Bitcoin Cash is splitting this week
Updated: Jul 9
Bitcoin Cash Hard fork (also known as the Bitcoin Cash Network Update) will take place on November 15, 2020, at 12 pm (UTC). The hard fork will make changes to the Difficulty Adjustment Algorithm (DAA), the Coinbase Rule, and Automatic Replay Protection (ARP). It is a disputed hard fork and there will be a probable chain split. Last time Bitcoin cash chain split happened on November 15 2018, as different developers did not reach the agreement regarding consensus change of the network. One team followed BitcoinABC implementation and the other team followed the rules of the BitcoinSV implementation. Ultimate two competing chains got generated – BCHABC and BSV. This time, there is another battle with consensus change of the network.
There is no such disagreement with DAA and ARP. The dispute is with the implementation of the Coinbase Rule. BCHABC team wants to implement the Coinbase Rule which involves 8% tax on the miners which would be channelled towards the developers. The developers will basically get 8% of block rewards for maintaining the security of the network. BCHN (Bitcoin Cash Node) team opposes BCHABC team regarding this. According to them, this ‘miner tax’ goes against the ethos of decentralization. The proposal by BCHABC team is not a very new kind proposal. Zcash had 20% developers tax and the community extended their 20% block reward developers tax for another 4 years some months back.
The node operators of the network need to decide which version of the software they’ll support. When this article was being written, 43.48% node operators signalled that they were neutral. The neutral side is depicted in the below chart as Bitcoin Unlimited. The neutral people will automatically follow the dominant chain. 38.09% node operators are for BCHABC and 15.27% are for BCHN now. The support for BCHABC has significantly gained traction in the last few days but BCHN team has got support from many heavyweights.
Present Node situation
WTF…Tell me about the coin-split dude
No, coin-split is never guaranteed. If BCHABC or BCHN (both are different from the current protocol) fails to achieve enough hash power to produce a valid blockchain, there is no possibility of coin-split. In that case, the version which achieves sufficient hash power will exist and the other will cease to exist. Right now BCHN has 50%+ hash power and in the last 7 days, 84.4% Bitcoin Cash blocks were created by BCHN team. BCHABC team plans to catch up soon. The final outcome should be a split.
Block creation in last 7 days
Historical block creation in last 7 months
What should you do if you hold Bitcoin Cash?
If you are holding Bitcoin Cash in your private wallet, you have nothing to do. All major exchanges are supporting the fork. In case you are holding your coin on the exchange, check with them whether they are supporting the fork or not. A big exchange like Coinbase has decided to not allow send/receive of BCHABC after the fork as they are supporting BCHN. So, it may not be a wise decision to keep your fund on Coinbase.
Hard forks and chain-splits are common in the blockchain field. Bitcoin Cash community dispute found a negative impact on the price of the number six cryptocurrency as per market capitalization. Bitcoin Cash price is 1.3% down in the last 30 days and 10.4% down in the last 1 year. The ATH for Bitcoin cash was $3,785.82 three years back in 2017. The selling pressure on Bitcoin Cash is visible and exchange inflow has increased heavily. Some people are waiting for chain-split to get free money. The last chain-split of Bitcoin Cash was profitable for many holders.
Note: The images (if not cited) are from Coin Dance