August 1st saw the first Bitcoin hard fork recorded in the first blockchain ever created. To me, it wasn’t really a hard fork, that would mean two coins going two different directions. Bitcoin is still on the same trajectory with an updated network, bitcoin cash has decided to do its own thing and fork away from the original chain.
Let’s get into this fork business…
Why Did A Hard Fork Happen?
There has been a scaling debate that has been happening for a long time now. This means that the bitcoin community needed to decide what type of upgrade they wanted to apply to the network in order to fix bugs and make things more efficient from a cost and time standpoint.
Weeks leading up to August 1st it was seeming likely that BIP 91 was going to activate with majority and Segregated Witness (SegWit) would be implemented with what was looking like a soft fork.
Then, a week before August 1st saw news and updates regarding an initiative by a small % of bitcoin miners to create Bitcoin Cash and fork away from the original chain to serve the purposes of their own initiative.
A hard fork occurs when there is not complete consensus when the upgrade happens, and a group on miners switch to a different set of rules which then leads to a hard fork in the bitcoin network as the type of upgrade Bitcoin Cash wants to implement was not supported by the majority.
This is the first hard fork in Bitcoin history. There are multiple cryptocurrencies built on top of the bitcoin network but no cryptocurrency has ever shared the same ledger history as the first cryptocurrency ever created.
Bitcoin Hard Fork – What Is Bitcoin Cash?
Bitcoin Cash, simply put, is a movement to increase the blocksize, reject SegWit and oppose the lightning network that will be in operation with the upgrade in Bitcoin.
What is the lightning network?
Explaining the lightning network can get techy and it’s easy to get lost in definitions (but don’t panic). It’s basically another layer of the network that can be used by everyone to send, receive and exchange IOU’s using smart contracts to make things more efficient and take some heat off the blockchain. You see, the problem is that bitcoin is still in its early days and it’s attempting to evolve. The network has been getting clogged because of the vast increase in users of bitcoin that increased transactions and traffic on the platform. The lightning network is like building a couple new highways/motorways in order to ease the traffic on the roads that are congested, allowing things to be quicker, cheaper and more efficient.
Through my research there is a reason why some of the bitcoin miners wanted to create bigger blocks rather than the lightning network. Bigger blocks means the miners have more to do, and more to get paid on but could also equate to an increased centralization of power within the BTC mining community. ViaBTC was the first exchange to announce they would support Bitcoin Cash quickly after news released about the potential hard fork. BitMain is a mining hardware company in China that through different connections, is closely related to ViaBTC.
Now, let’s put it together. A small group of people within the mining community did not want SegWit to happen because it would of tainted their monopoly within the field of mining, selling hardware and producing chips; especially BitMain in Asia which has a massive monopoly in this market. Their business model relies on this type of verification process, which makes you understand why they want bigger blocks, rather than the lightning network, because it is more money for them. However, if you are reading this how I am typing it, they are thinking about their pockets rather than the user base.
Have you ever met an avid user of Bitcoin that was excited about the ‘innovative’ [[inject sarcastic tone]] project that is Bitcoin Cash? I haven’t. And rightly so, I believe they are doing this for their own good rather than to contribute to the bitcoin and cryptocurrency industry.
Bitcoin has grown over the last 8 year exponentially because of its decentralization, openness, trust and the fact it cannot be manipulated as nobody owns it. Creating a cryptocurrency with a particular agenda or forging a centralization of power will never bold well in my opinion.
It’s Not A Hard Fork – It’s A Forking Away
What do you mean it’s not a hard fork? A hard fork suggests a splitting of the network in two different directions because consensus could not be met, but that’s only partly true in this case. What Bitcoin Cash is effectively doing is FORKING AWAY from the original chain. The large majority of the bitcoin community, both users and miners, were on board with SegWit and a User Activated Soft Fork happened in the Bitcoin platform as the upgrade happened and was implemented through BIP 91. This is a good day for the Bitcoin community as this will be a positive going forward in making the network better.
Bitcoin Cash has decided to do its own thing and be an alternative cryptocurrency to the original bitcoin, the first cryptocurrency ever created. That’s why I think it’s more accurate to say forking away, or forking off, whatever you prefer.
Can’t you tell these people are coders, developers, engineers? Now we have Bitcoin and Bitcoin Cash, as if things weren’t already confusing enough for people! Now, we will have to explain what’s going on with that and why there are two crypto’s with the name “Bitcoin” in it. Personally, I think they should of used something different, but it’s easier for them to potentially build with the well known Bitcoin household name. Plus, they spring boarded their project from the original Bitcoin chain which I am sure so many cryptocurrencies would like to do.
As I reread this, and feel the tone of the article; one of the worst things you can do in this industry is be romantic with it. What I mean by this is we are in a very fast paced, young and innovative industry that will keep changing. Bitcoin may not be what it is today 5 years from now. However, I believe in creating projects for the good of everyone! I think that’s what this industry was created for. Creating a network where everyone could have access to the global movement of value.
Bitcoin Hard Fork – What Now?
I think the near future is extremely bright for Bitcoin with the updated network and new market cycle coming into focus as the time of updates and controversy pass after the month of July. I would predict a bull market coming in August and heading into September. Watch out for those altcoins come soaring back too after hitting big lows during this time.
As for Bitcoin Cash, the questions in my mind are; can they capture a % of the market? Will the pump that has happened continue? How many bitcoiners will move over there? Can their model be successful as they have only increased the block size, they have not solved the scaling issue!?
Time will tell whether Bitcoin Cash can keep up momentum and become a looked to altcoin.
I hope this article helped you understand why the fork happened, what the reasoning was behind the hard fork and what Bitcoin Cash is.
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All the best,