Bitcoin

Bitcoin Cash vs. Bitcoin SV: Six Months after the Hash War – sFOX

In August 2017, bitcoin cash initiated a successful hard fork of the bitcoin network. bitcoin cash set out to fulfill what it saw as bitcoin’s original promise: digital cash with high transaction throughput and low fees.

History seemed to repeat itself in November 2018 when the bitcoin cash network itself split in two, leading to the creation of bitcoin satoshi vision or bitcoin sv.

Reading: Bitcoin sv vs bitcoin cash

In early August, bitcoin cash had proposed a protocol update. this included:

  • canonical ordering of transactions (ctor), which would require that the transactions in each block be included in a specific order.
  • op_checkdatasig , an opcode that would give the bch scripting language more flexibility, allowing oracles and atomic swaps with other strings. the goal was to introduce non-cash transactions that would bring a smart contract level of functionality to bitcoin cash.

A faction within the bitcoin cash community, led by craig wright and calvin ayre, vociferously disagreed with these proposed technical updates. they argued that the proposed updates were not secure and would corrupt the original vision of bitcoin as digital cash by allowing non-cash transactions. this faction released a competing version of the protocol with a higher block size limit of 128mb on November 15, 2018, leading to a controversial hard fork that split the chain into bitcoin cash and bitcoin sv.

An email that Roger Ver alleges Craig Wright wrote to him. Whether or not the email is genuine, the fact that Ver would even allege this represents the acrimony surrounding the hard fork last November. Source: BreakerMag.

See also: How to buy Bitcoin in the UK with a debit card

the bitcoin sv hard fork is interesting because it involved not only an initiative to revert bitcoin cash protocol changes, but also an attempt, by some members of the community, to effectively kill bitcoin cash by taking all of its hash . Energy. Six months later, it’s time to assess how both chains are doing and how they compare to their parent, bitcoin.

let’s see how bch stacked up against bsv along with btc just over a week after the hard fork, on Nov 26, 2018:

Here’s how that compares to where they were at on May 9, 2019:

See also: How to buy Bitcoin in the UK with a debit card

See also: How to buy Bitcoin in the UK with a debit card

See also: How to buy Bitcoin in the UK with a debit card

See also: How to buy Bitcoin in the UK with a debit card

Despite all the initial talk of a hash war, both chains continue to exist independently. To understand how bitcoin sv compares to bitcoin cash, we’ll compare chains along three key dimensions:

  • mining: bitcoin sv forged without replay protection, which posed an existential risk to bitcoin cash. this led to miners on both chains contributing hashing power unprofitably. what is the current status of mining on both chains?
  • block size: bitcoin cash increased its block size limit from 1mb to 32mb bitcoin. bitcoin sv subsequently increased its own block size limit from bitcoin cash’s 32mb to 128mb. how have bitcoin cash and bitcoin sv scaled their respective networks?
  • transaction volume: both bitcoin cash and bitcoin sv claim to meet bitcoin’s original value proposition. what does transaction volume tell us about how people and institutions are currently using bitcoin cash and bitcoin sv?

In this article, we will delve into the state of both cryptocurrencies since the fork.

Both bitcoin cash and bitcoin sv use bitcoin’s sha-256 hash algorithm, which means the same mining hardware can be used to generate hash power in bch, bsv, and btc. this is what led to the “hash war” between bitcoin sv and bitcoin cash at the time of the hard fork.

Unlike the bitcoin cash fork of bitcoin, where the chains split cleanly and went their separate ways, some bitcoin sv supporters wanted their chain to emerge from the hard fork as the sole survivor. nchain craig wright explicitly stated that he and other bitcoin sv supporters intended to use their mining hash power to 51% attack the bitcoin cash chain. With such an attack, they could theoretically discourage miners from mining bitcoin cash by mining only empty blocks or orphaning honest miners. In this scenario, bitcoin cash miners would be incentivized to switch to mining bitcoin sv.

See also: How to buy Bitcoin in the UK with a debit card

The “hash war” led miners to mine unprofitably on both chains. As shown in the chart above, the bitcoin cash network hash rate was around 4 exhashes per second in the months before the fork. Immediately after the fork, the bitcoin cash hash rate nearly doubled, rising to 7.8 exhashes per second. Bitmex research indicates that as of December 10, bitcoin cash miners had lost $3.45 million and bitcoin sv miners had lost $2.49 million.

About 10 days after the split, and an expensive, albeit short, hash war, the hash war ended when the bitcoin sv team announced a permanent split from bitcoin cash, enabling on-chain replay protection. since then, hash rates on both chains have dropped substantially. the bitcoin cash network now has 2.13 exahashes per second compared to bitcoin sv’s 447.19 petahashes per second, or nearly five times the hashing power.

The bitcoin cash hard fork presents an interesting case study in a blockchain governance conflict, illustrating that, in a sufficiently acrimonious situation, a forked chain could theoretically take down the original chain. however, while this fork ultimately led to losses for miners on both sides, bitcoin cash and bitcoin sv survived and stabilized after the hard fork.

As the bitcoin network grew, so did transaction times and fees. The largest bitcoin cash blocks were intended to help scale the network with fast transaction times and low fees. Following the hard fork with bitcoin, bitcoin cash first increased the block size limit to 8mb and eventually to 32mb. bitcoin sv later quadrupled that limit to 128mb.

bitcoin sv’s massive block size limit was intended to not only enable faster and cheaper payments, but also open up the chain to broader commercial use. In the words of nchain’s craig wright:

these are concepts and business seeds that we will provide to developers looking to extend the bitcoin protocol in sv, not as a means of breaking the state or anything like that, but for simple and boring uses, like plumbing technological data. . It will be about tax invoices and contract exchange platform: systems that allow a user to buy an item at the local store, and have it registered and available later for use as a tax record. it could even be automated to load it into an accounting system.

See also: Bitcoin: What The Heck Is It, And How Does It Work?

wright posited that larger blocks would allow bitcoin sv to function as a kind of “commodity layer” for businesses, which they could use to store invoice records, receipts, and more. while this use has yet to materialize in bitcoin sv, it is possible that the chain’s larger blocks will allow for greater commercial use than bitcoin cash in the future.

The daily average block size limit of Bitcoin Cash and Bitcoin SV. Source: BitInfoCharts.

See also: How to buy Bitcoin in the UK with a debit card

Currently, the average daily block size for bitcoin sv is 340kb, or 0.3% of the total block size limit. Bitcoin Cash’s average daily block size is 176KB, or 0.5% of the total block size limit. neither bitcoin cash nor bitcoin sv are seeing anywhere near full utilization of their respective block size limits yet.

Image source: BitMEX.

See also: How to buy Bitcoin in the UK with a debit card

Transaction volume on bitcoin sv similarly increased after the hard fork, to a whopping 4 million transactions on November 18. transaction volume in bitcoin sv has proven to be more volatile than bitcoin cash, at around 10,000 transactions per day, with peaks of up to 450,000.

See also: How to buy Bitcoin in the UK with a debit card

While bitcoin cash and bitcoin sv transaction volumes have grown since the hard fork, they are still dwarfed by bitcoin, which makes about 380,000 transactions per day. The data suggests that while bitcoin cash may support more transactions per block with lower fees, there simply isn’t as much demand for a blockchain-based cash system just yet. bitcoin cash competes with credit cards and centralized payment systems like paypal, which are probably the most convenient option for most people.

It is important to note that, unlike bitcoin cash, bitcoin sv does not target digital money as its primary use case. according to nchain’s jimmy nguyen, bitcoin sv’s goal is to be an enterprise base layer for businesses, which could be used for anything from launching token-based assets to a ledger that helps businesses manage their chain of transactions. supply. Nguyen says the bsv development team is focused on developing short-term on-chain scaling capabilities to support these use cases. while bitcoin sv transaction volume remains low at present, it’s still too early to tell whether bsv’s larger blocks will lead to more commercial and enterprise adoption in the future.

The recent bitcoin cash/bitcoin sv fork offers a novel case study in cryptocurrency governance, where members of one chain essentially declare civil war and attempt to eliminate the other chain from existence. Although this did not happen, it greatly affected the value of the network.

While the bitcoin/bitcoin cash fork was acrimonious, the two chains were largely separated after the split. surprisingly, the combined market caps of bitcoin and bitcoin cash were higher than the market cap of bitcoin before the fork. The same cannot be said for bitcoin cash and bitcoin sv. A month before the split, bitcoin cash’s market capitalization was $9 billion. today, six months after the fork, the combined market capitalization of bitcoin cash and bitcoin sv is around $6 billion, down 33%.

It’s only been six months since the hard fork, making it impossible to tell if one side or the other has emerged victorious. for now, both networks seem happy to go their separate ways. bitcoin cash seeks to fulfill what it sees as the original promise of bitcoin as a fast and cheap electronic cash system. Meanwhile, bitcoin sv sees bitcoin as a scalable blockchain layer that companies and businesses can build on. only time will tell which of these visions will win.

The above refers to an opinion and is for informational purposes only. it is not intended to be and does not constitute investment advice, and is not an offer to buy or sell or a solicitation of an offer to buy or sell any cryptocurrency, security, product, service or investment. seek a duly licensed professional for investment advice. The information provided here or in any communication containing a link to this site is not intended for distribution or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation or which would be subject to sfox , inc. or its affiliates to any registration requirements within such jurisdiction or country. Neither the information nor any opinion contained in this site constitutes a solicitation or offer by sfox, inc. or its affiliates to buy or sell cryptocurrencies, securities, futures, options or other financial instruments or provide any investment advice or service.

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