Happy birthday, bitcoin cash.
Tuesday marks the one year anniversary of the first block on the crypto protocol that split from the bitcoin network, now the fourth largest by total value, after a years-long disagreement about the course the cryptocurrency should take.
For supporters, the main goal for the competing protocol was increasing the block size to allow more transactions, and in turn more users, all in an effort to make cryptocurrency competitive with more traditional payment rails. But whether or not that plan would work was very unclear, if not highly criticized.
Yet, over the course of the last few months, around the same time developers raised its block size parameter from 8 MB to 32 MB (bitcoin’s limit is ~1 MB), bitcoin cash has seen an influx of new projects, including social media and tipping methods, taking advantage of its blockchain.
And since many of bitcoin’s most active developers were adamantly against the tweaks bitcoin cash stood for, the developers behind the alternative protocol see these apps as proof their offering is competitive.
Looking through the applications that have sprung up, it’s clear that those drawn to bitcoin cash are trying to carve out a unique role for the cryptocurrency – one that aligns with the initial value proposition touted.
Many of the applications target users with cheaper, faster payments, like Blockpress, a social media platform, and Centbee, a wallet that uniquely integrates a user’s phone list.
But there’s also some work being done to make bitcoin cash a more complex blockchain, able to handle smart contracts and token launches.
“The tremendous accomplishments that the bitcoin cash community has managed to garner in a year of existence with a new ticker, wallets and an all-around ecosystem has been phenomenal, and we hope to continue and increase on this trajectory,” Eli Afram, founder of Bitcoin Cash Australia, an advocacy group for the software, told CoinDesk.
He added:
“There’s a lot happening. We truly have an app explosion in full effect.”
Space and fees
For many app developers, the lure to bitcoin cash is all about the protocol’s unique selling proposition – basically, more space.
Take for instance Memo.cash, a social media platform resembling Twitter, where users can post short messages that get stored on the bitcoin cash blockchain never to be erased. Since bitcoin cash allows for more data to be stored in each transaction, supporters argue bitcoin isn’t capable of supporting an app like Memo.cash.
“Many of these apps cannot work on the bitcoin network, simply because of certain limiting changes that have been made to the codebase. For example, the OP_RETURN function on bitcoin cannot take the same size payload as bitcoin cash, meaning an app like Memo would have a restrictive message size limit,” Afram explained.
On top of that, more space within blocks also means reduced fees for users sending transactions.
For GitCash, which launched just last month, this is integral since it allows users to tip – no matter how small the amount – developers for their work on Github. The project emphasizes that bitcoin cash’s model allows fees to stay low even if usage increase dramatically.
And for developers that work on open-source projects generally on a volunteer basis, this app will likely be a welcome development.
Yet, the timing for these apps that focus on fees could be off.
Many of these developers compare the fees on bitcoin cash to those of bitcoin during the latter’s most popular time period, whereby fees eclipsed $20 per transaction. But right now, bitcoin fees are rather low – sometimes even lower than those on bitcoin cash today.
Still, supporters say it’s still worth it to build on bitcoin cash since it’s future-proofed, meaning ready for a day when usage of the protocols picks up again.
Alejandro de la Torre, vice president of business operations at BTC.com, a mining and wallet provider focusing on the cryptocurrency, told CoinDesk:
“We think these community-driven networks can be very effective at moving the needle in the adoption of bitcoin cash as a medium-of-exchange, which is the primary reason it was forked and developed.”
Scalability concerns
But even while all this innovation happens, there’s a big downside to increasing the amount of data kept on a blockchain – namely, it could make it much harder for users to run the underlying infrastructure that makes bitcoin cash tick.
That’s why in bitcoin, many developers are heads down working on the lightning network, an in-progress layer for pushing transactions off-chain.
Despite these alternatives, bitcoin cash supporters think raising the block size is a better and easier solution.
“[Bitcoin cash’s] last hard fork increased the block-size to 32 MB, virtually eliminating the risk for any network congestion due to scaling and paved the way for a low-cost transaction super-highway,” de la Torre said.
He believes that by making that one small change, bitcoin cash will avoid scaling problems other blockchains have faced.
Referring to the crypto cat app that went viral and caused high fees and transaction backlogs late last year, de la Torre said: “I don’t think we’ll see the bitcoin cash network get clogged by CryptoKitties anytime soon.”
And for de la Torre, the fact that there’s so much space within bitcoin cash means that plenty of other long-heralded use cases for cryptocurrency might finally see some pickup.
“In countries such as Venezuela where monetary inflation is estimated above 40,000 percent, the utility of this new block space to open up fast, low-cost transactions as an alternative payment system to local fiat has been more than salient,” de la Torre added.
Yet, that hasn’t necessarily happened in practice so far – not for bitcoin cash, which only sees a fraction of the transactions the main bitcoin network sees and is worth about a tenth of bitcoin by market cap, but also not for bitcoin either.
The ‘wormhole’
And not only are developers thinking about high-value payments use cases, but the use case that garnered incredible attention last year – the initial coin offering (ICO) – is also being considered for bitcoin cash as well.
Pointing to a long-standing upgrade proposed by Bitcoin Unlimited developer Andrew Stone, Afram told CoinDesk: “There are teams racing to produce a token protocol that will enable countless new use cases, which I’m very much looking forward to.”
And a couple weeks ago, cryptocurrency mining giant Bitmain released a proposal for adding a token mechanism to bitcoin cash, perhaps eerily dubbed “Wormhole.”
The idea with behind these proposals is to make it possible to spin up new tokens on bitcoin cash.
But just as ICOs broadly have taken vast amounts of criticism, the idea is sparking controversy among bitcoin cash users and developers too. Some have argued that the birth of tokens on the network will poorly impact the protocol and even worse, could introduce vulnerabilities that could put users at risk.
Still, that isn’t stopping several developers from trying to implement the upgrade into bitcoin cash’s next hard fork, coming in the fall.
As such, crypto tokens could be the next step towards differentiating bitcoin cash from its rival, bitcoin, and adding features that allow it to compete with even more protocols.
Birthday candle image via Shutterstock