Jordan Clifford – Scalar Capital Management, LLC, a managing Director, is an investment manager specializing in crypto and blockchain-related assets. Scalar Capital holds and may further invest in BCH, BTC and ETH.
Original link: https://medium.com/@jcliff/ the-Bitcoin-cash-story-e55b277491f9
Translated | Proofread by LadyBTC2018 | Cindy
The story of Bitcoin Cash
A peer-to-peer Electronic Cash System Satoshi Nakamoto October 31, 2008
A pure peer-to-peer version of e-cash allows online payments to be sent directly from one party to another without going through a financial institution.
1 background
The political disagreements that began in 2010 over the expansion of the Bitcoin community finally came to an end in 2017, culminating in the birth of Bitcoin Cash.
A small group led by Yang Haibo of ViaBTC created a new chain at block height 478559, known as the Hard fork. A hard fork represents a permanent and incompatible change in the rules of the chain and the original Bitcoin network.
With the creation of the new chain, a new cryptocurrency asset, Bitcoin Cash, is upon us.
Some people who support the idea of bitcoin “dominating the world” resent the birth of BCH based on some partial understanding. Most of them say as follows:
Bitcoin Cash is a cheap copy of Bitcoin. Bitcoin Cash changed the block size parameter “only”. Bitcoin Cash rejects a version that includes segregated witness (SegWit Softfork).
The emergence of Bitcoin Cash has inspired dozens of bizarre copycats, from Bitcoin Gold to Litecoin Cash. This often adds to the “original sin” imposed on Bitcoin Cash.
2 What is the value basis of cryptocurrencies?
It’s hard to value cryptocurrencies. Because their value is based not only on technology, but also on the market made up of buyers and sellers.
Today, there are a lot of speculators in the market, making the price of cryptocurrencies volatile.
In theory valuations should become more appropriate and consistent as markets mature. But to get there, the cryptocurrency market needs a bigger user base, not more speculators, but real users.
People judge the value of cryptocurrencies based on a number of factors, such as bitcoin sitting on the throne ahead of all other currencies today due to three main factors: brand, scarcity and network effects.
What about the future?
Latecomers such as Ethereum and Bitcoin Cash are also likely to overtake Bitcoin in other aspects (such as scale and cost of use) and become the new leader.
3. The cost of using cryptocurrency
Cryptocurrencies or tokens are not physical “things”, but digital certificates of value. What these assets actually correspond to is a kind of network access – the right to create transactions and be processed by the entire network.
As the market naturally matures, it will gradually move away from the speculative phase of single use cases (buying coins is for speculation) and then into an application phase of “coins are for use, not speculation”.
In the application phase, we can see different currencies as competing products in the market. At that point, Bitcoin may still be the most censor-resistant and tamper-proof asset around, but users may judge different cryptocurrencies on other aspects, such as transaction costs.
4 Bitcoin Cash’s parallel universe
Bitcoin was originally intended to be a better currency for transactions, and the Core team’s current thinking is that “Bitcoin should be a settlement layer.” This is one of the big differences between the Bitcoin Cash community and the Core team.
Bitcoin Core’s point of view is that the Bitcoin network should be able for “everyone to run full nodes with common hardware and network”.
The logic goes like this: Once the barriers to running full nodes get higher, fewer people will run them, and the miners who run the network with ASics will become more powerful, which will then compromise Bitcoin’s resistance to censorship and independence.
So to protect the public interest, the Bitcoin blockchain must remain compact. Meanwhile, Core believes that Satoshi Nakamoto did not anticipate the emergence of ASIC mining machines and mining pools when he wrote the bitcoin white paper, so he needs to adjust his original theory.
The Bitcoin Cash community believes that average users don’t care if they can run a full node and be a network validator, but more if their transactions can be done easily and cheaply.
They believe that creating a network with higher throughput and more technologically advanced software and hardware — such as a Visa-level, on-chain transaction system with no middle tier — will attract more participants willing to overcome the barriers to decentralization.
To “cash” as the goal, is to complete the original satoshi idea.
Satoshi Nakamoto’s paper briefly mentions the concept of SPV (Simple Payment Verification), so Bitcoin Cash’s network design also follows this principle, that is, clients can “verify payments without running full nodes”.
5 Is BCH “another air coin”?
These differences in the evolution of Bitcoin between the different camps culminated in the separation of the bitcoin network and community.
Interestingly, after the fork, enough economic and social resources flowed into bitcoin Cash’s tributaries to give it a huge market cap.
Most well-known exchanges support both Bitcoin and Bitcoin Cash, major wallet software and hardware wallets support BCH, and the most active commercial payment processor, Bitpay, has announced that it accepts both BTC and BCH.
Some projects originally set up for Bitcoin have shifted to BCH because of rising transaction fees.
Other early Bitcoin developers have turned their attention and interest to Bitcoin Cash, such as Gavin Andresen, who led the bitcoin development team in the absence of Satoshi Nakamoto. His endorsement is significant for Bitcoin Cash.
6 Deal with large on-chain transactions
Bitcoin Cash has struck a chord with many people with its appealing vision of “being the best cash to use,” generating a lot of market value, infrastructure and community support.
The question, then, is how do you get the network to support lots of low-rate on-chain transactions without turning the system into a dystopia where a few giants handle everything?
The relationship between centralization and block size remains controversial. An important parameter here is the time it takes for the newly mined block to reach the rest of the network, known as “block propagation time”.
Intuitively, the bigger the block, the more time it takes to reach other parts of the network. Miners must join larger pools to receive new blocks of information without wasting resources.
How to solve this problem?
Gavin Andresen, mentioned above, is leading a project that is actively investigating how to solve network propagation delays in large chunks.
One promising solution is to normalize the ordering of intra-block transactions, thereby reducing the number of variables required for sorting and greatly reducing the amount of information in the block.
Limiting the order of transactions within the block will allow Bitcoin cash to eventually spread across the network using graphene algorithms. The research, led by Gavin Andresen, has greatly reduced the objections of large blocks.
7 Other improvements brought about by Bitcoin Cash
There have been many improvements since Bitcoin Cash was created.
The May 2018 hard fork revived many opcodes that had been disabled in bitcoin’s early days over concerns about bugs.
Bitcoin Cash’s scripting language, which is now more expressive and flexible than Bitcoin’s, is better able to support tokenized assets and is implementing limited smart contract capabilities.
How to shorten the initial synchronization time of new nodes is currently being studied. Especially in cases where chain histories are large, the speed required for new nodes to come online can be greatly accelerated if they have commitments from reliable sources.
The Bitcoin Cash community believes that cryptocurrency is not just a cold program, it is designed for people and should focus more on their actual needs.
To that end, the community has set up a fund to further improve the availability of Bitcoin Cash and expand its uses. In terms of usability, for example, the recently introduced new address format can reduce obfuscation and transfer errors.
In general, bitcoin cash developers follow the philosophy that simpler is better; Peer-to-peer transactions are the killer app for digital currencies.
Unlike the Core team, which focused on the settlement layer, they focused on building a solid base currency and how to fully scale without compromising security.
8 epilogue
Bitcoin Cash has a strong community built by early Bitcoin supporters. More than 60 cross-team developers are contributing to the technology and working towards a true underlying peer-to-peer payment network.
Bitcoin Cash puts more emphasis on SPVS and tends to accept professional network members as node runners. Its network topology will not be the same as bitcoin’s, and it remains to be seen how bitcoin Cash will resist censorship in the long term.
Bitcoin Cash could be a strong competitor in applications where transaction costs and confirmation times are more important than maximum security.