Last year there was a huge computing power war, but this year it is quiet. What has BCH upgraded this year?

Text | Wang Ye Editor | Lu Xiaoming

Produced by | Odaily Planet Daily (ID: o-daily)

On November 15, Bitcoin Cash (BCH) is about to usher in its semi-annual hard fork upgrade.

The price of BCH was boosted by the positive impact of this upgrade, rising from 200 USDT on October 24 to a peak of 308 USDT on November 6, an increase of 54%. Of course, this increase was also driven by the positive impact of Wu Jihan's strong return to Bitmain.

However, the upgrade trend of BCH has not been able to stabilize. On the morning of November 14, the day before the upgrade, according to Huobi Global data, BCH fell briefly and has now fallen below the 280 USDT mark, reaching a low of 275.35 USDT, a 24-hour drop of 2.92%.

This hard fork upgrade was not as grand as the hash rate war in November last year, and not many people in the market paid attention to it. Liu Changyong, the founder of Zhimi University, told Odaily Planet Daily that "this is just a regular upgrade, and there is no need for hype. Last year, CSW and his gang took advantage of the upgrade to launch a rebellion that had been planned for half a year."

Shortly after BCH was born in 2017, developers formulated a plan to upgrade it every six months.

May 15 and November 15 of each year are fixed upgrade dates, using a hard fork upgrade method. Within 2 months after each upgrade, developers will discuss the content of the next upgrade and release a new version about 3 months before the next upgrade date.

What's new in this upgrade: Two new features

According to the official WeChat account of BitcoinCash, BCH mainly added two new functions during this upgrade.

The first feature is to eliminate the malleability vector on the BCH network through the Minimaldata rule. The upgrade announcement on November 15 explained: "This eliminates the final BIP 62 malleability vector, which means that most transactions on the Bitcoin Cash network (including all P2PKH transactions) will no longer be extendable." This can effectively protect the security of transactions, and the implementation of the Minimaldata rule can also strengthen the simplified payment verification (SPV) client.

The second feature added by BCH is support for OP_Checkmultisig and OP_Checkmultisigverify to improve the Schnorr signature function added last time. The upgrade announcement reads: "This upgrade adds support for OP_Checkmultisig. After the upgrade, all signature check operations will support Schnorr signatures."

Schnorr aggregate signature (using OP_Checksig) is a method of multi-signature. Through Schnorr signature, the BCH network will allow more complex mechanisms for multi-signature transactions.

Liu Changyong summarized the BCH hard fork upgrade, "This hard fork upgrade solves the scalability problem, making transactions safer and improving the security of the currency. Multi-signatures can reduce the amount of data and mainly improve network processing performance. In terms of providing more signature methods, it can provide more application scenarios for currency payments."

Ordinary users do not need to do anything before the BCH network upgrade function changes take effect. For infrastructure such as exchanges and wallets, the impact is not too great.

Miners and node operators need to download and run the latest version of the BCH client that supports November 15. According to the latest data from the block browser CashCoinDance, there are currently 1,510 nodes in the entire BCH network, and 71% of the nodes are compatible with the upgrade content.

Three hard fork upgrades in BCH history

Bitcoin Cash (BCH) was first launched as a competing coin for Bitcoin on August 1, 2017. BCH still follows the Bitcoin protocol, but increases the block limit and will not adopt the SegWit upgrade.

The birth of BCH caused a great response in the cryptocurrency world at that time. In the subsequent bull market, it once occupied the second place in market value, triggering a series of fork events that followed that year. Since then, BCH has been upgraded three times through hard forks:

The first upgrade took place in November 2017, mainly due to the unstable Emergency Difficulty Adjustment (EDA) mechanism.

EDA helped BCH to ensure stable block generation under low computing power in the early stage of its creation, but this mechanism also brought disadvantages. Due to the unstable difficulty, the computing power fluctuated greatly, making its block generation unstable. In order to solve this problem, BCH carried out its first hard fork upgrade in November 2017.

The second level upgrade was in May 2018, increasing the BCH block size from 8MB to 32MB, aiming to process more transactions at a faster speed.

The adoption of new OP codes and colored coin technology will introduce basic smart contracts and representative assets into the BCH network. This change is to expand the application of BCH. After this upgrade, BCH gave birth to Token solutions such as Wormhole Protocol, SLP, and Keoken.

The third upgrade took place in November 2018. This upgrade triggered a computing power war between Bitcoin Cash ABC supported by Wu Jihan and Bitcoin SV (Bitcoin Satoshi Vision) supported by CSW, which forked out BSV. CSW insisted on expanding the capacity to 128M and expressed different opinions on the upgrade rules.

Two opcodes were added during this upgrade: OP_Checkdatasig and CTOR.

With CTOR, transactions in a block are ordered in a different way while removing the limitations of Topological Transaction Ordering (TTOR). Developers believe that CTOR removes the complexity of block template creation time and, when combined with the Graphene protocol, can also result in a more efficient method of block broadcasting.

OP_Checkdatasig is used to improve the BCH script language. When someone uses OP_Checkdatasig, it calculates the hash value in the transaction and checks the signature based on the data, which is actually an autonomous way to verify invalid signatures. Supporters of OP_Checkdatasig believe that the script language can allow for a variety of different contractual concepts, including permissionless cross-chain atomic swaps, local warrants, and oracles.

BCH added the basic Schnorr signature protocol at block height 582680. The signature algorithm can theoretically improve scalability by reducing bandwidth and storage by 25%. If the protocol is combined with concepts such as transaction mixing, the Schnorr solution can also provide benefits such as transaction privacy.

Positioning itself as a world currency, it still faces many competitors

From the above three fork histories and the usual discussions in the BCH community, we can see that the goal of BCH is to be a globally applicable "world currency".

As for encrypted digital currencies, factors such as long transaction confirmation time and high handling fees still limit their use in people's daily lives.

BCH is one of the representatives of large blocks, and believes that larger blocks also mean stronger transaction processing capabilities. In addition, BCH also has certain advantages over BTC in terms of transaction fees.

Image from bitinfocharts.com

According to bitinfocharts.com, the transaction fee of BCH in the past three months is much lower than that of other mainstream currencies such as Bitcoin, which has also made BCH popular among some merchants around the world. Currently, the transaction fee of BTC basically fluctuates around 1 US dollar, while that of BCH is around 0.0091 US dollars.

Image from RogerVer Twitter

According to the BCH online merchant list website acceptbitcoin.cash, there are currently 1,128 merchants from all walks of life that have begun to accept BCH payments; according to Marco Coino, a map of merchants accepting BCH, there are more than 600 physical stores that accept BCH.

In addition, some developers have developed BCH credit cards.

On October 13, developer Tobias Ruck showed everyone through a video how to send transactions with Be.cash, and how to sign a 10,000 satoshi BCH transaction offline through a smart contract and provide insurance for it.

A month later, developer Tobias Ruck developed a smart card based on Be.cash that can generate valid BCH signatures. The smart card is like a credit card and completes transactions in less than a second. The point of sale only needs to install an application on the phone to receive BCH payments made by the card, and the smart card can generate a BCH signature from the card to the phone.

Although the smart card functionality is already available, Ruck explained: “It’s still very crude right now, and I still need to build the application to send transactions. However, once it is completed, it will be very large. When it is scaled up, the price of smart cards can actually reach $1 each.”

Even with some progress, BCH still has a long way to go in terms of payment. In addition to overcoming technical obstacles, it is facing a head-on battle with its financially powerful rival BSV in the cryptocurrency world, and the traditional world is facing a counterattack from Libra and DCEPs of various countries. Upgrading at this time is just a routine arms optimization in these wars.

Regarding the impact of this upgrade and the performance of the coin price, Liu Changyong concluded, "In general, each hard fork upgrade of BCH is a very pragmatic upgrade after comprehensive consideration of short-term and long-term market development, weighing security, functionality, and performance. It is conducive to the long-term sustainable growth of the BCH market size. As for the short-term price performance, it will be affected by many factors such as capital flow, macro environment, market sentiment, etc., and it is unpredictable."