Bitcoin Cash (BCH), the 24th largest cryptocurrency by market capitalization as of year-end 2021 and the most prominent of the dozens of different bitcoin forks, had its own split on Nov. 15, 2018, into Bitcoin Cash and Bitcoin SV.
Through the process of hard forking, the original cryptocurrency, Bitcoin Cash, remained in place and continued to follow its previous protocols. At the same time, a second currency, Bitcoin SV, was generated according to an updated set of protocols. The two token systems will continue to develop simultaneously and on parallel tracks.
The original bitcoin cash touted the software version Bitcoin ABC, while the new version will be referred to as Bitcoin SV, with SV standing for "Satoshi's Vision," a reference to bitcoin developer Satoshi Nakamoto.
- In the world of cryptocurrencies, a "hard fork" occurs when an existing blockchain essentially splits into two.
- The original fork maintains the original protocol and ledger while the new fork implements certain policy changes, upgrades, or technical differences.
- Bitcoin Cash was originally a hard fork off of Bitcoin.
- Bitcoin Cash subsequently underwent its own hard fork creating Bitcoin SV.
Reasons for the Fork
Typically, a hard fork takes place when groups of miners and developers can't agree on updates to the software governing a particular digital token. As a result, one group continues to operate under the same rules, while the other branches off and generates a new blockchain with an updated software setup. In the process, a second digital currency is generated.
In the case of Bitcoin Cash, the hard fork is the result of building tensions among developers. When BCH developer Amaury Sechet proposed an upgrade that modified the ordering of transactions on the blockchain, a schism occurred and has only become more fraught. As tensions rose, developers and miners within the BCH community increasingly moved toward the support of one or the other of two major personalities in the digital currency world, Roger Ver and Craig Wright. Ver and Wright are both known as strong supporters of digital currencies in general and Bitcoin Cash in particular, but they have been unable to reach an agreement about how to proceed in this case.
The hard fork to create Bitcoin SV was motivated by the desire to increase the block size limit from 32 MB to 128 MB.
Ver and Wright
Ver, known as "Bitcoin Jesus" for his early and outspoken evangelism on behalf of the leading digital currency, has taken a position in support of the new software upgrade. In this case, this means that Ver supports the current Bitcoin Cash, rather than the proposed hard fork currency.
On the other hand, Wright, who has claimed to be the pseudonymous Satoshi Nakamoto on various occasions, believes that the BCH software should expand the maximum block size from 32MB to 128MB. Wright argues that this change would be more in keeping with Satoshi's original idea for bitcoin; thus, the nickname "Satoshi's Vision" was born.
The Day of the Split
Miners will determine which of the two currencies will receive their hash power, the computing energy needed to mine tokens. Generally, miners tend to dedicate their hash power to the coin promising a higher profit as the mining process is completed. On the day of the split, analysts forecasted that Bitcoin ABC (retaining the original name Bitcoin Cash) will likely prevail, receiving up to 60% of total hash power.
On the day of the split, Bitcoin Cash traded at about $289 while Bitcoin SV traded at about $96.50, down from the un-split cryptocurrency's price.
Many of the world's top digital currency exchanges became involved in the process if only to state their support of the fork. This meant that users of exchanges like Coinbase or Binance were eligible to receive one new token for each old token they owned at the time of the fork. BitMEX stands apart from other major exchanges for having taken sides ahead of the fork; it announced via blog post that its contracts "will settle at a price on the Bitcoin ABC side of any split and will not include the value of Bitcoin SV."
Still, other exchanges allowed customers to pre-trade both of the potential new coins, a move that is largely unprecedented. One potential reason for this maneuver is to allow the larger digital currency community a chance to voice their support for one coin option over the other by their trading actions.
As of Dec. 31, 2021, Bitcoin Cash is trading for around $430 with a market cap of nearly $8.15 billion while Bitcoin SV has a $2.3 billion market cap and traded for $122.67.
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