Why is Bitcoin Cash (BCC) Bitcoin?

Bitcoin: Past to Present

In 2017, conflicting and divergent value propositions for Bitcoin’s fundamentals led to the community and Bitcoin splitting into several different groups, each with their own vision of what Bitcoin is and what it will become. This article will explore the different Bitcoin “hard forks” and demonstrate why Bitcoin Cash is the cryptocurrency that best lives up to the original system outlined in the Bitcoin whitepaper.

As a peer-to-peer electronic cash system, Bitcoin has experienced explosive growth at the beginning of this year. Users are attracted to Bitcoin's features: low transfer fees, instant confirmation, global compatibility, 24/7 operation, and no upper or lower limits on transaction amounts. This electronic cash has quickly become popular with different user groups around the world. Merchants use Bitcoin to enter the global market. Immigrant workers use Bitcoin to transfer money home, with fees far lower than Western Union. Charities and content creators use Bitcoin in "tips/donation boxes" to collect donations of all sizes from all over the world. Some industries have even completely replaced traditional payment methods with Bitcoin. This growth rate has continued for several years, leading many people to believe that Bitcoin is on the road to becoming an unstoppable financial technology revolution.

The Dawn of the Bitcoin Scaling War

However, like all technologies, scalability becomes an inevitable problem. Since the beginning of Bitcoin, people have predicted and discussed how the system should scale, not just to millions of users, but to billions - what else can become a global mainstream currency besides Bitcoin? In fact, when Satoshi Nakamoto first proposed the concept of Bitcoin in 2008, the first question he was asked was how the system would scale. Satoshi Nakamoto answered:

Bandwidth may not be as expensive as you think. A typical transaction is 400 bytes (error correction codes are compact). Each transaction must be broadcast twice, so let's assume each transaction is 1KB. Visa processed 37 billion transactions in 2008, an average of 10 billion transactions per day. That's 100GB of bandwidth, which is the size of 12 DVDs or 2 HD movies, or about $18 of bandwidth at current prices. It will be years before the network reaches that size. By then, uploading 2 HD movies on the network may not be a big deal.

What started as a dispute over something to add to the Bitcoin protocol has since completely divided the Bitcoin community, culminating in a fight among developers over who is the real Bitcoin.

Eventually, a small group of engineers calling themselves “Bitcoin Core” seized control of Bitcoin development and began to counterintuitively insist that Bitcoin could not scale to handle 250,000 transactions per day, or 4.5 cents of bandwidth at 2008 prices. By 2016, the network finally reached its limits, and Bitcoin began to lose many of the properties that had originally made it so fascinating.

Transaction fees skyrocketed, from 2 cents to $9 in August 2017. Transaction confirmation times became increasingly erratic, with users waiting hours or days for transactions to be completed. Declining usability caused many early adopters to abandon Bitcoin in favor of competing coins or switch entirely to traditional payment methods. Bitcoin adoption slowed, and in 2017, Bitcoin transaction volume began to decline for the first time in its 9-year history.

Segregated Witness Core is born

The group calling themselves “Bitcoin Core” began to assert that Bitcoin would never be a currency, after all, it was just a new speculative asset class. They also began to remove many of Bitcoin’s essential features, making transactions reversible (replacement of fee) and removing the digital signatures that mathematically secure Bitcoin through Segregated Witness. Many of the goals they achieved were contrary to the white paper, and the team no longer represented the most basic Bitcoin ideas - nor could they make any value proposition related to the original payment. Of course, the people on this team were dedicated, hard-working, and talented. However, given the above facts, such a team could not reasonably use the word “Bitcoin” in their name. “SegWit Core” seemed to be a better fit.

Segregated Witness removes signature data from transactions. Source: Peter Rizun, “Segregated Witness is Not Bitcoin”

Enter Bitcoin Cash

These dramatic changes and successful technologies prompted a group of long-time concerned Bitcoin users to initiate a "fork" or split on August 1, 2017. The hard fork resulted in Bitcoin Cash, which increased the block size, removed the replace-by-fee method, and kept Bitcoin's digital signatures intact.

Bitcoin Cash, unlike the product of the Bitcoin Segwit chain, has its own market price, mining network, and block transaction records from the genesis block onwards. Because Bitcoin Cash is created by a small number of miners, many servers still refer to the Segwit-chain as "Bitcoin" even though it is more accurate to say that the two are relatives that share a common genesis block.

Although the Segwit-chain inherited the "Bitcoin" name, Bitcoin Cash is closer to this version of Bitcoin: the one that sparked the entire cryptocurrency craze by becoming a model electronic payment system.

Although the Segregated Witness Core team has insisted that such a fork is "dangerous" and will destroy the entire Bitcoin system, the successful hard fork of Bitcoin Cash seems to have proved that network splits are a viable way to eliminate differences, experiment with new features, and allow various models to compete with each other in a free market.

More Bitcoin Forks Are Coming

As of October 2017, two new hard forks are set to occur on the Segwit chain: SegwitGold is scheduled to fork around October 25th, and Segwit2x will fork sometime in mid-November at block height 494784. The Segwit2x hard fork will increase the block size to 2MB and remove digital signatures via Segwit.

SegwitGold is largely identical to the Segregated Witness chain, most notably changes to the proof-of-work algorithm (which means it will lose a significant amount of the computing power that secures the Bitcoin network) and the fact that the team of developers pre-mined a large portion of the coins themselves as “rewards” for their work on the project.

Segwit2x is a planned upgrade to the Segregated Witness chain, which has the support of the vast majority of the mining network and businesses that rely on the secure operation of the Bitcoin network. The main change of this fork is to increase the block size from 1MB to 2MB, thereby increasing the network capacity from 250,000 transactions per day to 500,000 transactions per day. The Segregated Witness Core team remains steadfast in their opposition to any form of direct expansion and has vowed to activate their own chain (Segwit1x), although it is unclear whether they can obtain enough hash power to support the survival of this chain.

The main differences between the various forks are as follows:

Bitcoin Cash

Symbol: BCC (sometimes also called BCH)

Mining algorithm: SHA-256

Block size (daily transaction capacity) : Currently 8MB, maximum 32MB without forking (can process 2 million to 8 million transactions per day, equivalent to 23 to 92 transactions per second)

Data used to achieve maximum capacity: 8MB

Average transaction fee: 0.07USD

Average transaction confirmation time: ~15 minutes (target is 10 minutes)

Is the transaction reversible: Irreversible. Once the transaction is sent, the result cannot be changed.

Is Segregated Witness implemented: No. All transactions contain their own unique digital signature.

Note: The transaction confirmation time is longer than ten minutes due to fluctuations in computing power. Even a fee of $0.01 can be included in the next block, but some wallets use a higher fee by default.

Segwit2x (Planned)

Symbol: BTC (Planning), since this is no longer Bitcoin, it may be SW2

Mining algorithm: SHA-256

Block size (daily transactions): 2MB block size limit. Up to 3.4MB "effective" capacity, assuming 100% SegWit adoption (currently ~10%). 500,000-850,000 transactions per day (5.8-9.8 transactions per second)

Data used to achieve maximum capacity: up to 8MB

Average transaction fee: To be determined

Average transaction confirmation time: To be determined (target is 10 minutes)

Is the transaction reversible: Yes. After the transaction is sent, the sender can change the destination address (including sending it to himself) through the Replace-by-Fee method before the transaction is confirmed.

Whether to implement isolated witness: Yes. Digital signatures are removed as an independent data structure.

Segregated Witness Chain/Segwit1x

  Note: The chain generated after the Segwit2x fork is called Segwit1x.

Symbol: Currently BTC, suggested to be called SW1 after the Segwit2x fork.

Mining algorithm: SHA-256

Block size (daily transactions): 1MB block size limit. Up to 1.7MB "effective" capacity, assuming 100% SegWit adoption (currently ~10%). 250,000-425,000 transactions per day (2.9-4.9 transactions per second)

Data used to achieve maximum capacity: up to 4MB

Average transaction fee: Currently $3, but fluctuates frequently.

Average transaction confirmation time: between 40-60 minutes (target is 10 minutes). Peak confirmation time exceeded 2500 minutes on June 8, 2017.

Is the transaction reversible: Yes. After the transaction is sent, the sender can change the destination address (including sending it to himself) through the Replace-by-Fee method before the transaction is confirmed.

Whether to implement isolated witness: Yes. Digital signatures are removed as an independent data structure.

SegwitGold (Planned)

Symbol: SWG

Mining algorithm: Equihash (incompatible with the current Bitcoin mining structure)

Block size (daily transactions): 1MB block size limit. Up to 1.7MB "effective" capacity, assuming 100% SegWit adoption (currently ~10%). 250,000-425,000 transactions per day (2.9-4.9 transactions per second)

Data used to achieve maximum capacity: up to 4MB

Average transaction fee: To be determined

Average transaction confirmation time: To be determined (target is 10 minutes).

Is the transaction reversible: Yes. After the transaction is sent, the sender can change the destination address (including sending it to himself) through the Replace-by-Fee method before the transaction is confirmed.

Whether to implement isolated witness: Yes. Digital signatures are removed as an independent data structure.

Bitcoin Cash is Bitcoin

Bitcoin itself has no central authority or governing body, which means that any serious discussion about the fundamental nature of what Bitcoin is must be based on sound reasoning and data, not “because we say so” rhetoric.

Based on the comparison of the various versions of Bitcoin listed above, the white paper, and the understanding over the years that Bitcoin is an electronic cash system, this site's position is that Bitcoin Cash is the version of Bitcoin that is closest to the original idea.

The position that Bitcoin Cash is Bitcoin is based on its adherence to the design goals and original uses that Bitcoin was intended to achieve.

On October 13, 2017, Bitcoin Unlimited's Chief Scientist Peter Rizun announced that his Gigablock Testnet Initiative successfully mined and broadcast the first 1GB block. Such test results show that the Bitcoin network can scale to a level that is competitive with mainstream payment processors (10,000 transactions per second or even more vs Visa's average of 3,000 transactions per second). Bitcoin Cash, with a more realistic scaling method, is fully prepared to become a world-class peer-to-peer electronic cash system.

in conclusion

Based on the above arguments, Bitcoin Cash (BCC) is the only forked coin that is a natural continuation of the original Bitcoin invention. All Segregated Witness chains change many of Bitcoin’s fundamental characteristics, just as Bitcoin itself is extended by its name.

appendix

Mining

All current Bitcoin hard forks, with the exception of SegwitGold, are mined using the SHA-256 mining algorithm. Having specialized equipment is important because it means miners have to make a serious skin-in-the-game investment in securing the network. CPU-focused algorithms like Equihash mean that botnets and server farms can easily mine on the network, but if it were more profitable to mine with CPUs, they would have an incentive to continue mining.

Transaction Capacity

Network transaction capacity is a fundamental property of a currency, and it is important that the network has enough capacity to satisfy all demand. If there is not enough paper money to satisfy all those who want to obtain it, paper money may be useless. Both the original Bitcoin and Bitcoin Cash adhere to this idea, although the SegWit chain and SegWit Core developers believe that capacity should be artificially limited even if the demand for network usage far exceeds the available capacity.

User Experience

Bitcoin is useful as a digital currency because it can be used to send transactions of any amount, large or small. When fees are low, it is reasonable to use Bitcoin to buy a cup of coffee, pay $1 for a song, or pay a tip with digital currency. When capacity is limited and fees increase dramatically (as we can see with the SegWit chain), SegWit coins become practical for many transactions. High fees will scare off many potential Bitcoin users and hinder many innovative business models that have emerged to take advantage of Bitcoin's low fees and fast transaction confirmations. This change in the SegWit "economic node", led by the SegWit Core team, has led to a decline in enterprise usage of SegwitCoin, with many companies abandoning it for other more powerful cryptocurrencies. The most obvious choice now is to return to Bitcoin Cash (BCC).

Segregated Witness and Replacement by Fee (RBF)

The Bitcoin white paper states very clearly:

We define electronic money as a string of digital signatures.

  According to the introduction of the "feature" of Segregated Witness by Segregated Witness Core developers, newly created transactions will remove the digital signature from the transaction as a separate data structure, and only wallets running a specific version can see this signature. By using the Bitcoin opcode ANYONE_CAN_SPEND, "tricking" wallets of other versions, these transactions without digital signatures are also valid. Bitcoins stored in the ANYONE_CAN_SPEND address rely on a fundamentally different security model.

Replace-by-fee, SegWit Core introduces a misconceived "feature" that makes it common for users to reverse a transaction after sending it but before it is confirmed. Combined with capacity constraints, where users often have to wait 24 hours or more for transactions to be confirmed, Replace-by-fee makes Bitcoin less practical and less secure. Chargeback fraud is a real problem for merchants, but credit card companies have departments (and high overhead) to mitigate this risk. Just like paper money, once sent, it is irreversible, and irreversibility is a big part of what makes Bitcoin "Bitcoin."