by Liam J Kelly
Now that the dust has settled between the rise and crash of bitcoin cash (BCH), a closer examination of the crypto ecosystem reveals what’s really at stake. Although the politics behind BCH and bitcoin have engendered division, the two currencies can and should exist in the same realm. Extend this analysis across all coins, allowing bad-seeds to weed themselves out, and you have a diverse market of technologies.
Materializing Conflicting Desires: BTC & BCH
The best way of getting a handle on the growing maturity of this sector is to investigate the brief history of BTC and BCH. Without establishing a winner, per se, the function of this investigation will serve to show the possibility of a strong choice of options in cryptocurrency. Not only that, but examining the birth of BCH, we can see how this field cannot, and will not, be dominated by a single community.
Essentially, we are looking at how bitcoin’s popularity is serving and providing solutions for differing interests. Some were more successful than others, but the consensus is that coexistence is perfectly possible. Moreover, it is preferred in many cases.
In the case of the recent fork, the update sought to answer scalability concerns and reduce exchange times. Due to the rise in popularity on all fronts, the massive uptake of new users meant channels of commerce were becoming clogged. Reddit user, r/singularity, explained these scalability concerns as such:
“Bitcoin, as dictated in the code, cannot handle any more than around three transactions per second at the moment. To put that in perspective Paypal handles around 15 transactions per second on average and VISA handles something like 2000 transactions per second.”
The Birth of Bitcoin Cash
BCH was the result of a hard fork in August 2017, and it remained relatively silent until this November. It was the result of a vote conducted on July 20, in which community leaders sought to speed up transaction speeds in two ways.
The first solution, Bitcoin Improvement Proposal (BIP 91), also known as SegWit, was actually a soft fork that streamlined the way in which bitcoin transactions were managed. In this update, the verification process that ensures senders possess the proposed funds would be organized separately. It separated a step of the authentication process and ultimately reorganized how this process was technically completed.
This created a new block called the Extended Block which contains the signature from the previous block. Also, because this update was backward compatible, something that distinguishes a soft fork from a hard fork, new blocks could continue to be built on top, and older blocks would still be valid.
This amendment was received critically as it was more of a band-aid solution for the scalability issues that the community was trying to solve. Thus, a hard fork was proposed, and eventually accepted on August 1, which created Bitcoin Cash.
This new token differed from bitcoin in a number of ways. As the primary objective was to go further in the direction of answering scalability concerns, lead BCH engineer, Amaury Séchet proposed an increase in block-size, remove SegWit from the new chain, and ultimately support a “safe and peaceful coexistence of the [BCH and BTC], with replay and wipeout protection.”
To conclude the investigation here, would be to omit many further developments. Notably, the politicization of some communities in the bitcoin sphere, as well as harsh censorship of discussion on many channels.
Serving The Needs Of The Market: Diversification
One of the more positive notes regarding the decisive features of these decisions is the fact that people are actively discussing ways in which to bring cryptocurrencies to the mainstream. Many agree with Sechet and believe that there is enough market interest for both currencies to survive, if not thrive.
CEO of Input Hong Kong, Charles Hoskinson, elaborated on this topic as well as emphasizing the non-threat that BCH poses:
“Bitcoin Cash seems to be a productive split with its existence neither threatening Bitcoin’s nor requiring support from Bitcoin’s remaining adherents. Now Bitcoin is free to provide its small-block vision and cash the large block. My hope is that this will reduce fighting in the long run as both sides realize that the other isn’t going away. Just like we did with Ethereum and Ethereum classic.”
Ethereum co-founder, Vitalik Buterin, was also very complimentary of the birth of BCH. On his Twitter account, he not only complimented the developers of the currency but more generally spoke on the rise of diverse coins:
A key reason why I am now so confident in crypto is precisely the fact that there are so many different teams trying different approaches.
— Vitalik Buterin (@VitalikButerin) November 12, 2017
Keeping an eye on the positive adjustments is certainly as important as noting the political backdrop. The former the product of the latter; both following Satoshi’s greater ideal for a better way to imagine our interconnectivity.