A development group which employs Craig “Satoshi Nakamoto”/”Faketoshi” Wright is going to release a competitor to Bitcoin Cash, called Bitcoin SV (“Satoshi Vision”). This is the result of a disagreement within the Bitcoin Cash community.
On one side is Bitcoin ABC, the protocol behind the original Bitcoin Cash. On the other is nChain, a Bitcoin Cash-advocating research centre which promotes “Bitcoin Cash as the true Bitcoin”. Wright, who last year made headlines when he claimed to be the real Satoshi Nakamoto, is nChain’s ‘Chief Scientist’.
The disagreement is this: Bitcoin ABC wants to release an upgrade, and a certain section of the Bitcoin Cash community disagree. As a result, the chain could split into two. Sound familiar? It should.
Bitcoin Cash was created in August 2017 when the Bitcoin ABC protocol was implemented. Basically, it increased the block size limit on the Bitcoin blockchain because transactions had become slow and expensive – the smaller the blocks, the more of them there are, so more verification calculations are necessary. As the chain split, holders of BTC suddenly held the same amount of BCH.
Most holders of Bitcoin did not agree with the fork and continued on the original path, which is why there are two cryptocurrencies where once there was one. In fact, the price of BCH crashed soon after its creation when BTC holders sold off the BCH that they had come into possession of. At the moment, Bitcoin Cash has a market capitalisation of $9 billion, making it the fourth most valuable cryptocurrency, while Bitcoin is worth $111.4 billion (figures from coinmarketcap.com).
History repeats itself
BCH underwent an upgrade in May which didn’t lead to a fork. Why is this one different?
The developments, in layman’s terms, relate to being able to use the BCH blockchain to write smart contracts by making it possible to add a second layer to its blockchain. Examples of additional blockchain layers include the Lightning Network (for Bitcoin) and Plasma (for Ethereum). They are touted as ways to make blockchains faster and/or add more functions to them.
Adding a smart contract-writing function to Bitcoin Cash would likely attract more people to use it. Bitmain, the Chinese company that dominates cryptocurrency mining, has already indicated its interest in helping to develop such a function, and it recently invested $3 million in a startup that plans to make use of one as soon as one is invented. That startup counts Roger Ver, Bitcoin Cash zealot and owner of Bitcoin.com, as an adviser.
The upgrade is due to come into effect in November. However, Wright’s nChain does not agree.
Jimmy Nguyen, CEO of nChain, said that its mission is to “fulfil the vision of Bitcoin’s founder Satoshi Nakamoto”, and to this end, Bitcoin SV will avoid “unnecessary changes to the original Bitcoin protocol.”
By this he means additional layers. In response to the upgrade, nChain is releasing its own, which will raise the block size of Bitcoin Cash once again, to 128 megabytes from the current 32. For reference, the Bitcoin block size limit is 1 megabyte.
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Buterin vs Wright IV
Vitalik Buterin, creator of Ethereum, made his opinion known:
The BCH community should NOT compromise with Craig Wright to “avoid a split” and should embrace it as an opportunity to conclusively ostracize and reject him. Bitcoin Craig (BCC) can go take the ticker symbol from the now-defunct cryptocurrency to which it is a fitting successor.
— Vitalik Non-giver of Ether (@VitalikButerin) August 22, 2018
Buterin does not believe that Wright created Bitcoin, and called him a fraud to his face at a conference in April. His reference to ‘BCC’ was another little dig: a reference BitConnect Coin, the token issued by the notorious Ponzi scheme.
— Hope Freiheit 🥃 (@hope_freiheit) April 3, 2018
Personal animosity aside, there is reason to be critical of another increase in block size. Some have pointed out that this is so unnecessary as to be farcical:
My thoughts on the proposed changes to Bitcoin Cash
1. 128 MB blocks — right now absolutely unnecessary and dangerous. The median block size over the last month is just 37 kB! There are still no blocks larger than 8 MB despite the limit is 32 MB now (see https://t.co/h0UTLUGR7y)
— Nikita Zhavoronkov (@nikzh) August 21, 2018
Who will prevail?
According to CCN, around two thirds of BCH holders use Bitcoin ABC. Ver can probably be counted on to support Bitcoin Cash proper, given his aforementioned advisory position. However, CoinGeek, a mining pool that controls approximately one quarter of all Bitcoin Cash mining, supports Bitcoin SV.
It will be interesting to see how this disagreement plays out.