Nov 18, 2020
Bitcoin has many users around the world. The philosophy behind Bitcoin attracted lots of people. With the popularity of Bitcoin, people who are not familiar with cryptocurrencies began to call every digital currency “Bitcoin.” Bitcoin made popular Satoshi Nakamoto and all the cryptocurrencies around the world. So, Bitcoin is the crucial player in the cryptocurrency sphere.
Since the creation in 2007, Bitcoin was the emerald on the ring of cryptocurrencies. However, some people were not so pleased with the characteristics of Bitcoin. They were searching for improvement in the Bitcoin blockchain. Some users and investors did not like new improvements and thought that those were not enough for the system to perform in a better way than usual. These conflicts lead to separation amongst users. Some people stayed as a soft fork on the original Bitcoin, others with more distinct ideas created a hard fork with new names.
As the topic of the blog suggests, we will differentiate the Bitcoin Core (BTC)– the original one and the Bitcoin Cash (BCH)– the new one. From 9 January 2009, Bitcoin was sound until the problem occurred due to the scalability in 2017. For the moment, Bitcoin was handling up to seven transactions, and the block size was 1MB. Here, developers separated into two fronts: small-block and big-block proponents. In July 2017, Bitcoin introduced Segregated Witness as a solution to the problem. In August, the Segregated Witness was activated. SegWit reduced the transaction size by 75%. It means that it can hold 4MB information in a 1MB block. SegWit was the solution for the small-block proponents. Also, Lightning Network was another solution proposed by small-blockers later on.
According to the small-blockers, an increase in block size will damage decentralization and functionality. Increased block size will make it hard for nodes to validate accepted blocks. The speed of receiving will be low because a big block size will require a high-speed connection, and not all nodes have that type of high-speed connection. Also, there will be lags in the system if the block size is big. It will take lots of time to validate transactions in the blocks. If some nodes have a high-speed connection, then the network will not be decentralized as it used to be, and the number of participants will decrease. These small-blockers are the proponents of Bitcoin Core. They think that increasing block size is the opposite of Satoshi’s philosophy.
According to big-blockers, increasing block size is the only way to improve the network. During the boom periods, transactions and transaction fees increased as people demand more bitcoins. The reason was people wanted to include their transactions in blocks as soon as possible, and they paid high fees. In December 2017, the transaction fee increased to $57. In that period, there were 115000 unconfirmed transactions worth $700 million, and it was massive. So, big-blockers thought that increasing the size of the block to the 8MB will be the solution to the problem.
The result of this conflict was the hard fork in Bitcoin. The small-blockers continued to use original Bitcoin as Bitcoin Core with the SegWit improvement, and the big-blockers deviated from this and created Bitcoin Cash. The popularity of Bitcoin depends on the stakeholders and how does each fork work for them. Users have significant power over the network. If the majority of them think that Bitcoin Core is the best for them, then Bitcoin Core will be successful. Initially, Bitmain, the mining company, supported Bitcoin Cash. After the fork, it was interesting which cryptocurrency will be better off.
Bitcoin Cash does not support any of the improvements that BTC has, which are the SegWit and Lightning Network. BCH increased its block size to 32MB in May 2018. BCH is one of the leading cryptocurrencies with 5th place for its market capitalization in 2020. On 15 November 2018, BCH experienced a hard fork itself. The hard fork named Bitcoin SV- Satoshi’s Vision. BSV proponents increased the block size to 128MB. BSV led by Craig Wright, who was alleged Satoshi Nakamoto, and Calvin Ayre, the owner of the CoinGeek. Bitcoin ABC was another fork that continued as the original Bitcoin Cash. Bitcoin ABC also adopted Smart contracts to increase network functionality.
Regardless of all those forks, Bitcoin still survived even thrived till now. “What does not kill you makes you stronger“ is valid for Bitcoin. If we look at the price graphs and market capitalization Bitcoin Core is a market leader. Even Bitcoin is considered as digital gold and treated as an investment and asset by various companies. In November 2020, Bitcoin traded up to $18000 in the market. This sound position of Bitcoin will last for a long.