There’s been no lack of hype or support surrounding Bitcoin Cash (BCH) since its hard fork from Bitcoin on August 1st, 2017. But now that a year anniversary has been celebrated and passed, the cryptocurrency community has been prompted a spectrum of questions: What has become of BCH? Where does it stand in terms of development? Longevity?
The answer manifests in a segmented series of discussions, though to understand them we have to start at the genesis (block) of BCH.
In a much-abridged recap of the Bitcoin Cash concept, Bitcoin Cash can be understood as an alternative, or hard-fork of Bitcoin originally conceptualized as a solution meant to solve the issue of big block sizes and slow transaction times. In an effort to alleviate the ever prevalent dialogue of “heavy data,” Bitcoin Cash introduced a solution under the title of SegWit2x. SegWit2x removes much of the original signature data from block transfers while doubling the size of the blocks from 1mb to 2mb. This proposed introduction of SegWit2x and therein fork from the original Bitcoin protocol hasn’t been met without intense criticisms from all parties involved in the community.
Many vocalized concerns over this type of solution merely acting as a patch for a leaky boat, only prolonging or drawing out core issues, while others shared concerns over the fragmentation of the Bitcoin community. Despite this, a hard-fork from Bitcoin was established on August 1st through the implementation of SegWit2x, which continues today. If you’d like to read more about the simple history and defining factors of the currency, I discussed this concept a little more here.
Perhaps, the most efficient method of quantifying the success of a currency to date exists inside of addressing adoption and the sub-categories that exist inside of that:
Bitcoin Cash Merchants & Consumers:
Merchants and consumers are two of the biggest defining factors in recognizing the success or failure of a currency specifically. A dialogue between who is using the token and who is accepting the token. A developer or miner can work on the project all they’d like, but if there is no real-world adoption… it’s useless.
Where Bitcoin Cash has realized multiple seemingly large milestones from BCH seeing adoption by something like 80% of Cyprus merchants by November of 2018, to integration into the 1-billion user platform WeChat — a more unfortunate truth remains.
Like the title of the chart says: Bitcoin Cash use in commerce is declining. And rapidly. And this isn’t without lack of effort. Roger Ver and company have been tirelessly dumping time and money into the marketing of the currency, but clearly with little effect on adoption.
Despite this, little concrete evidence remains as to why. Speculative answers exist in things like difficulty of use, overall market fatigue or even the sustained success of its competition — but one thing remains clear… A year later, and the consumer and merchant market is not using Bitcoin Cash.
Bitcoin Cash Technical Community (Miners & Developers):
Regardless of an initial spike in merchant adoption and pricing, today the mining community is seeing a stagnation and slight decline in the number of miners working towards excavating Bitcoin Cash. When paired against Bitcoin, a worrying trend becomes quickly identifiable.
The growth of Bitcoin over the past full year demonstrates a more consistent and stronger trend when compared against Bitcoin Cash, which from April to May saw a relatively large increase in total hashrate, but then remained constant until August where it began a slow decline in overall hashrate.
Though when compared to Bitcoin’s hashrate SFOX provided the commentary “It’s worth noting, though, that the rate of increase in Bitcoin Cash’s hashrate has actually moderately outpaced the rate of increase in Bitcoin’s hashrate in recent months: since the start of 2018, Bitcoin’s hashrate has increased 97.35% from 15.0181E hashes per day to 29.6384E hashes per day, whereas Bitcoin Cash’s hashrate has increased 129.12% from 1.9669E hashes per day to 4.5066E hashes per day.”
The issue with this understanding is that it doesn’t consider the upper limit of overall miners and the rate at which new miners are educated and integrated into the ecosystem. The percentage is relative to the number of people in the group, not the overall number of miners. It could be assumed that as Bitcoin experiences more adoption, the rate at which the hashes grow will slow because the number of potential new and immediately willing miners becomes lower and lower.
In other words, it takes exponentially fewer miners and commitment to shift the overall hashrate percentage when moving from 2E hashes a day to 4.5E hashes a day, than it does to shift Bitcoin from 15E hashes to 30E hashes, and these miners should be more easily accessible due to the saturated atmosphere of education, established mining operations, etc. So if it was actually experiencing a robust level of adoption we should expect the percentage shift to be much larger because it takes much less miner adoption to shift the percentage that much.
Earlier this year, one of the largest mining groups in Japan announced that they were ceasing mining of BCH.
The bottom line is that miners are not specifically excited about BCH. It currently yields similar profits and results to Bitcoin while being much less established and offering no advantage or differentiator large enough to shift the interest of the community.
Bitcoin Cash Developers:
Now, where unfortunately a lack of readily available information exists in relation to the existing development core, we can get creative and look for other important indicators to that speak to overall growth and consistency.
And unfortunately for Bitcoin Cash, not many indicators speak to overall growth and consistency on the side of the developers. When postured against Bitcoin a clear disparity in the GitHub activity can be noticed. Virtually nothing happens for Bitcoin Cash over the course of multiple months, while Bitcoin experiences a consistent level of contribution. When observed in light of the statistics concerning mining and consumer adoption, it would seem that the project is meeting stagnation.
Beyond this, there has been a massive vocalized concern in the development community that Bitcoin Cash is actually a very centralized project touting itself as decentralized. bitPico, an anonymous group of developers, programmers and Bitcoin enthusiasts released a statement pointing out that their bitPico BCH node was banned after coordinating multiple attacks to test the network’s resilience. The suspension of their node speaks to a centralized operation, therein lowering the trust and willingness of anonymity purists to work with the project.
bitPico further released the statement that “We are currently monitoring the IP addresses as they seem to be changing into separate network groups, possibly to fake decentralization.”
When all of the factors are considered it becomes apparent that Bitcoin Cash provides very little to believe in outside of its semi-hollow promise of faster transaction times. The question is begged, how are we as consumers supposed to believe in the adoption of a currency based off of a small pool of differentiations that demonstrates no meaningful growth, no meaningful adoption, and no meaningful product development?