BCH production reduction is imminent, and the computing power shortcoming is prominent

Source: Honeycomb Finance News

There was no price frenzy in the market.

It is expected that at 11:30 pm Beijing time on April 8, Bitcoin Cash (BCH) will usher in its first halving since its birth - the reward for miners to generate blocks will drop from 12.5 BCH to 6.25 BCH.

At 19:30 on April 7, with 28 hours left before the expected production cut, BCH was temporarily trading at US$260, a 24-hour increase of 7%.

BTC's rise above $7,000 has boosted the entire cryptocurrency market and provided a good market foundation for the BCH network to reduce production. However, among the top ten cryptocurrency assets by market value, BCH's short-term 7% increase is not the highest.

The production cut did not bring about a price frenzy. If the price does not break through further, the production cut one month earlier than BTC may cause a short-term loss of computing power from BCH. BCH has a long way to go to challenge the king of coins.

On April 7, the "fight" between opinion leaders from the two major communities of BCH and BSV began to warm up for the "reward reduction" of the two forked networks.

At 11:30 pm on April 8, the BCH network will experience its first halving since independence - miner rewards will be reduced from 12.5 BCH to 6.25 BCH. Three days later, the BSV network will also experience the same halving.

In the past two days, the market's recovery from the "3.12" crash has paved a good opportunity for BCH to reduce production. On April 6, BTC rebounded above $7,000, and BCH also rose from $230 to $259 in 24 hours, an increase of 11.7%.

At 7:30 last night, BCH was temporarily reported at $260, a 24-hour increase of 7%. This increase is not high among the top ten crypto assets by market value. During the same period, ETH's 24-hour increase was 12%.

The current production cuts have not brought more upward momentum to BCH, and the benefits of halving have been released earlier.

Since the beginning of this year, in addition to the BTC family, the prices of a number of "halved coins" such as DASH and ETC have all risen. BTC has risen from $6,950 to $10,500; ETC has risen from $4.1 to $13.2; BSV has the most exaggerated, rising from $92 to $455. BCH is not to be outdone, starting from the low of $195 on January 2, and breaking through the high of $500 on February 14.

At that time, there were voices in the market that "the halving rally has started". No one would have thought that the spread of the new coronavirus would become a "black swan", and the global financial market would suffer a blow, and cryptocurrencies were not immune. On the afternoon of March 12, the waterfall suddenly came. The next day, BTC fell to a minimum of $3,800, and BCH also fell to the bottom, with a low of $129 reappearing the bear market at the end of 2018.

Halving can no longer whet investors’ appetite.

Jihan Wu, the founder of Bitmain and a recognized opinion leader in the BCH community, is not optimistic that the "halving" can directly drive the price of the currency up. In October last year, he predicted that the bull and bear markets were getting longer, and the halving and the bull market might not start at the same time.

The trend of Litecoin, which was halved ahead of schedule last year, was one of the bases for Wu Jihan's judgment. He believed that the hype about the halving stimulated a short-term rise in the price of the currency, which was then hit hard. In this process, the funds did not intend to break through the previous high. In addition, as the market value and volume of Bitcoin expand, the user base is also expanding, and the volatility is gradually decreasing.

Over the past year, BCH has also fallen into this pattern, hovering between $100 and $500. In the first half of last year, the cryptocurrency market recovered under the catalysis of the IEO boom, but the total market value still did not break through the historical high at the end of 2017.

At that time, BCH also seized the historical opportunity, becoming independent from the BTC community before the currency market peaked, and allowing a group of "sweeteners" to enjoy early dividends. In mid-December 2017, BCH peaked at $4,120. At that time, BTC was hovering at $20,000.

Comparison of BTC and BCH price trends

BCH, which has separated from the Bitcoin community, has not escaped the ups and downs of the "coin king", and the overall downward trend is more obvious. At present, no cryptocurrency can create a new heyday, let alone the halving of BCH and BSV. The expectation of BTC's production reduction has also become dim in waves of hype and the last round of plunges.

Compared with the impact of network production reduction on the current coin price, the BCH community is more concerned about the future of Bitcoin Cash, including computing power and application scenarios that are closely related to network security, as well as its potential to become a user-friendly and reliable currency.

In the days leading up to the halving, news spread in the market that miners were switching from BCH to BTC.

According to the media Bitcoinist, many miners have begun to switch from BCH to BTC mining, and the loss of miners will have an impact on the BCH network.

BTC.com shows that as of 4 p.m. on April 7, BCH's total network computing power was 3.28 EH/s, and BTC's was 105.16 EH/s. BTC's computing power is nearly 30 times that of BCH.

However, since January this year, the overall computing power of the BCH network has been gradually increasing. BTC.com shows that in early January this year, the lowest computing power of BCH was 176PH/s. As of 4 pm on April 7, the computing power of the BCH network was 543PH/s.

BCH hash rate fluctuations this year

Yang Haipo, founder of CoinEx & ViaBTC, told Fengchao Finance that most miners mine for profit, especially the machine gun pools with concentrated computing power. They will automatically choose to mine currencies with higher returns. These miners pay more attention to the price in the secondary market. Assuming that the price of BCH remains unchanged, BCH will halve about a month earlier than BTC, with less rewards, and the computing power will also be reduced to about half of the original during this period. When the BTC halving is completed, the miners who mined BCH will also come back, and the computing power level will gradually recover.

However, he also pointed out that after the halving, the development of BCH will be more urgent. Because whether it is BTC or BCH, under the premise that the total supply remains unchanged, the block reward will be reduced after the production reduction, and the miners' income will be more dependent on transaction fees. However, BCH has not yet been widely adopted, and the transaction volume on the chain is not large. The transaction fees may not be able to meet the miners' income needs, which will affect the operation of the network. "I hope that BCH can benefit from its large blocks, give full play to its characteristics of electronic cash, and achieve large-scale adoption."

Jiang Zhuoer, founder of Litecoin Mining Pool, also mentioned the current shortcomings of BCH in the interview: BCH is still too small and may be affected or even die due to some unexpected events. One example is the split of BSV by Craig Wright, which caused the community, which was still in the development stage, to lose some people and caused a relatively serious blow to BCH.

In addition, Jiang Zhuoer believes that BCH has not yet formed a closed loop in some aspects, "For example, the issue of developers' income and where the developers' money comes from have not been well resolved yet."

It can be seen that after the production reduction, BCH will not only face market tests, but also challenges in network development and computing power support.

BCH, which became independent from the Bitcoin community due to differences in capacity expansion, has been struggling forward in the following two years, fighting for the ideal of "becoming a reliable currency that everyone in the world can use."

BCH Development Roadmap

In the past two years, the developers of the Bitcoin Cash network have continuously upgraded the network processing efficiency to enhance the "payment" experience, which is the most important aspect of currency. Every November 15 and May 15, BCH will upgrade around the two key points of performance and security, such as code optimization for large blocks and the "0 confirmation 100% security" avalanche protocol.

Last May, the BCH upgrade further increased the transaction verification speed of BCH. Before that, users would sign each transaction once, which would cause congestion when multiple transactions were initiated at the same time. That upgrade enabled the network to sign multiple transactions at once, greatly shortening the transaction time.

On November 15, two new consensus protocols were added to the BCH network, also with the goal of improving verification efficiency and being compatible with batch verification. Another upgrade point is a fix that makes most transactions on the BCH network tamper-proof, further strengthening security.

Both transaction efficiency and network security serve the ultimate "payment" scenario of BCH. BCH has gained support in online shopping and offline restaurant consumption. According to the official website, there are now more than 190 merchants around the world that accept BCH payments.

Townsville, located in Queensland, Australia, is known as the BCH City, where more than 100 shops support BCH payments. Investors who have visited the area before have described that when they are lucky, they can also use BCH to pay for taxis.

In addition to the payment field, BCH's more "out-of-the-box" function is smart contracts. At the beginning of last year, developers added the SLP (Simple Ledger Protocol) protocol to the BCH network to implement the function of smart contracts for issuing coins.

This is the biggest change for BCH as a member of the BTC family, which also brought some market doubts at the time: How can a currency network that focuses on efficient transactions also go the route of issuing coins? The BCH community sees this as a manifestation of the diversified development of network functions.

At present, there are thousands of tokens issued based on the SLP protocol. On March 21 this year, there was news that Tether would issue USDT on the BCH public chain based on the SLP protocol, but as of now, the BCH version of USDT has not been seen on the market.

“I hope BCH can accumulate experience in the first halving, discover its own problems, and correct some defects as soon as possible so that it can be used in more scenarios.” This is the expectation of Wang Hongli from the BCH Chinese community. He hopes that after the miners’ block reward is halved, the community will not be affected by the harsh environment and reduce the fluctuation of computing power as much as possible. “Of course, it would be better if the price can rebound significantly.”