Bitcoin cash

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Bitcoin Cash (BCH)
Bitcoin-cash.jpg
Founded 2017
Key People Craig Wright, proponent, notable developer; Roger Ver, proponent, notable developer
Twitter @BITCOlNCASH
LinkedIn Profile
Website BitcoinCash.org

Bitcoin Cash (BCH) is a cryptocurrency that resulted from a fork within the bitcoin community. It does not hold the same value as bitcoin. Some consider it a form of altcoin, while others believe it should be considered an extension of bitcoin.[1][2]

Overview

Bitcoin Cash was created using the same blockchain as bitcoin, beginning on block 478558.[3] It was created to help address a longtime issue of scaling bitcoin's blockchain to increasing demand.[4][5]

Background

In an effort to curb widespread spam attacks in which hackers flooded the blockchain with scores of small transactions, the bitcoin blockchain's developers imposed a hard limit of 1 megabyte per 10 minutes to the blockchain's programming in 2010.[6] This translated to the blockchain being able to process roughly 5 transactions per second, hamstringing the effectiveness of spam attacks.[7] Although this change was successfully implemented, the problem of "scaling," or adapting the blockchain to growing demand, caused fierce debate within the bitcoin community that never quite abated.[8]

The 1-megabyte limit was effective in combating spam attacks, but as bitcoin grew in value, it caused an increase in the average time needed for transactions to be completed, while increasing the fees needed to carry out transactions in a reasonable amount of time. Although the number of miners also increased, which improved the computing power of the blockchain network, this issue continued to worsen.[9] The bitcoin community became split on how to fix this issue, with some insisting that the limit be raised to 2 megabytes per 10 minutes, and others insisting that this would cause bitcoin to grow too quickly, which would inevitably lead to centralization, which violated the tenets of freedom and decentralization upon which bitcoin was created.[10] Through the implementation of Segregated Witness (SegWit) - a software program that rearranges how data is stored in bitcoin blocks, which boosts capacity while remaining compatible with past versions of the software - members of the bitcoin community removed transaction malleability, a bug that had been hindering the development of bitcoin projects.[11][12]

As a result of this division in the bitcoin community, Bitcoin Cash, a new cryptocurrency, was created.[13]

Bitcoin Cash and Coinbase

In December 2017, Coinbase announced that it would begin allowing users to trade BCH. It also added BCH to the accounts of users who had bitcoin in their Coinbase wallets before August 1, 2017. This caused the price of BCH to spike, going from $2,100 to $3,600 in less than 24 hours.[14]

The price increase resulted in Coinbase customers filing a class action lawsuit against Coinbase, accusing the exchange of facilitating insider trading. In July 2018, after a 6-month internal investigation, Coinbase concluded that there was no evidence that its staff had participated in insider trading.[15][16]

ABC Bitcoin vs. nChain

In 2018, a developer called ABC Bitcoin proposed an upgrade to the existing Bitcoin Cash protocol. The proposed upgrade offered new scaling solutions and even the potential for developers to design smart contracts on the BCH blockchain, similar to Ethereum. Many strongly rejected the proposal, including nChain, which proposed its own alternative upgrade called "Bitcoin SV," the SV being an abbreviation for "Satoshi's Vision." Proponents of the "SV" upgrade argued that it was closer to the original vision of Satoshi Nakamoto. The proposed SV upgrade would increase the size of blocks on the blockchain to 128 megabytes.[17] Bitcoin Cash community members raised concerns that this clash could lead to the community splitting following a hard fork of Bitcoin Cash, similar to the fork that created BCH in the first place.[18][19] By November 15, 2018 - the agreed date for the network upgrade - the public dispute between the two sides had become bitter and devolved into personal accusations between the unofficial leaders of the two factions, with Bitcoin.com's Roger Ver advocating for ABC Bitcoin and nChain's Craig Wright for Bitcoin SV.[20][21]

On November 15th, both software updates to Bitcoin Cash's blockchain went live, causing a hard fork. The final block mined before the fork was block number 556,766. This officially created Bitcoin Cash ABC and Bitcoin Cash SV, which initiated an intense conflict between miners in the formerly whole BCH community. Miners supporting one side or the other pooled their hash power in an effort to overwhelm the opposing side. Before the conflict began, Wright made public threats that programmers supporting Bitcoin Cash SV would perform hacking attacks that would destroy the ABC blockchain. Before the conflict began, SV consolidated enough hashing power to theoretically carry the attacks out.[22] During the conflict, Wright began posting a series of combative tweets about Bitcoin Cash ABC, as well as posting an article on Medium.com entitled, "Present liability schemes and sanctions."[23][24] He also allegedly sent an inflammatory email to Ver.[25]

Shortly after the fork took place, several popular cryptocurrency exchanges, including Bitfinex, Binance, and Poloniex, announced they had begun accommodating both BCH ABC and BCH SV.[26][27]

Key People

References

  1. Bitcoin Has Split Into Two Cryptocurrencies. What, Exactly, Does That Mean?. Slate.
  2. Bitcoin split in two, here's what that means. CNN.
  3. The Best Money in the World. BitcoinCash.
  4. Some Bitcoin Backers Are Defecting to Create a Rival Currency. The New York Times.
  5. Bitcoin split in two, here's what that means. CNN.
  6. The Bitcoin Cash Hard Fork Will Show Us Which Coin Is Best. Fortune.
  7. Some Bitcoin Backers Are Defecting to Create a Rival Currency. The New York Times.
  8. Bitcoin split in two, here's what that means. CNN.
  9. Bitcoin Has Split Into Two Cryptocurrencies. What, Exactly, Does That Mean?. Slate.
  10. The Bitcoin Cash Hard Fork Will Show Us Which Coin Is Best. Fortune.
  11. SegWit Goes Live: Why Bitcoin's Big Upgrade Is a Blockchain Game-Changer. Coindesk.
  12. Some Bitcoin Backers Are Defecting to Create a Rival Currency. The New York Times.
  13. Bitcoin split in two, here's what that means. CNN.
  14. Bitcoin: Coinbase Users Get 'Cash' Windfall. Fortune.
  15. Coinbase Reveal Results of Internal Investigation. Coindoo.
  16. Coinbase Finds No Insider Trading of Bitcoin Cash. Fortune.
  17. Today’s Bitcoin Cash Fork, Explained. Block Explorer.
  18. Bitcoin Cash Could Hard Fork Due to Disagreements. Crypto Digest.
  19. Bitcoin ABC Calls nChain’s Bluff, Vows to Proceed with Contentious Hard Fork Upgrade. CCN.
  20. How to Watch the Bitcoin Cash Fork As It Happens. Coindesk.
  21. Satoshi vs. Bitcoin Jesus: Bitcoin Cash Battle Turns Personal. Bloomberg.
  22. Bitcoin Cash Just Split Into Two Blockchains. Coindesk.
  23. Craig Wright, Defender of Satoshi’s Vision, on Social Media Warpath. Finance Magnates.
  24. Present liability schemes and sanctions. Medium.
  25. Bitcoin Cash’s Roger Ver: “We are definitely launching a cryptocurrency exchange”. AMB Crypto.
  26. Major Exchanges Are Already Distributing New Bitcoin Cash Tokens. Coindesk.
  27. Binance Distributes Bitcoin Cash ABC (BCHABC) and Bitcoin Cash SV (BCHSV) Coins. Ethereum World News.