According to Binance CEO, 83% of the cryptocurrency stolen from the attack on Curve Finance has been recovered.
Although many new investors may be unaware, there exists a battle for the heart and title of ‘the one true Bitcoin’ – a war between developers over ideology and progress, over technology and its potential, and – ultimately – for hearts and minds.
The differences between what we’ll term ‘Bitcoin Core’ and ‘Bitcoin Cash’, for reference, encapsulate a wider struggle in the cryptocurrency ecosystem – wherein developers have each made arguments as to how cryptocurrency projects and blockchain initiatives should scale to reach and serve a global audience.
The history of Bitcoin and Bitcoin Cash
The story first began in 2009 with the emergence of Satoshi Nakamoto’s Bitcoin white paper, which first outlined a peer to peer money that is not controlled by any central authority. Rather than have a middleman verify the legitimacy of transactions, Bitcoin relies on a blockchain – a distributed and decentralized ledger in which transactions are recorded and verified through cryptography.
The advent of Bitcoin remains a remarkable one, and is historic for the fact that it is, in principle, the very first monetary system that might reach a global audience and function effectively without the need of a financial intermediary.
While Satoshi Nakamoto has been revered for their work on the white paper and network that birthed the wider cryptocurrency market, the concept behind Bitcoin is not without flaw. The Bitcoin network is capable of processing a maximum of seven transactions per second, which – while this is an amazing achievement given the novelty of blockchain technology – sets up an early problem.
Firms such as Visa or Mastercard can process some 1700 transactions per second – meaning that developers need to find a method to ‘scale’ Bitcoin to ensure it can be used as a means of transaction by participants all over the world.
Fundamentally, this is a major key in ensuring that Bitcoin can fulfill its vision as a worldwide peer-to-peer payment network.
While Bitcoin itself was first detailed in Satoshi Nakamoto’s white paper, the cryptocurrency’s development community are in charge of building on the concept that first outlined the Bitcoin network. Such tweaking can not only comprise smaller adjustments or bug fixes – similarly to other software products – but can also involve principle changes that make new solutions possible.
For years, the development of the Bitcoin network has been under the stewardship of Bitcoin Core; a foundation of developers and programmers committed to making Satoshi Nakamoto’s dream a reality. Over time, however, key disagreements in Bitcoin Core’s community have prompted frictions and intense debates over which direction the cryptocurrency should head in.
A key roster of Bitcoin Core developers became concerned over time that Bitcoin Core’s leadership had not taken active steps to rapidly scale the cryptocurrency, and had become frustrated with the project’s apparent pace of development. These frictions were compounded by proposals that would introduce ‘second layer’ mechanics – put simply, networks that would run atop the Bitcoin network itself – that could potentially distance Bitcoin from Satoshi Nakamoto’s initial proposal and lead to the ‘centralization’ of Bitcoin.
Two of these proposals have drawn ire. SegWit2x – named Segregated Witness – would be a planned network upgrade that would restructure the composition of a block and reposition ‘signature’ data within a block to accommodate more room for transactions. The proposal draws the ‘2x’ in its name from its intent to double Bitcoin’s block size from one to two megabytes.
Secondly, development of the Lightning Network – a channelized peer-to-peer payments network built atop the Bitcoin network – would seek to create a distributed web of payment channels between users.
Angered developers argued that neither of these proposals meaningfully remedied the scaling difficulties experienced by the Bitcoin network, and did not inherently resolve the network’s limitations without resorting to third-party improvements or modifications that fell outside the scope of Satoshi Nakamoto’s white paper.
Further, fears arose that the development of SegWit2x and the introduction of the Lightning Network may render the ‘centralization’ of the Bitcoin network possible.
On August 1st of 2017, these tensions came to fruition as Bitcoin underwent a hard fork – a process wherein its blockchain split into two variants. While Bitcoin Core’s blockchain remained unmodified, a new blockchain for a network called Bitcoin Cash was created.
What are the technical differences between Bitcoin and Bitcoin Cash?
Bitcoin Cash’s blockchain adopted new rules which made it incompatible with Bitcoin Core. Chiefly, Bitcoin Cash proponents moved to adopt an 8-megabyte block size that could rapidly scale to accommodate more transactions per block, and further implemented an adjustable mining difficulty that could lessen or harden depending on the number of miners active on a network. Both of these moves would theoretically ensure that the Bitcoin Cash network would accommodate a greater volume of transaction throughput than its forebear, and would hence be able to serve a global economy with far greater readiness.
While the continuing development of both projects might have resolved itself, community tensions have only increased since the debut of Bitcoin Cash.
Principally, disagreements between Bitcoin Core and Bitcoin Cash developers have stoked arguments over which project is the ‘true’ Bitcoin as outlined by Satoshi Nakamoto. Proponents of Bitcoin Core have argued that Bitcoin Core is the logical answer given the fact that the underlying Bitcoin network would be largely unchanged – especially when using a second-layer solution to scale – and that Bitcoin Core enjoys a far greater market dominance on online exchanges
Bitcoin Cash proponents have conversely argued that the Bitcoin Cash network is a logical expansion of Satoshi Nakamoto’s vision that does without the necessity of a second-layer solution, and would effectively proliferate the idea of a decentralized, peer-to-peer payments network to global users far more quickly effectively than Bitcoin Core would.
What are the ideological differences between Bitcoin and Bitcoin Cash?
In principle, the debate between both Bitcoin Core and Bitcoin Cash is a simple one. While it is accepted that good money by necessity needs to be a store of value (where it holds worth for a long period of time), means of exchange (where it can be used to pay for goods and services rendered), and unit of account (where goods can easily be valued and priced), both projects bear differing ideologies in how this paradigm should be achieved.
Bitcoin Core developers have argued that the correct process in developing ‘good’ money is to first achieve a store of value, which can then become a means of exchange and finally a unit of account. Given that gold has enjoyed similar properties, it has been argued that Bitcoin Core correctly emphasizes the technical ‘soundness’ of its product first, and deals with transaction mechanics as a secondary priority.
Bitcoin Cash developers have argued that ‘good’ money first needs to be accepted as an effective means of exchange before it can hold long-term value. Citing the fact that gold might hold market value but isn’t readily used in market transactions, Bitcoin Cash developers have argued that Bitcoin, by necessity, must be able to serve as many users as possible before accruing significant value.
So, which is the ‘real’ Bitcoin?
To put it simply, online communities have been divided. While Bitcoin Core developers have retained control of Bitcoin.org, Bitcoin Cash developers have taken control of both the ‘official’ Bitcoin news channel – news.bitcoin.com – as well as the former Bitcoin Core Twitter handle, @Bitcoin.
Reddit communities have further taken the brunt of community disagreements, as Bitcoin Cash supporters have, on occasion, flooded Bitcoin Core channels with Bitcoin Cash news.
The disagreements between both parties – as well as the ideological debate as to which Bitcoin network is the ‘true’ heir to Satoshi Nakamoto’s white paper – have created a confusing and potentially misleading avenue for first-time investors to tread. Both Bitcoin Core and Cash development parties stand to gain should new money flow into their respective projects – while Bitcoin Core remains adamant to retain its leading position in the market space, Bitcoin Cash remains determined to capture greater and greater portions of capital, increasing its market capacity.
Chiefly, this is where the battle will be decided – as many online exchanges, peer-to-peer services, and marketplaces will simply provide whichever project has the largest market capacity with the designation ‘Bitcoin’ or ‘BTC’. Ultimately, while both cryptocurrencies offer a unique and exciting investment option for interested parties, it is important to note that Bitcoin and Bitcoin Cash are mutually exclusive of one another and, essentially, do not represent the same end product.
Which ‘Bitcoin’ will succeed?
For the most part, Bitcoin Core has continued to retain its market dominance and the enthusiasm of new investors. Criticisms have been levied against Bitcoin Core developers for the project’s reliance on third-party scaling mechanics, and the fact that the project’s initial SegWit2x proposal was ultimately not implemented in its entirety. While Bitcoin Core remains the world’s leading cryptocurrency, the project has noted decreasing transaction volumes – signaling that investors may be more willing to hold on to the digital asset as a store of value rather than use it in everyday transactions.
Bitcoin Cash has succeeded in capturing its fair share of the market, and at the time of writing trades above the $1,300 USD mark. While the project’s pace and ambition in securing both new users, use cases, and technological advancements have been met with commendation, the initiative has also been the subject of criticism due to its adjustable mining difficulty and the fact that it has arguably misled several eager investors by marketing itself as ‘Bitcoin’.
Into the future, Bitcoin Core might well succeed in its vision thanks to the fact that it has been adopted as a commonly-used trading pair on online exchanges, that it already enjoys support from a wide pool of investors, users, and developers, and that the Bitcoin Core network is estimated to possess around 10x the number of network nodes that Bitcoin Cash employs.
However, Bitcoin Cash poses a strong threat to this narrative. When the Bitcoin network is saturated with an overwhelming flood of transactions, wait times can be longer and transaction fees can cost its users more – Bitcoin Cash instead accommodates users with faster transactions and cheaper fees. Miners, too, might be incentivized to move to Bitcoin Cash during periods where its adjustable difficulty has been lowered and profits may be higher.
Although Bitcoin and Bitcoin Cash are neither mutually exclusive ideas nor currencies, it remains unlikely that both will succeed side-by-side. Ultimately, if Bitcoin is poised to become a worldwide peer-to-peer money system, one ideology will take root and prove the path to reach the goal outlined by Satoshi Nakamoto – likely dooming the other to an existence spent in the shadow of the ‘true’ Bitcoin. The golden thumbs up – or down – sits in the confidence of worldwide investors.