“My Bitcoin is the True Bitcoin!” A Short Primer on the BTC v. BCH War
It can be hard to write about this topic without offending anybody. Uttering the words “Bitcoin Cash and Bitcoin can coexist” hurts both sides of the debate, like pressing on an open wound. This is not something that is getting any better.
(Disclaimer: I have no stake in either Bitcoin nor Bitcoin Cash).
Recently the National Institute of Standards and Technology (NIST), an agency of the United States Department of Commerce, said in its report that, “technically, Bitcoin is a fork and Bitcoin Cash is the original blockchain”. (The Bitcoin Cash fork last August was caused by the Bitcoin Cash miners increasing the blocksize limit from 1 MB to 8 MB). The statement by the NIST gave the BCH community exactly the boost they needed to claim superiority. The general consensus of the BCH community is that this is their chance to rise to prominence. However, the NIST report also states that the public comment period would remain open until February 23.
How does this war affect you?
BTC and BCH hedge against each other. In other words, when BCH goes up dramatically, the chances are that BTC will be in the red, and vice-versa. This is because they are both essentially competing for the same thing: to become the “real” Bitcoin. Since Bitcoin Cash is a fork of Bitcoin, proponents of BCH believe that they are carrying out the true vision of Bitcoin.
Think of these coins as giants battling each other on a land shared with villagers. While BTC and BCH battle for dominance, the rest of the cryptoworld feels the ripples. Many skeptics see this battle as a harbinger of the ‘crash’ that everyone who has not bought into crypto yet is waiting for. This instability is laughable by banks, because to them, it shows that teams cannot come up with simple answers to important decisions. To them, decentralization brings the prospect of instability, and diminishes investment potential.
To many blockchain believers, this is an opportunity for smaller coins to grow. Ripple, Ethereum, and Cardano have seen major growth since the drama between BCH and BTC began. And to many who have been involved with crypto for some years now, this is just another volatile moment for a never ending volatile coin.
In the last year, events on the crypto exchange Coinbase, where there were accusations of insider trading during the release of BCH on the exchange, have really brought out the true colors of how people feel about this. There was a lot of heat on BCH when it was forked in August, but the news of another much more threatening fork, Segwit2x, drew the attention away for a bit. When the Segwit2x supporters decided to postpone, the heat drew back towards Bitcoin Cash.
The Arguments (as brief as they can be)
Bitcoin is a movement of cypherpunks and activists; the aim of Bitcoin is to create the most decentralized form of money, one where it becomes almost impossible for one group to control the currency. This belief absolutely cannot be compromised, no matter what the conditions are.
Most relevant supporter- Andreas Antonopoulos
One of the most trusted and influential people in the cryptocurrency industry, Antonopoulos is known for his love, or possibly even obsession, with Bitcoin and what it could do to change the world. In fact, it wasn’t until recently that he even became a millionaire; throughout most of his involvement with Bitcoin, he wasn’t making much at all. Antonopoulos was just speaking and advocating, until one day the community donated over 100 Bitcoins to him.
Although Antonopoulos is a large supporter of BTC, his focus is not on trying to destroy BCH. He actually thinks they can coexist.
If you read through the comments, you can see that Antonopoulos does not think that BCH is even remotely close to taking over Bitcoin. He has no desire to be “feeding into the drama, distracting from the important work that needs to be done.”
Bitcoin Cash is a movement that claims it wants to increase confidence in cryptocurrency, as Bitcoin has been criticized for slow transaction times, high mining fees and high energy consumption, factors that BCH’s supporters feel it combats.
Most relevant supporter – Roger Ver
Roger Ver is a long-time investor in cryptocurrencies and the cofounder of bitcoin.com. While some within the community believe he is playing unfairly, Ver fully supports Bitcoin Cash, and is trying to convince everyone that BCH is the true bitcoin. There is even a eatured page on bitcoin.com that supports his claims.
Decentralization and scaling issues
As mentioned earlier, Bitcoin Core roots from cypherpunks and activists. The people who have stayed true to Bitcoin want to see a truly decentralized currency. And they believe that they will get what they want, but it will take some time to do it the right way.
Those in the BTC camp believe that they have solutions for these problems, and that taking action such as forking will just prolong the inevitable. Sure, increasing the block size alleviates the pain now. But for how long, and at what cost? Increasing the block size makes for a more centralized coin. Larger blocks mean full nodes are more expensive to operate, which leads to fewer hashers running the nodes.
Eventually Bitcoin Cash will also have to deal with the problems that BTC faces; BCH is nowhere near scalability (running at circa 23 transactions per second) when compared with processors like Visa, which can do up to 24,000 transactions per second.
Bitcoin has scaling solutions, they are just going to take some time (or maybe less time than you think).
The Lightning Network is coming, and it is Bitcoin’s solution to many of the above problems. It’s an off-chain solution, just like the Raiden network that is being rolled-out by Ethereum. The Lightning Network will allow for near-instant transactions, with very small transaction fees. Lightning creates micropayment channels that are off-chain, which means the transaction doesn’t need to immediately broadcast to the blockchain. A simulation of 10 million users operating on the Lightning Network proved to be functional, yet still lightning fast. Three separate labs, ACINQ, Blockstream, and Lightning Labs, are independently working feverishly towards building a working network, and mainstream adoption is well underway.
No one knows, when or how this BTC v. BCH war will end. But this short introduction to the complex crypto drama ends with a few numbers (look for more details on bitinfocharts.com) and a tweet by Chris Burniske, a partner at Placeholder, a New York venture firm that specializes in cryptoassets.
Bitcoin v. Bitcoin Cash
|Price||8,494.24 USD||1.102 USD|
|Sum of all “coins”||16,829,211||16,933,567|
|Market Capitalization||143bn USD||18.7bn USD|
|Transactions last 24h||230,462||23,758|
|Median Transaction Fee||3.92 USD||0.013 USD|
|Active Addresses last 24h||703,817||78,068|
Source: bitinfocharts.com, 5:40 AM GMT
With additional reporting by Sead Fadilpašić.