The controversial Bitcoin Cash network update is set to take place this Sunday
On Sunday, the fifth-largest cryptocurrency created through a hard fork of the Bitcoin blockchain, is set to undergo a contentious hard fork which could lead to a chain split.
The controversial network upgrade of Bitcoin Cash (BCH) threatens to create two completely viable chains – much like the split of BCH and Bitcoin Satoshi Vision (BSV) two years ago. It’s also possible that only one chain will remain viable in the end.
The likely split is between two protocols; Bitcoin Cash Node (BCHN) and Bitcoin Cash ABC. As it stands, more than 70% of blocks are signaling for Bitcoin Cash Node, while less than 1% are signaling for Bitcoin Cash ABC, so Bitcoin Cash Node looks like it will be the dominant chain by far.
The proposed upgrade, at least for the BCHN version, introduces a novel mining algorithm and is widely accepted. Meanwhile, the Bitcoin ABC camp supports an alternative upgrade that adds a further element allocating 8% of the block rewards to the ABC development team. Zcash (ZEC), a privacy-centric coin has a similar fund, and Dash (DASH) sees a much larger percentage go to its treasury, which is used to promote the cryptocurrency.
Bitcoin Cash’s community, however, believes the 8% allocation to developers goes against the cryptocurrency’s decentralised nature, and is even perceived by many as a ‘tax’ to the network.
Bitcoin Cash’s performance in 2020 pales in comparison to Bitcoin and other altcoins. While Bitcoin is gaining momentum and posting YTD gains of 115%, BCH is trading at record lows against BTC.
Another contentious hard fork could seriously rattle Bitcoin Cash investors and hurt the coin’s prospects for the long term. Chainalsysis’s chief economist, Phillip Gradwell, tweeted on Wednesday that over 1 million BCH were sent to cryptocurrency trading platforms over the last seven days to be sold off for other cryptoassets, presumably as users expect volatility in the price of BCH during the hard fork.
However, the hard fork could also serve to finally resolve the miner tax issue that’s been plaguing the BCH community for far too long, while also repairing developer differences and improving the security of the network.
In short, it could be good for Bitcoin Cash in the long term.
We are working with our team and clients on a plan which will allow us to be flexible and adapt to requirements as they become apparent.
We have looked at how other exchanges and custodians are approaching the fork, and there seems to be a mix of “wait and see” as well as some who outright reject the ABC chain.
Our current plan is to temporarily switch off deposits and withdrawals of Bitcoin Cash on November 15th, 2020, for a monitoring period, which could last up to December 1st, 2020.
During this two week period we will decide whether there is any need to support the less popular chain, and if so we will add the code to support it.
We will support Bitcoin Cash Node regardless of the outcome of the fork.
We will support Bitcoin Cash ABC ONLY IF the hash power on the ABC network is at least 10% of the hash power on the Bitcoin Cash Node network (or there is sufficient client request).
Clients who want full control over the outcome of the fork should withdraw their BCH to a private wallet. By holding a BCH balance with us across the fork, clients agree that Copper will handle the fork at its discretion, and understand that Copper may decide not to support Bitcoin Cash ABC at all.
If you have any questions or concerns, please get in touch with your account manager as soon as possible.