as erroneously read in the censored forums, but he always tried to support BTC and the increase in the size of the blocks. Its support for BCH occurred months after the fork, when core devs sabotaged the SegWit/2x plan (i.e. the block size expansion to 2 MB after the SegWit implementation).

Falsehood 3: Nobody uses BCH

It is true that the number of transactions on the BCH blockchain is still lower than the ones on BTC, but they are in strong development. Unlike BTC which has been abandoned by many companies because of the slowness and high fees, BCH is expanding exponentially as a payment method. The big blocks make it cheap and quick to use.

Falsehood 4: BCH is not safe

Although the computing power of the BCH network in this period is significantly lower than the one on BTC (the computing power between BTC and BCH is divided proportionally to the value of the respective currency), the BCH network is not insecure. To perform a so-called 51% attack it is so expensive that no one has ever done it seriously. And if you want an immutability equal to the one on BTC, it would be enough to wait for a higher number of confirmations (today around 50).

Falsehood 5: Bcash Btrash, and various other nicknames

This category is represented by the most childish people who enjoy crippling the names of the coins in order to make fun of them. Bitcoin Cash is not junk money. We would like to remember that it is the version of Bitcoin that most closely resembles the concept of electronic cash without intermediaries. And BCH is constantly undergoing defamatory attacks because unlike BTC, it will continue to function just as foreseen by Satoshi Nakamoto in the 2009 whitepaper.

Takeaway

BCH exists to keep the original concept of Bitcoin active. BTC is no longer a "peer-to-peer monetary system", but a compensation management system.

BSV tries to steal BCH's fame by proposing itself as the original concept of Bitcoin, trying to create a lot of confusion between the two. BSV is supported by very few exchanges in the world and very few companies.

BCH is what Bitcoin should have been according to Satoshi Nakamoto's vision. BTC and BSV are both sabotage attempts.

Awareness of this situation is slowly spreading and people are starting to have a clear vision.

Conclusion

We are not opposed to the development of scalability models on different layers, which would be well suited for micro transactions, but they should be voluntary and optional. If they became the only way to use cryptocurrencies, it would be a problem. We hope this reading has been useful and pleasant. We too, like many early adopters, have the vision of a world whose transactions can all be entrusted to the blockchain, and we see in Bitcoin (BCH) the characteristics to achieve it.