The Bitcoin Cash network just passed through another fork after it was originally created as a hard fork in the Bitcoin (BTC) blockchain in August 2017. The hard fork on November 15 divided the Bitcoin Cash network into two new types of blockchain, Bitcoin Cash ABC (BCHA) and Bitcoin Cash Node (BCHN). The main difference between the two is the 8% tax on the total bonus miners have to pay to the BCH ABC development team.
Of the two Bitcoin Cash networks, ABC received very little hash power, while Bitcoin Cash Node received the majority, indicating that miners may generally prefer BCHN over BCHA. The last regular block of Bitcoin Cash that was mined before the mine was mined by Binance, and the first block was mined to split the blockchain in two by AntPool.
This is not the first time the Bitcoin Cash community has seen a thorn in the side. The first fork in the network occurred in August 2017, followed by another in November 2018, which shared the network in Bitcoin Cash ABC and Bitcoin Cash SV (BSV). With the latest symbol, called Satoshi Vision, this split was created with the goal of keeping Bitcoin in line with the original vision of the currency used in everyday peer-to-peer transactions.
Over time, Bitcoin began to gain value and attract more and more attention on a large scale, resulting in the symbol being used more as an investment tool than in everyday transactions, as originally planned. In addition to deviating from the original vision, Bitcoin also experienced problems with scalability, as the network was unable to process a large number of transactions due to 1 MB block size. This resulted in transactions spending a lot of time queuing and waiting for confirmation.
Bitcoin Cash solved this problem. On the day of the stress test, the number of transactions per block in the BCH network rose to 25,000 per block with no increase in fees, compared to 1,000 to 1,500 transactions per block seen on the Bitcoin network. However, the latest hard fork, which happened on November 15 this year, was powered by drivers other than network efficiency gains.
Hard forks are usually good for a branched asset, because it creates a clear division of the different strengths in the network, so that participants can choose which of these strengths has the greatest impact on them. This often also means that the value of the coins received is higher than the value of the original coin. However, due to differences in cross-currency incentives, one currency often takes the lead while the other hangs, losing most of its market value and becoming more vulnerable to 51% attacks.
The consequences of the current thorn
This severe division was particularly triggered by mining due to the proposed rule that 8% of the extracted BCH was designated as BCH ABC to fund the development of protocols. The developers were divided into two groups: BCH ABC, led by Amori Sechet, who proposed the modernization; And the Bitcoin Cash node that removed the source code for the additional tax that BCH miners would have incurred.
Ashu Swami, technology director at Apifiny, a provider of liquidity and crypto solutions, told Cointelegraph why BCHN is getting stronger support: “It is supported by both the mining camp and advocates for decentralization. As a result, many reputable exchanges such as Coinbase and Kraken have also supported this aspect. He also added: “There is a strong possibility that another currency, BCHA, may not exist for more than a few months.” Indicates that he is not part of the group that caused the split.
After the fork, the BCHN hashish seems to be the more dominant of the two. Swami believes that the 8% tax on BCHA’s total rewards is due, but that may change quickly. This is to explain:
“What [miners] actually do at any given time will depend on the relative reward of the two pieces. Since both BCHN and BCHA will use the same work algorithm manual, the hash power can be distributed very quickly between these coins. If the BCHA price remains, due to some factors, high enough that even after a tax of 8% it has a higher return on mining than BCHN, all rational miners will immediately redirect their hash power to BCHA unless they are willing to accept losses to manipulate the price in the future. ”
However, even if BCHA’s revenues were not high in the future, the network would not necessarily disappear from society. Sam Bankman Fred, CEO of FTX Cryptocurrency Exchange, told Cointelegraph about the possibilities:
“This does not necessarily mean that it will disappear completely – there are many examples of minority chains continuing at the crossroads – but it is more than certain that BCHN will be the dominant chain of the future.”
The data show that even before the split, 80% of the miners in Bitcoin Cash preferred the Bitcoin Cash node, which is now reflected in mining.