This week is likely to bring a hefty dose of Deja Vu for the bitcoin cash (BCH) community as the cryptocurrency heads towards yet another contentious hardfork; its second in as many years.
When crypto developers clash and fail to come to an accord, what typically follows is a hard fork. In other words, the protocol splits in two, with dev teams quite literally going in separate directions. And that’s precisely what’s in store for BCH on November 15th.
Bitcoin cash—itself created in a hard fork spin-off from bitcoin core—underwent its last chain split in 2018. Dubbed the “hash wars,” the divisive split came about after considerable in-fighting between developers over separate ‘visions’ for the protocol’s direction. The end result was bitcoin SV.
This time around, the battle wages between the bitcoin ABC and bitcoin cash node (BCHN) developer teams. BCHN wants to implement a fairly unobtrusive mining algorithm update that aims to optimize the mining process. Meanwhile, ABC’s plan is slightly more radical—proposing to earmark 8% of bitcoin cash’s block rewards for a developer fund.
Diverting mining rewards to fund developer efforts isn’t particularly groundbreaking; other cryptocurrencies, including Dash and Zcash, have a similar system. But for some, including bitcoin cash proponent Roger Ver, the fund would represent a move toward centralization.
“Diverting part of the #BitcoinCash block reward to pay a single development team is a Soviet style central planner’s dream come true. Please stop,” Ver Tweeted.
Bitcoin Cash Node vs. Bitcoin Cash ABC: Hashing It Out
In the end, while a split is inevitable, it’s the miners that will have the final say on which chain will come out on top. That’s because miners effectively ‘vote’ with their computing power (aka hashing power). The side with the most hashing power, and thus most miners, typically becomes the more attractive chain.
This was the case back in 2018, during the hash war that produced BSV. Today, as bitcoin cash enjoys a coveted spot as a top 10 cryptocurrency by market cap, BSV sits on the periphery, having gained significantly less support from miners during its own hard fork.
The BCHN v ABC hardfork, however, may already be a foregone conclusion. BCH miners have made their intent visibly clear, penning messages such as “PoweredbyBCHN” into newly minted blocks—alleging support for the BCHN proposal.
Moreover, per data from on-chain analytics site CoinDance, BCHN has claimed 815 of 1000 newly mined blocks—demonstrating overwhelming miner backing.
It’s not overly surprising that miners would oppose ABC. After all, the proposal effectively plans to siphon their revenue. But where do crypto exchanges stand?
What Crypto Exchanges Plan to Do, and How It’ll Affect You
Regardless of who gains the most hash power, the split will create two separate assets representing the two distinct forks: BCH ABC and BCHN. Several notable exchanges have already come out with their plans for Sunday’s split. Okex was among the first, noting that holders of BCH will receive both newly created assets. The same goes for HitBTC.
Some exchanges, including Crypto.com, are opting to support the asset with the most hash power. Kraken meanwhile pledged support for BCHN, noting that it would only list ABC’s iteration if it managed to gain 10% of the network hash—something that is looking wholly unlikely given recent estimates.
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A unique—and often lucrative—result of many hard forks is that the process creates two assets of equal value. In other words, holders of the contended coin receive a 1:1 ratio of the said assets. One of the most notable examples of this was bitcoin cash’s original hard fork from bitcoin core in 2017. Four months after the split, BCH hit its all-time high of $3,950, fortuitously enough for those holding the forked assets.
With this in mind, holders of BCH on Kraken and Crypto.com may wish to withdraw to a wallet or exchange that plans to support both sides of the split in order to claim any additional tokens.