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Bitcoin Cash fork update: New year… same issues

Bitcoin Cash fork update: New year… same issues

3 months after the start of the hash war, BCH is licking its wounds and BSV Is struggling.

On November 15, 2018, Bitcoin Cash experienced a hard fork after a faction of the BCH community disagreed over the latest protocol updates. As a result, the fork created a new bitcoin offshoot, called Bitcoin Satoshi Vision (BSV), which claims to want to establish itself as bitcoin the way that Satoshi Nakamoto had originally envisioned it.

A brief refresher

The hard fork came at the end of escalating tensions amongst the Bitcoin Cash community. The community was split into two main factions: the BCHABC camp and the BSV camp.

Much of the conflict was informed by differences regarding the software underlying the Bitcoin Cash network. The BCHABC camp supported a number of changes which were to be implemented on the planned November 15 date. However, the BSV camp believed these changes were detrimental to the health of the cryptocurrency and only favored certain stakeholders in the community.

The most contentious aspect of the planned upgrade was the pre-consensus feature. The BSV camp opined that the upgrade would grant undue influence to Bitmain and other large mining giants. The fact that Bitmain was already able to burn BCH coins following an earlier update served to further drive suspicion from the BSV camp.

In response to the BCHABC upgrade, and because it seemed the community would be unable to reach consensus, the BSV team planned its own upgrade. They believed that their upgrade would revert the network back to the original iteration envisioned by Bitcoin’s pseudonymous creator and would then become the ‘real bitcoin’. Hence, the name Bitcoin Satoshi Vision.

The BSV camp was backed by self-proclaimed Satoshi Nakamoto, Craig S. Wright, as well as billionaire and CoinGeek owner, Calvin Ayre. BCHABC had a significant amount of support from the BCH developer base as well as from mining giant Bitmain and Bitcoin.com owner and the de facto face of BCH, Roger Ver.

A hard fought war

On November 15, the cryptocurrency community began to feel the effects of the hash war as the opposing factions began to fight for supremacy. In an effort to gain the lead and assert themselves as the dominant chain (and thus "the real BCH"), several leading mining operations diverted their hash power away from mining bitcoin to whichever faction they supported. As a result, there was a significant drop in the price of bitcoin (BTC).

BCHABC eventually won the hash war and retained the BCH name as well as the ticker. Exchanges further solidified the BCHABC camp’s position as the winners when they started to list BCHABC as BCH on their platforms. Examples of these include Coinbase, Bitstamp, and Kraken.

The BSV camp launched its new cryptocurrency and in no uncertain terms, reiterated that they were now the ‘real bitcoin’ as their network adhered to the specifications set out by Satoshi. Despite losing the hash war, BSV remains listed on many exchanges including Binance and Poloniex. Interestingly, leading American exchange Kraken issued a warning about the high risks involved in trading BSV when it announced it would support the fork.

The ideological war was costly in many ways. Miners supporting their respective factions felt the pressures of significant losses, numbering in the millions. Moreover, while the price of bitcoin was affected by the hash war, it was the two chief combatants which bore the brunt of the fall in price.

Two weeks after the fork, BCH ABC was trading at $158, while BSV stood at $93. These values represented a major fall in value. Prior to the hard fork, BCH was trading at $423.

How things stand today

Three months have passed since the now infamous BCH hash war. Bitcoin Cash is trading at $118 today and Bitcoin Satoshi Vision is trading at around $62 – their combined price of $180 is down 57% from its pre-fork value. At the same time, market leader bitcoin is down only 34% from its November 15th price.

While both altcoins were initially in the upper echelon of cryptocurrencies, measured by market capitalization, presently, things look relatively different. Only BCH was able to retain its spot comfortably in the top ten cryptographic assets.

Furthermore, Bitcoin Satoshi Vision cannot seem to inspire confidence in the greater cryptocurrency community. While it has a significant amount of support from its small community, many within the larger digital currency sector remain doubtful of the security and robustness of the BSV network.

For instance, a cryptocurrency researcher published findings that he was able to commit double spends on the BSV network. Sharing his findings on Honest Cash, a BCH-focused social media platform, the researcher (named Reizu) stated: "I’ve done many double-spending on the Bitcoin SV network." He further specified that it was relatively easy and practically free to commit the spends.

Additionally, the cryptocurrency community is reeling from a number of high profile 51 percent attacks. The same fears are translating to the BSV network and what appears to be a highly centralized mining network. Stated Reizu in his research: "[…] After a few mined blocks I discovered that the transactions that were being mined were those that were sent almost always to the same nodes. I also confirmed what we already knew, that Bitcoin SV mining is very centralized. Specifically: 34% of the hashrate is only 1 node. 59% of the hashrate are 2 nodes. 68% of the hashrate are 3 nodes. 75% of the hashrate are 4 nodes."

At this stage, it is hard to imagine that BSV will be able to remain one of the most valuable coins in the market. Without a community, an ecosystem, and real users, a decentralized digital currency cannot survive.

The Bitcoin Cash network, on the other hand, is considered more secure. It’s older, more established, and has more miner support. However, it is still struggling to shake off investor fears over BCH potentially going the same route as other bitcoin forks given that it has lost support from major players such as CoinGeek and nChain, which had previously dedicated substantial financial and development resources to growing the BCH ecosystem and brand.

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