Bitcoin Cash (BCH) spikes on Binance fork support but can it survive governance meltdown?

BCH

Update: 4 November 2018 – Coinbase is supporting BCH fork, in line with bitcoincash.org roadmap . Price gets another bounce.

News that Binance is supporting the Bitcoin Cash (BCH) hard fork has propelled it 7% higher today at $453, according to coinmarketcap.

Bitcoin Cash forked from bitcoin in August last year in order to increase block size.

Binance will snapshot the chain on 15 November at 4:40 pm (UTC). Deposits and withdrawals of BCH will be suspended from 3:00pm on the same day

“We will handle all technical requirements involved for all users holding Bitcoin Cash in their Binance accounts,” the exchange said in a blog post.

“We will make a separate announcement after the snapshot is complete to notify users when deposits and withdrawals for Bitcoin Cash will reopen. ”

The split in the BCH developer community has led to the need for hard forks due to the lack of agreement.

Binance is the largest exchange to announce support for the fork, but it is difficult to tell beforehand which chain will be the most stable.


Ledger says no

That’s the reason why popular hardware wallet vendor Ledger is not supporting the fork. It is also concerned by the possibility of “replay attacks”, in which transactions are able to be “replayed” on different chains.

Ledger will be suspending its BCH service until the dust settles.

There will be a minimum of two forks, both of which will initially have no replay protection.

Fork wars is bad for Bitcoin Cash

The fork led by Bitcoin ABC (the most popular Bitcoin Cash client), which is associated with mining giant Bitmain, aims to bring scaling potential to the network and improve the scripting language.

Another group called nChain, led by Australian Craig Wright who last year tried to claim he was Satoshi Nakamoto, wants the block size raised to 128MB from the current 32MB and is worried by the lack of testing by the ABC developers.

The nChain fork, supported by the second-largest BCH miner after Bitmain, Coingeek, is called Bitcoin SV and dispenses with the canonical transaction ordering (needed for the Bitcoin ABC scaling solution) and the opcode revision to enhance the scripting.

Stress testing

On 1 November a group of devs who call themselves the  Professional Stress Test Team conducted stress tests that they claim showed throughput of 733,000 transactions in one day, with one 14MB block containing 73,000 processed transactions

There hasn’t been much word from BCH booster Roger Ver and owner of bitcoin.com. He’s probably waiting like the rest of us to see what emerges strongest from the mess.

Forking leads to token drops of the new chain’s token for anyone who holds BCH before the fork(s). That’s why the price has risen today, with Binance support taking some of the headache out of the forking mess for individual BCH holders.

The downside though is that the multiplying forks shows the inadequate governance of BCH, something it shares with bitcoin and other networks. It also leads to consumer confusion. And where there is confusion there is an opening for the scammers and fraudsters.

About the Author

Gary McFarlane
Gary has been writing about cryptocurrencies since 2013 and currently works as the cryptocurrency analyst at interactive investor, the UK's second-largest online investment platform. Gary contributes for Coin Intelligence News in a personal capacity and none of his commentary should be considered investment advice. Gary is the winner of the ADVFN International Financial Awards 2018 Cryptocurrency Writer of the Year. Contact Gary on twitter at: @gary_mcfarlane

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