What is Bitcoin Cash?
Bitcoin Cash was formed from a hard fork in the Bitcoin blockchain that occurred on the 1st of August this year. A hard fork essentially is a split in the chain and as long as each side gets support from miners and users then they can continue as crypto assets in their own right.
The support for Bitcoin Cash came from a powerful group of Bitcoin supporters and miners that had run out of patience with the lack of consensus from miners, developers and other stakeholders to implement measures to enable Bitcoin to scale to meet the increasing demands being placed on the network.
If you were a holder of Bitcoin on August 1st then as long as you control your private keys then you will also have the same amount of Bitcoin Cash. Most online wallets and exchanges have also decided to support Bitcoin Cash and deliver proceeds to the owners of the Bitcoin.
Why is scalability important?
The last week has been a great example of how the current state of Bitcoin is far from meeting the expectations of its design as originally outlined in the now infamous Satoshi Nakamoto white paper published in 2008.
A simplified version can be found here:
Or the original paper can be downloaded here:
Bitcoin was supposed to be an electronic cash system that was virtually instant and free to use however as is currently the case currently when the network becomes overloaded delays and fees for sending transactions on the Bitcoin network rise substantially.
Transactions in the past week or so have taken days to be confirmed and incurred fees as high as around $100 USD. The unconfirmed transaction list or mempool has been as high as 220K while the network is really only processing about 3-4 transactions per second.
State of Bitcoin fees on 8/12/2017
Two main schools of thought have become divided over this issue while some maintain the answer is as simple as removing what was a temporary blocksize limit of 1mb others say this is unsustainable and we need to add other layers to Bitcoin and solve most of the issues off-chain.
What is the best way forward?
Never has an issue divided the crypto community as deeply as this fork of Bitcoin Cash. There are so many misguided opinions, lies, disinformation and personality attacks coming from both sides that it is very hard to get to the facts of the matter however we have conducted what I would consider a high level of forensic technical research to hopefully be able to provide some guidance.
Our research is from a technical standpoint and this can be completely at odds with investment research. In a nutshell we find it very hard to make the case that Bitcoin with the addition of Segwit and other off-chain scaling solutions can be considered to be the real Bitcoin.
Bitcoin Cash is more in line with the original design of Bitcoin and is proving itself capable of living up to the expectation of the system. Lifting the limitation enables the blocks to scale to larger sizes when required to facilitate the increased volume of transactions. This is very simple to implement without adding unnecessary complexity to the Bitcoin network that will increase the attack surface potentially introducing vulnerabilities to the original design which has proven its effectiveness over the last 8 years.
Scaling is an issue that needs to be resolved yesterday waiting another 18 months for solutions that may potentially fall short of expectations is far from adequate. Advances in computational power, storage and network bandwidth have increased significantly since the 1MB limit was imposed to counter network spamming. Demands of scaling should be far outstripped by technology advances for some time to come and by then other measures could be implemented but in the meantime there is no good reason we can find not to follow the KISS principle.
Bitcoin today as much as pains us to say it has next to zero utility value. It is way to slow and expensive to use as a currency and has seen a decrease in merchants acceptance over the last couple years. Without the utility value that made Bitcoin great it really only serves as a ‘store of value’. It is no longer capable of helping lift people out of poverty as the fees make small purchases unviable and it seems to be fast becoming another rich man’s (or woman’s) asset.
Our team here at FNQ Computers have decided as a result of our findings that we will support Bitcoin Cash moving forward in all ways we can and I know many other merchants that want to be part of the crypto currency revolution are doing the same.
In conclusion we would certainly not advise anyone to go sell all their Bitcoin for Bitcoin Cash but I would advise any new Bitcoin investors to also consider buying Bitcoin Cash as it is quite possible that one day if it receives enough support from users and miners then it may just simply become known as Bitcoin.
As the region’s leading crypto and blockchain experts we are always happy to assist people with any aspects of owning, storing and trading crypto assets and if you need help to extract your Bitcoin Cash from your Bitcoin wallet then get in touch with us today.