The research division of BitMEX, a cryptocurrency exchange platform has released a report that shows a comparative analysis of SegWit and Bitcoin Cash. The report which was released on Thursday, March 22, 2018, is an update on an earlier report released six months prior to the SegWit capacity increase.
Apart from providing an update on SegWit, adoption, the report also provides a sort of side-by-side comparison between SegWit and Bitcoin Cash. A large part of the current chatter in the Bitcoin community is about the merits of SegWit and Bitcoin Cash, vis-à-vis each other.
A Tale of Two Approaches to the Bitcoin Scalability Problem
The Bitcoin scalability debate is as old as the cryptocurrency itself. Part of the reason why the scalability issue continues to evade any sort of consensus within the community is that the matter isn’t purely a technical one as there is a great deal of philosophy and ideology entrenched in it.
SegWit and Bitcoin Cash are two approaches to the issue that differ both in the technical and ideological constructs of the overall issue. This is despite the fact that both approaches seek to achieve the same goal; increasing bitcoin’s transaction capacity.
SegWit has been able to provide about 41 percent more scale by compressing the data size of each transaction, thus freeing up more block space. Bitcoin Cash, on the other hand, chose to increase the block size limit from 1 MB to 8 MB.
SegWit versus Bitcoin Cash
According to the data presented by BitMEX, the transaction volumes of SegWit and Bitcoin Cash are similar in many ways. Adjusting for the one-month head start that Bitcoin Cash had over SegWit, the latter has had 31.5 percent more cumulative volume that Bitcoin Cash and around 20 percent more transactions. There have been 6.1 million SegWit transactions since the launch of Bitcoin Cash.
In terms of adoption, the data shows that SegWit user adoption has been a little faster than that of Bitcoin Cash. This is perhaps one of the reasons why despite the fact that Bitcoin Cash predates SegWit by a month, the former has had more cumulative transactional volumes than the former. A look at the data presented by BitMEX revealed that Bitcoin Cash did indeed have a momentary initial spike in adoption which was likely due to the excitement of a new cryptocurrency. In comparison, the adoption of SegWit over a similar period of time appeared to be more gradual.
According to BitMEX, SegWit beginning to have a profound impact on the bitcoin transactional matrix as a whole as fees have become materially reduced, but did warn, “the transaction fee market is still immature and, in our view, transaction prices are likely to remain volatile going forward.” The chart below, using data from Coinmetrics, shows the logarithm of the average fees of bitcoin, bitcoin cash, and litecoin, along with their transaction volumes in USD.