Another Fork of a Fork — Bitcoin Cash Split Triggers Market Turmoil
Over the course of the last week we have witnessed a tremendous drop in cryptocurrency prices. An exact root cause analysis would need plenty of insider information, however, the Bitcoin Cash (BCH) hard fork that happened on November 16 has certainly made an impact. Understanding the difference between a soft and a hard fork is of utmost importance:
- Hard Fork: A type of fork that renders previously invalid transactions valid, and vice versa. This type of fork requires all nodes and users to upgrade to the latest version of the protocol software.
- Soft Fork: A soft fork differs from a hard fork in that only previously valid transactions are made invalid. Since old nodes recognise the new blocks as valid, a soft fork is essentially backward-compatible. This type of fork requires most miners upgrading to enforce, while a hard fork requires all nodes to agree on the new version.
Every 6 months, the BCH network performs hard forks as part of scheduled protocol upgrades. For the latest scheduled hard fork on November 15, a fight between two competing proposals arose:
- Bitcoin Cash SV (Satoshi’s Vision) — Representing the “reformers” that attempt to restore “the original Satoshi protocol” by changing the current BCH structure.
- Bitcoin Cash ABC (Adjustable Blocksize Cap) — Representing the “conservative wing” that aims to preserve BCH from radical changes.
- Technically speaking there is a third proposal for the network upgrade, the Bitcoin Unlimited version. That’s however not pivotal for this story to understand what’s going on.
Both sides have their supporters and I do not aim for a judgement with respect to which upgrade is the better one. However, since any proof-of-work (PoW) protocol lives from its miners, both sides are now fighting each other using their hashing power (“amount of computer power miners have to hash”) to preserve their chain as the ultimate chain. That is why you maybe already heard the term “hash war”.
Well, what is our opinion on such developments then? Of course, if a space is innovating itself it is also producing creative destruction. Nonetheless, all these fights in the crypto space are tiring. I know there are and will always be difference of opinion, but a binary mindset as currently promoted (by Craig Wright, the Wannabe Satoshi Nakamoto) is for sure wrong!
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