Bitcoin

All About the Bitcoin Cash Hard Fork

Bitcoin cash (BCH), currently the fourth-largest cryptocurrency by market capitalization and the most prominent the dozens of different bitcoin forks, is set to undergo its own split on Thursday, November 15, 2018. Through the process of hard forking, the original cryptocurrency will remain in place and continue to follow its previous protocols. At the same time, a second currency will be generated according to an updated set of protocols. The two token systems will continue to develop simultaneously and on parallel tracks. According to a report by MarketWatch, the original bitcoin cash will be known as bitcoin ABC, while the new version will be referred to as bitcoin SV, with SV standing for “Satoshi’s Vision,” a reference to bitcoin developer Satoshi Nakamoto.

Reasons for the Fork

Typically, a hard fork takes place when groups of miners and developers can’t agree on updates to the software governing a particular digital token. As a result, one group continues to operate under the same rules, while another branches off and generates a new blockchain with an updated software setup. In the process, a second digital currency is generated.

In the case of bitcoin cash, the hard fork is the result of building tensions among developers. When BCH developer Amaury Sechet proposed an upgrade that modified the ordering of transactions on the blockchain, a schism occurred and has only become more fraught. As tensions rose, developers and miners within the BCH community increasingly moved toward support of one or the other of two major personalities in the digital currency world: Roger Ver and Craig Wright. Ver and Wright are both known as strong supporters of digital currencies in general and bitcoin cash in particular, but they have been unable to reach an agreement about how to proceed in this case.

Ver and Wright

Ver, known as “Bitcoin Jesus” for his early and outspoken evangelism on behalf of the leading digital currency, has taken a position in support of the new software upgrade. In this case, this means that Ver supports the current bitcoin cash, rather than the proposed hard fork currency. On the other hand, Wright, who has claimed to be the pseudonymous Satoshi Nakamoto on various occasions, believes that the BCH software should expand the maximum block size from 32MB to 128MB. Wright argues that this change would be more in keeping with Satoshi’s original idea for bitcoin; thus, the nickname “Satoshi’s Vision” was born.

What Happens Next

At this point, it’s up to the miners. Miners will determine which of the two currencies will receive their hash power, the computing energy needed to mine tokens. Generally, miners tend to dedicate their hash power to the coin promising a higher profit as the the mining process is completed. Per MarketWatch, analysts have forecast that bitcoin ABC (the original version of bitcoin cash) will likely prevail, receiving up to 60% of total hash power.

Many of the world’s top digital currency exchanges have become involved in the process, if only to state their support of the fork. This means that users of exchanges like Coinbase or Binance will be eligible to receive one new token for each old token they owned at the time of the fork. BitMEX stands apart from other major exchanges for having taken sides ahead of the fork; it announced via blog post that its contracts “will settle at a price on the Bitcoin ABC side of any split and will not include the value of Bitcoin SV.”

Still other exchanges are allowing customers to pre-trade both of the potential new coins, a move that is largely unprecedented. One potential reason for this maneuver is to allow the larger digital currency community a chance to voice their support for one coin option over the other by their trading actions.

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