The one year anniversary of bitcoin’s first ever successful chain-split fork is now just two days away, with the months passing almost as quickly as they came, leaving us with just a little bit more wisdom.
Looking back, a lot has gone right and in many ways surprisingly so considering the speed of BCH’s integration within pretty much all of Bitcoin Core’s infrastructure.
Bitcoin Cash is now on BitPay, on Coinbase, on all prominent exchanges, and has in summary overall faced no obstacles whatever from the market.
It has, however, in some ways failed to persuade the market perhaps in the most important aspect, usage.
Bitcoin Cash is hardly seeing any transactions even though it has capacity for some 10 million per day. Why?
We think the main reason is because they remain obsessed with Bitcoin Core. There have been some promising developments, but their public space on reddit is often a place where you don’t really want to hang out for more than a second. Their focus, on the surface, appears to be more towards the past than the future or the present.
Much of it understandably so, but their argument is no longer with Bitcoin Core, but with the market. A market which needs confidence that their approach to scalability works. A confidence which they do not have because 8MB might be fine, but 32MB at this point probably not, and 320MB if there is real adoption might break the network.
The problem all public blockchains face is that there is too much demand, and not for 1 million transactions or 10 million, but potentially 100 million or even a billion transactions a day.
And that demand may well be virtually instant, rather than in line with Moore’s law, which is why a simple blocksize increase would have been a useful first response, but small blockers are somewhat right that it would have been a can kick.
It would have bought time, and the aim of buying such time would have been to develop sharding for proper scalability whereby 100 million or even a billion transactions can be handled.
Current Bitcoin Core devs don’t think sharding is possible, which is one of the biggest reason for the fork. While former Bitcoin Core lead dev, Gavin Andresen, not only thinks it is possible but proposed it as a solution as far back as 2012-13.
We understand Andresen is back in bitcoin development for Bitcoin Cash clients, but we’re not sure whether he is working on sharding.
Without sharding the network would develop into huge nodes run by miners, businesses, universities, and so on, and that can be a tradeoff but not when things like ethereum allow for the same capacity once they implement sharding while allowing individuals to still run a node on their laptop.
The latter is beneficial because it would allow future Bitcoin Cash like grassroots to fork if they wish, like BCH did almost exactly a year ago. While if running a node is so expensive, there would have to be some corporate backing to fork.
Not that the current situation is much different in both bitcoins if you wish to maintain the current Proof of Work (PoW). In that case, millions of dollars would be needed to find the first mining blocks.
Developers however can currently download a node, test it and so on, and independently launch a fork client. While if a node costs more than a yearly average salary to run, some peoples’ or market control would be lost.
That can be a tradeoff some are willing to take, but all should be clear that it is a tradeoff and it may well be a tradeoff we don’t need to make because of sharding which was always the aim, but somehow was completely lost during the blocksize debate.
In other words, both big blockers and small blockers are right in some ways and are wrong in some ways. That is why this debate has been able to continue for so long and has ended in a stalemate.
Thus, continuing the debate is pointless for there is no longer a debate. There is instead a market that for BCH needs to be persuaded their network can really scale and just increasing the blocksize does not seem to be very persuasive because their blockchain is not attracting much use when the use cases are so numerous.
And it probably is not attracting much use because businesses are probably wondering whether, if they do develop all these use cases on BCH, whether their use case will last for just a year or decades.
As we are seeing in ethereum and in Bitcoin Core, the market responds to lack of capacity by lowering demand for on-chain transactions due to an increase in fees. That suggests on-chain usage depends on the level of confidence the market has for its capacity.
It is that market BCH should be focused on, and it is those concerns it should be addressing. All else is irrelevant because propaganda fails where self-interest or benefits are self-evident and there is free choice.
They should thus be talking a lot more about BCH than BTC, they should be talking about what merchants accept it, about what remittance company can be set-up, about where adoption is growing, how, and so on.
Because ultimately the success of bitcoin can be the success of BCH and vice versa. At just 300,000 transactions in combination, there is almost no pie they can take from each other, but out there, there is a whole big world with millions, perhaps billions of transactions. Cashers should go pick them up, ignore corers, and focus on their own aims of a peoples’ currency.