Drama surrounding the impending Bitcoin Cash hard fork scheduled for today has sent the crypto markets into a nosedive. Bitcoin dropped over 15% and Bitcoin Cash lost 20% in intraday trading yesterday on the news. Shockwaves ricocheted through the cryptocurrency landscape disrupting the relative stability felt during the last four months. Bitcoin in particular was starting to appear to have matured past these types of intense volatile movements. So why then did a market that has weathered news good and bad for months with relative disdain suddenly make this dramatic move?
Bitcoin Cash was created by a hard fork from the Bitcoin codebase in August 2017. For those of you who do not follow the crypto markets closely, a hard fork is when an existing blockchain is copied and replicated as a new chain, sometimes implementing changes to the code base that the developers think will improve the new chain. The existing holders of the coin that is forked receive coins in the new chain at the time of fork.
While some hard forks create new value for the owners, many of them are inconsequential. However, there also is the potential for hard forks to cause harm to the underlying network by dividing the community of users, and turning committed developers into contentious adversaries.
“Hard forks, by their very nature, tend to divide a community of users who are deeply invested in the journey of a cryptocurrency. It is vital that holders of Bitcoin Cash within the crypto sphere are adequately prepared and fully understand the intricacies of such developments.” said Nick Cowan, CEO of the Gibraltar Blockchain Exchange (GBX).
More than ever this is the case in the Bitcoin Cash split because of a provision for replaying that essentially creates double spending of transactions in order to only allow one chain to survive. This creates a set up where the mining consortiums will start to attack one another with rented hashpower to try and shut down the competing blockchains, in a winner-take-all battle of nuclear proportions. Will this spell a catastrophic drop in cryptocurrency prices? Only time will tell, and that time very well may be today. Litecoin creator Charlie Lee tweeted yesterday, “What happens when there’s an ideological entity that has the means to 51% attack a competing fork? We will find out tomorrow!”
Bitcoin Cash was born out of an argument against the main Bitcoin community’s decision to implement a code verification process called Segwit, short for “segregated witness,” a code base added o increase scalability of Bitcoin. Certain members of the community argued loudly that Segwit would reduce security, and this argument split the Bitcoin community. Many of the members that stayed in the Bitcoin community argue that the Bitcoin Cash split was because the miners on the network were upset about losing revenue to Segwit and the discussed implementation of Lightning Network, as both of these lower mining revenues. But the members of the Bitcoin Cash community argue that their intentions are purely to maintain the true vision of Satoshi.
Who is this Satoshi? They are the pseudonymous leader of the cryptocurrency revolution. The identity of Satoshi Nakamoto has remained a highly contentious secret, and I use the pronouns “they, them and their” in this regard, as nobody knows if Satoshi was male, female, or even a group of people.
One of the most prominent founders of Bitcoin Cash, Craig Wright, has come out in the past claiming he is Satoshi Nakamoto. But he has no legitimate proof of this, and many have disputed this claim. One can clearly say he most certainly lacks the technical skills to have been Satoshi as he was caught plagiarising a “Hello World” tutorial when trying to prove he could code. Thus many in the Bitcoin community have given him the name “Faketoshi” instead. Yesterday, whatever-you-want-to-call-him, threatened on Twitter to crash the price of Bitcoin if miners refuse to support his Bitcoin Satoshi’s Vision (BSV) fork off of Bitcoin Cash.