Bitcoin Cash (BCH) is a cryptocurrency which split off from Bitcoin (BTC) in a hard fork event which occurred on the 1st of August, 2017. Bitcoin Cash diverged from Bitcoin due to irreconcilable differences of opinion regarding Bitcoin’s approach to scaling. Bitcoin Cash proponents strongly favor on-chain scaling through the increase of block sizes.
Bitcoin Cash has been attracting attention during the first weekend of November, when it climbed rapidly on strong volume. This was notable for occurring in an otherwise mostly-stagnant crypto market. While we don’t claim to know the reasons behind Bitcoin Cash’s volatility, many speculate that the price rise is driven by two major factors: BCH’s impending hard fork plus the announcement by some major exchanges that they’ll support both sides of this fork.
The Upcoming Bitcoin Cash Hard Fork
Bitcoin Cash is on the verge of a hard fork, which is scheduled to occur on the 15th of November 2018. On this date, Bitcoin Cash will split into two: the original Bitcoin Cash ABC and the new Bitcoin Cash SV (which stands for “Satoshi’s Vision”). BCH holders will retain their BCH coins and receive SV coins in 1:1 proportion. As with the BTC / BCH fork, the upcoming ABC / SV split is motivated by different visions for the future of Bitcoin Cash development.
Bitcoin SV is the project of Craig Steven Wright, the Australian man who claimed to be Satoshi Nakomoto. It is backed by Canadian businessman, Calvin Ayre, who owns the CoinGeek mining pool and crypto news site.
Craig Wright (left) and Calvin Ayre, both enjoying the high life.
Bitcoin ABC has the backing of Jihan Wu, the CEO of major Chinese miner, Bitmain, as well as French developer, Amaury Sechet (aka “Deadal Nix”), who is the current Bitcoin Cash lead developer.
Amaury is known for his Rubik’s Cube skills and Jihan for his sharp business practices.
The various members of the Bitcoin Cash appear to be fairly evenly divided in their loyalties, with each side proclaiming their version as the real Bitcoin Cash – and sometimes even as the real Bitcoin (BTC)! However, it’s as yet unknown which side will gain the support of Roger Ver, the influential entrepreneur who owns various high-traffic Bitcoin Cash websites.
As for the Bitcoin Cash miners, their hashpower will play a decisive role in determining which side of the fork becomes the official Bitcoin Cash. At the time of writing (the 4th of November), it appears that the ABC and SV-supporting miners have roughly equal hashrates:
CoinGeek, BMG pool, okminer (from 11 to 3 o’clock on the above pie chart), and SVPool are all considered SV supporters. Their combined hashrate currently forms a majority, at around 52.3%. However, Bitmain has a great deal of hashpower currently directed towards mining Bitcoin, which it could potentially retarget into Bitcoin Cash. This is possible as both coins, BTC and BCH, share the same SHA-256 hashing algorithm.
The Risks of Forks: Why is the Bitcoin Cash Price Surging?
Undoubtedly, a contentious hard fork like this introduces significant unpredictability and risk. It may result in mutually hostile groups attacking each other on various fronts. While past hostility between Bitcoin and Bitcoin Cash supporters has mainly been limited to propaganda and low-impact technical tests, some degree of underlying cooperation does exist.
Developers from both camps have alerted their “opponents” to vulnerabilities in each other’s code instead of exploiting them maliciously. Additionally, miners dedicated to BTC or BCH have refrained from conducting major mining attacks on the opposing blockchain. Whether this gentlemanly restraint will persist between ABC and SV remains to be seen. It’s worth noting that neither ABC nor SV will implement replay protection, increasing the likelihood of replay attacks.
The future of the BCH split is unpredictable and poses a considerable degree of risk. However, despite these risks, the recent 10% surge in BCH price suggests that market participants are disregarding such concerns, driven by the desire for free Bitcoin SV.
How will the Fork Unfold?
To be honest, we have no idea! It’s possible that one side will eventually establish dominance in terms of price and hashrate, but the timing and outcome remain uncertain. We hold no bias toward either side.
We strongly advise all Bitcoin Cash holders to educate themselves on the potential risks and take necessary precautions. Be aware that many exchanges and services may suspend Bitcoin Cash transactions around the time of the fork. Stay informed and make informed decisions to safeguard your holdings.