Bitcoin Cash, the fourth largest digital currency, and perhaps the most popular Bitcoin hard fork, split into two earlier this month to create another cryptocurrency.
The resulting cryptocurrencies are referred to as Bitcoin SV (Satoshi’s Vision) and Bitcoin ABC (core Bitcoin Cash).
Here’s a brief guide to how the hard fork was initiated and what it means for the future of Bitcoin Cash.
What Is a Hard Fork Anyway?
In simple terms, a hard fork represents a scenario where miners and developers do not mutually agree on a proposed change to the software, despite them all operating under a similar blockchain.
As soon as the fork goes through, a particular group known as “nodes” (computers which are linked to the network and which are part of the transaction confirmation procedure) will subsequently upgrade to the new software while the other will operate on the previous rules, producing two separate digital currencies and blockchains.
Context: Two Opposing Positions
The decision of splitting resulted after a disagreement of the proposed upgrade by a lead developer of Bitcoin Cash, Amaury Sechet, to add a small alteration to the transaction ordering.
This dispute escalated online and now pits two of the greatest crypto personalities against each other: Craig Wright, the self-identified creator of Bitcoin, and Roger Ver, prominent crypto startup investor and Bitcoin Cash promoter.
Although both these individuals are great proponents of the currency, the imminent fork has now put them at loggerheads.
While Ver has significantly pushed for the imminent new software upgrade or Bitcoin Cash, Wright, on the other hand, argues that the software should subsequently diverge towards the original Bitcoin, as Satoshi’s Vision.
This he claims should be done by raising the optimal block size from 32MB to 128MB.
How successful these coins will be is ultimately dependent on the miners who will commit their hash power (computing power of mining a digital currency). Whatever the case, the miners will eventually commit their hash power to either coin that appears more lucrative to mine.
Up to now, the consensus within the industry is of the idea that Bitcoin ABC ought to prevail in the tag of war between the miners.
As for crypto exchanges, many of the major ones including Binance, Coinbase and even Bitfinex, have all outlined that they are in full support of the hard fork, which means that Bitcoin Cash owners will subsequently receive the new cryptocurrency in a 1:1 ratio as soon as the network gets upgraded.
In what was a relatively surprising move before the fork, several exchanges took an unusual approach of allowing the pre-trade of both coins, a step which Wright outwardly criticized.
According to him, this may be a breach of U.S. short selling rules by allowing the trade of a coin which is non-existent.
The exchange Wright referred to in his criticism was Poloniex, which argues that pre-trading affords power to the crypto community to make up their mind on the coin they want to give their support to.
In a press release, Poloniex outlined that they believe that the most responsible step in this predicament is remaining neutral and allowing the community to decide on the chain they wish to support.
Since the announcement of the hard fork, Bitcoin has subsequently been trading in a somewhat turbulent manner surging as high as 50 percent earlier this month just before dropping to 21 percent after the fork.