Bitcoin Cash's Fork is Live, and the Hash War Has Begun
Earlier today Bitcoin Cash, itself a fork of the original cryptocurrency Bitcoin, split into two competing blockchains.
The so-called hard fork is a result of two sides, Roger Ver’s Bitcoin ABC and Craig Wright’s Bitcoin Satoshi’s Vision (SV), refusing to compromise. Each claims their version of Bitcoin Cash is better, and since the community couldn’t agree on a winner, the blockchain was split in two.
A little background on forks
In the context of blockchain, you can think of a software fork as being like a fork in the road: it’s the point where the users behind a project can’t agree on a direction, so they split up and head in two (or more) different directions.
A soft fork, in which a new but still backward-compatible chain is created, isn’t too big a deal. You can think of these as software updates; they represent changes to a blockchain’s software but they don’t actually split it into wholly separate chains.
Hard forks do create wholly separate chains, and that’s why hard forks like today’s Bitcoin Cash fork are a big deal. What was once a single project with a single blockchain has become two separate projects on two separate blockchains. Often, that results in a pretty significant price drop for one or sometimes both of the tokens on these blockchains, as it forces commercial partners, developers, and members of the community to pick sides.
Ultimately, hard forks often result in one of the two split chains winning and becoming the new default chain, with the other competitor dying out. But that isn’t always the case, and both chains can survive if the community stays split in the long term, with each side retaining its supporters in the community.
In the case of the Bitcoin Cash hard fork, then, we’re left to wonder whether one of the two warring parties will emerge the victor, or whether the end result will be a permanently split Bitcoin Cash community.
Bitcoin ABC versus Bitcoin SV
The row over Bitcoin Cash began when developer group Bitcoin ABC, which had been the de-facto leader of Bitcoin Cash development, suggested a number of technical upgrades to the BCH network. The largest and most contentious of these was a reordering of transactions to increase block capacity.
Bitcoin SV, a newer group that emerged from blockchain R&D firm nChain, disagreed. They wanted to restore retired code from the original Bitcoin protocol and increase the Bitcoin Cash block size from 32 MB to 128 MB, a move which they argue is more in line with Bitcoin creator Satoshi Nakamoto’s vision as outlined in his original whitepaper.
Ultimately, the two sides couldn’t come to an agreement, so the projects forked. There are now two versions of Bitcoin Cash: Bitcoin ABC (BCHABC) and Bitcoin SV (BCHSV).
Who will win?
The next question is which of the two new chains will become the dominant player and win over the largest share of Bitcoin Cash users and partners. So far, it would appear Ver’s ABC is winning. Live data from CoinDance suggests that as of this writing, about 75% of former Bitcoin Cash nodes have joined the BCHABC network, whereas just 8% of those nodes are currently running the BCHSV chain. Commercial partners, including big exchanges Binance and Coinbase, also appear to be coming down mostly on Bitcoin ABC’s side so far.
If Bitcoin ABC’s lead continues to grow over the coming hours, it will become increasingly difficult for Bitcoin SV miners to keep mining on the minority chain as costs will rise. Normally, that might spell the end of the battle and make Bitcoin ABC the winner. But Bitcoin SV leader Craig Wright, who was an early Bitcoin adopter but has alienated some with unproven claims he created Bitcoin, has vowed to fight on even if he is losing money.
And although the short-term results clearly favor Bitcoin ABC, the long-term results are far from clear. The early price action may be mostly the result of Bitcoin ABC’s faster hashing speed, and Bitcoin SV is thus far lagging only a few blocks behind Bitcoin ABC.
“So, these are like the early results of an election and it looks like Party A has likely won. We're not entirely sure at the outcome, but Party B supporters are already disappointed,” said Chris Wilmer, a professor in the University of Pittsburgh’s Swanson School of Engineering.
“Superficially, the differences between ABC and SV are fairly minor technical disparities, but the real division is in the people behind each Bitcoin Cash implementation,” Wilmer added. “For the ecosystem as a whole, the best outcome is for the ‘fork’ to resolve decisively with a clear winner. Although not a fatal outcome, it's possible that the split remains permanent, which can degrade the positive network effects of Bitcoin Cash.”
For now, the hash war will continue. Miners can switch sides between the two networks at will, and both of the two camps will be working to recruit additional resources, hoping to prove the ultimate winner in what could turn out to be a war of attrition.