Next Step for Bitcoin Cash: Changing Address Format to Stop Losing User Funds

Bitcoin and its fork, Bitcoin Cash, are more than just ideologically different — they’re dangerously so.

For months, the Bitcoin Cash fork has caused some Bitcoin and Bitcoin Cash users to temporarily or permanently lose their coins when transferring money. However, this nightmare may soon disappear, as the Bitcoin Cash development team recently announced that it is taking steps to solve this problem.

Back earlier this summer, Bitcoin Cash forked from the original Bitcoin chain to try out a different long-term development vision. Although Bitcoin and Bitcoin Cash are different, their similarities are raising this question.

When Bitcoin Cash forked a new blockchain from Bitcoin's transaction history, it included a lot of Bitcoin's old code, including the address format that Bitcoin users use when transferring money.

A quick Google search yields dozens of forum posts where users are complaining about this issue:

“I accidentally sent my bitcoins to a Bitcoin Cash address, is there a way to recover my bitcoins? Can anyone help me fix this?” asked a user asking for help on Bitcoin Stack Exchange.

Another post pleading for help read: "These coins are worth about $500 and I feel like an idiot!"

There is actually a solution: just change the address format of Bitcoin Cash to make them incompatible. Amaury Sechet, the lead developer of Bitcoin ABC (Bitcoin Cash Development Group), believes that this will become the next major goal of Bitcoin Cash.

Announcing the progress of work on the new address format, called "cashaddr," he called it an "urgent" change and aimed to make the change as soon as December.

He later added:

“I think it’s important to get this done as soon as possible to reduce user confusion about the use of different addresses and prevent fragmentation of the Bitcoin Cash ecosystem.”

Change

Unlike the last big change to bitcoin cash, this will not be a hard fork, meaning not everyone will need to upgrade their wallet software to stay on the blockchain network.

“The key is that the public and private key pairs do not change, they just look different in the wallet software as ‘addresses’,” Calin Culianu, a developer at Bitcoin ABC, told CoinDesk.

However, he also noted that the upgrade would be smoother if everyone, including wallet developers, adopted the change in advance so that the entire ecosystem would be aware of the new addresses.

But what’s interesting is that Sechet’s proposal was first proposed as a change by the Bitcoin Core developers, the main development group behind Bitcoin.

While Bitcoin Cash is intended to compete with Bitcoin in an attempt to lower transaction fees, taking inspiration from Bitcoin’s main development group’s proposal shows that the two cryptocurrencies are not taking completely different paths.

Bitcoin ABC developer Shammah Chancellor said:

“We want the user experience to be flawless, especially when there’s potentially a lot of money at stake.”

Reaching consensus

Despite this, there is still controversy over whether the proposal can be passed.

Developers agree that proposals need to be agreed upon by the Bitcoin Cash community. For example, one developer, Roy Bagami, agreed to introduce a new address format, but said he was “not a big fan of bech32,” which is the basis of Sechet’s cashaddr format. So, he proposed something else.

Another developer, Freetrader, launched a “community survey” to get a clearer perspective.

Still, there is resistance to change. “That’s a good suggestion, too,” Chancellor told CoinDesk.

More broadly, developers have an optimistic outlook on the bitcoin fork, with Culianu arguing that it is doing “very well” and no longer needs to be changed.

“I was more concerned about making sure it was implemented, and when they really needed the manpower, they were already fighting back — now that Amaury Sechet has built a bigger team and everything is going well — I no longer have to invest,” Culianu told CoinDesk.

Other developers have proposed long-term developments that could make bitcoin cash transactions cheaper, such as solving the problem of “transaction malleability.” While they may hint at what’s to come, they have so far all been hotly debated.

Regardless, while the address format may seem like a minor change, it could be a differentiating mark between Bitcoin and Bitcoin Cash moving forward.