By: Sameer Zubairi | 5 min read | 17/12/2018

What Caused The Bitcoin Cash Hard Fork

HARD FORKS: ACHIEVING A DEMOCRATIC CONSENSUS

The fragmentation of the Bitcoin Cash network continues to fuel the debate against the democratic characteristics of blockchain technology. The instability that is created when large portions of a blockchain network can’t agree on a definitive protocol can make businesses shy away from incorporating digital currency.

Essentially, when the majority of nodes can’t agree on the different terms and conditions required to execute transactions on the distributed ledger, something known as a hard fork occurs. As a result, two coins are produced and they function on concurrent blockchain networks. Even stable crypto assets, like Bitcoin, have undergone multiple hard forking events.

Generally speaking, a fork event indicates a divide in a project’s community and can make it an unattractive buy.

Forks in cryptocurrency are becoming more ubiquitous, making it an important concept to grasp for interested investors. The communal nature of crypto one of the things that makes it attractive to investors, but forks are something that shines a more nuanced light on the risks associated with these democratic currencies. Generally speaking, a fork event indicates a divide in a project’s community and can make it an unattractive buy. Furthermore, a forks event’s effect on price can be incredibly varied based on if it’s soft or hard, and deliberate or accidental.

In the case of Bitcoin Cash, a soft fork planned to be carried out by the currency’s largest network client, Bitcoin ABC, was disputed by other influential parties in the community. Therefore, carrying out simple updates to the protocols used to execute transactions on the network became a moment of contention from others in the community.

A Game of Forks: Bitcoin Cash ABC, SV and Cobra Client
Bitcoin Cash is typically scheduled for a soft fork update every 6 months, which is expected to be carried out without contention. The largest client on the network, Bitcoin ABC, recently announced version 0.18.0 of the blockchain protocol used to carry out transactions. This was not meant to be a major upheaval of the previous protocol, but just made small adjustments, including things like Canonical Transition Ordering and two new operation codes (opcodes).

Opcodes are the part of the computer code which provides instructions on operations to be performed.

The release of this announcement from Bitcoin ABC sparked an opposition asking for more radical change.

  • Specifically, Craig Wright, who is the founder of the blockchain development platform nChain and also claims to be the real Satoshi Nakamoto, released a different proposal for the protocol to be implemented at the scheduled fork date. In Wright’s proposal, an entire roadmap was laid out outlining a reversion to the original protocol released by Satoshi. This involved implementing four “Satoshi” opcodes. Therefore, this proposal was named, SV for “Satoshi’s Vision”.
  • Lastly, seeing all the disarray in the Bitcoin Cash community, a controversial mouthpiece in the Bitcoin community, Cobra, who is the anonymous handler of bitcoin.org, joined the chaos. Cobra announced the release of the Cobra Client, which promised to keep the exact same protocol without making any changes. Cobra even claimed to have 25% of the hashing power associated with the network, which would make it the second most favored proposal, behind 29.5% of nodes supporting Bitcoin SV and 19.3% supporting Bitcoin ABC.

The result of this battle royale turned out to be a hard fork and the establishment of two new versions of the Bitcoin Cash network: Bitcoin Cash ABC and Bitcoin Cash SV. The Cobra Client has folded its position and Cobra seems to be showing his support for Bitcoin Cash SV.

THE FAULTS OF DECENTRALIZATION

The faults that formed within the Bitcoin Cash community can reveal some of the disadvantages of a democratized code being executed on the network. Some people have claimed that this is clear evidence of a centralized system being more stable, but that might also be just jumping to conclusions. Considering that updates and forks are not regular occurrences in most blockchains, but carefully planned out steps, it makes sense to democratize this process.

The nodes on the network can then collectively dictate the code used to execute their transactions. However, in order to have a high degree of stability (something that is necessary for mass adoption to occur) it may be fruitful not to update the network too frequently and make controversial changes that may draw concern from pockets of the community. Ultimately, the success of all coins helps lead to the success of the crypto industry as a whole.

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