Two competing versions of Bitcoin Cash are vying for supremacy ahead of the currency’s hard fork on November 15.
Bitcoin ABC is the older client. The newer, more sophisticated, version is Bitcoin SV. It's a full node implementation that will increase the default largest block size from 32MB to 128MB, in order to complete more transactions without slowing down the network. This is the holy grail developers have been chasing since Bitcoin blew the monetary system apart in 2008.
Now is also a crucial stage in the development of Bitcoin Cash. Proponents and advocates have long believed it is the electronic cash system closest to Satoshi Nakamoto’s original vision for Bitcoin. As the stats show, the currency is running at 0.2 transactions per second, with 1.1 million BTC being moved around on-chain, and a hashrate of 5.61 exahashes per second.
And the currency has just made a massive leap forward. At the end of October, a joint Australian-Singaporean team won £5m in BCH for successfully developing tokenisation in Bitcoin Cash. This means that it’s possible for anyone to deploy smart contracts on the Bitcoin Cash blockchain. This is a huge deal which could make it much easier for institutions, regulators and big businesses to interact with Bitcoin Cash and kickstart mass adoption.
There is a serious need to incentivise miners to do the heavy lifting of actually running the Bitcoin Cash software, using their computing power to verify transactions and keeping the currency running smoothly.
Mining Bitcoin Cash profitably will be much harder in the future, if things stay as they are.
This is because the block reward - the monetary incentive miners are handed for doing the work - will halve from 12.5BCH to 6.25BCH in two years’ time.
If Bitcoin Cash developers don’t make the effort now to upgrade the blockchain, miners could simply vote with their processing cycles and switch to mining rival blockchains instead.
If a cryptocurrency is going to be used as an actual real-life currency, one that can compete with paper or plastic fiat, it won’t work when there are thousands of transactions just sitting around waiting to be confirmed. A backbone of miners must confirm transactions as quickly as possible, as often as possible. More miners means fewer transactions sitting in the mempool waiting to be picked up.
Stability is also the key to mass adoption. Just as the Internet protocol doesn’t often change - that’s the agreed method by which data is sent from one computer to another, which makes the internet possible - digital currency will only work if developers can demonstrate a system which is trustable, secure, professional and able to integrate with the rest of the world. Bitcoin Cash could be that system. But only if they make it profitable for miners to secure it, maintain it and keep it working.
That’s why a group of engineers and developers have decided now is the time to upgrade the Bitcoin Cash protocol to scale properly, making it much more professional. This is where Bitcoin SV or Satoshi Vision comes in.
If Bitcoin SV does what its backers think it should do, it will be able to handle many more transactions in a more stable manner than Bitcoin Cash can right now.
Things are looking good so far. Bitcoin SV now has nearly 60% of the hashpower for BCH, compared to the older client BitcoinABC, which is falling in popularity.
In a November 10 stress test (broadcast and replayable on Hashwar.live here), mining groups running the SV client managed to mine largest block size ever completed on a public blockchain. nChain’s BMG Pool successfully mined five 32MB blocks.
Test Co-ordinator Brendan Lee explained how his team queued up a batch of 1.2 million transactions, which were blasted onto the network over the course of a little over an hour.
This successful demonstration of a public network processing these kinds of numbers will send a very bold signal to investors and the broader public, said Lee.
“We hope that we can generate enough hype through this test that companies looking at implementing cryptocurrency-based payments will put Bitcoin Cash first,” he added in a release to Coingeek.com.
The infrastructure test worked. Now it’s down to a second stress test on November 17 to demonstrate to the world that Bitcoin Cash can manage threats from potentially hostile elements and attackers.
Says Lee: “We believe that if a network wants to call itself Bitcoin, it must be able to show the world that it is anti-fragile, and this includes withstanding attacks that I would consider relatively cheap for a well-funded state-based actor to execute.”
Lee says his team will be spending around 70BCH ($37,000 at today’s prices) in the course of the 24-hour test.
Exchanges are already making their choice. While BitPay has said it will support Bitcoin ABC, it is not even in the top 100 Bitcoin Cash exchanges by volume.
The world’s largest exchange, Binance, has said it will initially support both chains. Poloniex is already supporting Bitcoin SV and Coinbase, Huobi, OKEx and many of the most popular exchanges across the globe are backing SV.
As of November 12, SVPool, a mining pool operated by nChain’s Dr Craig Wright, is running with nearly 20% of the mining power (hashpower). Wright has been extremely outspoken in the past on how he sees Bitcoin actually generating revenue for those who are putting in the hard yards of developing and maintaining it. SVPool offers zero fees to miners, making it extremely attractive for those with relatively small amounts of power to play with. Miners also get payouts in the form of Pay Per Last N shares, a percentage of shares they contribute to the total. PPLNS tends to reward loyal miners who stick with a particular pool in the long run. The other popular method is PPS, or Pay Per Share, where miners get an instant, guaranteed payout for their contribution to the probability that the mining pool will find a block. PPLNS tends to offer higher rewards and bigger payouts than any other method.
While it’s never certain which way the community will fall on Bitcoin SV, it’s obvious that miners will follow the money, and the best chance they have of remaining profitable with Bitcoin Cash is to turn to SV. The successful stress test at 32MB blocks is a massive boost for SV and the tide may have turned too far for Bitcoin ABC to recover.
Competition is already intense. No-one wants to put their hard-earned cash into mining a blockchain that nobody is going to use, will become swiftly unprofitable, and will be abandoned.
In truth, whether miners choose Bitcoin SV or not will be the difference between being part of the future, or being left behind.
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