The bitcoin blockchain may be just hours away from its first major fork.
While the technical maneuver (explained in more detail here) doesn’t impact bitcoin itself, if implemented it will result in the creation of a competing cryptocurrency, Bitcoin Cash, with a similar transaction history.
That said, Bitcoin Cash intends to activate new rules that are at odds with the bitcoin network, aiming to boost transaction capacity by increasing the block size to 8MB and removing Segregated Witness (SegWit), a long-debated code optimization that’s likely to activate on bitcoin later in August.
Warranted or not, some have been making a pretty big deal out of Bitcoin Cash’s launch.
But, just like every other cryptocurrency, the success of Bitcoin Cash hinges on how much support it gets from users, businesses and miners. And, so far, it might not have much.
While it certainly has passionate supporters who disagree with bitcoin’s technical direction, Bitcoin Cash is trading at about one-tenth of bitcoin’s price on an available futures market.
And, so far, out of more than 20 mining pools, only one, ViaBTC, has said that it is giving miners that are a part of the pool the option of pointing their computing power toward the securing the cryptocurrency.
Elsewhere, it seems positions on and opinions of the project are still developing in real time.
Bitcoin Cash supporters
So, what do we know about supporters so far?
For one, Bitcoin Cash supporters often overlap with the members of bitcoin’s scaling debate who have historically supported a bigger block size parameter.
Take for instance Bitcoin XT, Bitcoin Classic, and Bitcoin Unlimited: a few alternative bitcoin softwares that tried to enact similar changes but never got off the ground. Many of the developers who worked on those projects now support Bitcoin Cash. In fact, some are working on compatible software implementations.
Then there are various entrepreneurs, researchers and users who support the ideas behind it.
“SegWit doesn’t solve the problem we have right now which is an urgent need for on-chain scaling,” said Yours CEO Ryan X. Charles, who supports Bitcoin Cash’s technical roadmap.
Like Charles, some companies and users are backing the idea because they just want bitcoin to be easier and cheaper to use. They argue that an immediate block size parameter increase would go a long way toward achieving that.
“As far as how many support it, I’m not sure, but I’m pretty sure the silent majority wants lower fees,” he added.
The average fee for a transaction, at time of publication, was more than a dollar, down from nearly $5 last quarter.
Bitcoin Cash vs. Segwit2x
Still, since Bitcoin Cash is trying to push a niche combination of scaling technologies, even some who support a bigger block size don’t back the effort.
ShapeShift CEO Erik Voorhees is one, and DCG founder and CEO Barry Silbert, who played a big part in coordinating a technical roadmap called Segwit2x, is another.
That’s partly because many companies and mining pools still intend to support the Segwit2x “agreement,” another controversial scaling proposal that attracted the support of bigger bitcoin startups and mining pools representing 80% of the network’s computing power.
The obvious difference between Segwit2x and Bitcoin Cash is that Segwit2x doesn’t intend to drop support for SegWit.
In this light, some see Bitcoin Cash as a possible backup plan if Segwit2x goes awry before the block size parameter increase expected in three months. (Although, that particular hard fork is quite controversial as well.)
While aligned with ViaBTC, one of Bitcoin Cash’s biggest supporters, on some other issues, mining pool Bitcoin.com and mining firm Bitmain both also said they will continue to stand behind Segwit2x for the time being.
In that way, Bitcoin Cash might attract more support in the future if the Segwit2x scaling proposal fails to boost the block size parameter.
Bitcoin Cash critics
Segwit2x supporters and mining pools are not the only users who aren’t interested in moving to the new cryptocurrency, and are skeptical that Bitcoin Cash will attract enough users to “breathe new life into bitcoin,” as the project website advertises.
While some alternative cryptocurrencies, such as ethereum and ripple, have been successful, most other competing cryptocurrencies haven’t achieved bitcoin’s level of popularity. Critics, arguably with history on their side, contend that Bitcoin Cash faces the same problems as this class of assets.
In that context of the thousands of available cryptocurrencies, Bitcoin Core contributor Bryan Bishop called Bitcoin Cash a “total headache” and “overwhelmingly boring.”
“It’s easy to make spin-offs,” he said. “What’s hard is protecting and growing bitcoin’s value in backwards-compatible ways that benefit the entire ecosystem.”
Bishop went on to question why Bitcoin Cash developers chose the date August 1, since a group behind another controversial scaling proposal, BIP 148, was scheduled for the same date.
“By choosing a conflicting date, I think the unfortunate outcome is increased confusion for bitcoin users,” he said.
Still, bitcoin’s value is that it’s a decentralized online currency.
So, even Bitcoin Cash critics such as Bishop applaud that users can create their own cryptocurrency if they don’t like a particular technical feature.
Bishop concluded:
“If the cash proponents want to stop using the current bitcoin protocol, they are certainly welcome to, even if I wouldn’t recommend it.”
Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which helped organize the Segwit2x agreement, and has ownership stakes in ShapeShift and Yours.
Two bitcoins image via Shutterstock