There are few incidents that generate more controversy in a crypto space than a hard fork. They are often accompanied by fractious divisions in the community and highlight the ideological divides that can occur with a technology that aims to give power to the people. It directly takes away from the strength of the network that was the source of the hard fork.
Without a doubt, no hard forks have been more contentious than those that have split from the Bitcoin protocol - Bitcoin Cash (BCH) and Bitcoin Satoshi’s Vision (BSV). The former generated its fair share share of controversy when it occurred; the latter did exponentially more so.
Indeed, the controversy will be a major talking point, as it greatly affected both projects and created a tense atmosphere in the market for nearly two weeks. While the acrimony has largely died down, there is still a great deal of vocal conviction in the particular approaches the projects take.
Hard forks typically occur when nodes on the network disagree with the development approach that the network is taking, whether it be scaling or the introduction of new features. This fundamental difference in the vision for a protocol points to the respective network’s community belief about what an open and decentralized digital asset should be, and has weighty ramifications for the future of the market.
These talking points came to the fore last year with the arrival of Bitcoin SV. We examine how Bitcoin Cash SV envisions a decentralized payments protocol and its contrast with its predecessors.
History of Bitcoin SV (BSV)
The story of Bitcoin SV begins with Bitcoin Cash.
Bitcoin Cash originally split from Bitcoin in August 2017, after developers disagreed with Bitcoin’s approach to scaling. A majority of developers on the Bitcoin network believed that the correct approach to scaling in the short to medium term was the introduction, as opposed to the enlarging of block sizes. An increase in the block fees was also a partial motivation for this change. Another motivating factor was the belief by Bitcoin Cash supporters that an increased block size would also support Bitcoin’s use case as a transactional currency, as opposed to simply being “digital gold.”
SegWit, short for Segregated Witness, changed the way data was stored in blocks, besides introducing other changes. The more efficient way of storing data meant that more transactions could be stored in one block and this was considered to be an acceptable solution until a more permanent solution was formed (SegWit transactions have noticeably increased over the past year.)
However, there was a sizable number that opposed this changed, and who believed that increasing the block size was the optimal way to solve scaling problems. Bitcoin’s block size was originally 1 MB (SegWit 2x would raise this to 2 MB). Those would eventually go on to form Bitcoin Cash, supported by Roger Ver and others, argued for the increase of the block size to 8MB, which occurred with the hard fork. This has since increased to 32 MB.
In November 2018, Bitcoin Cash was subject to damage of its own with a rising faction within its community proposing an even larger limit for its block size. Bitcoin SV forked on November 15, led by Craig Wright and Calvin Ayre, and brought with it a much larger block size. Bitcoin SV’s own block size is an astonighly large 128 MB. The fork arrived after the end of the much discussed “hash war”, described a little later.
The Purpose of Bitcoin SV (BSV)
Bitcoin Satoshi’s Vision was named so because its founders believe that it is in keeping with Satoshi Nakamoto’s original vision of Bitcoin. The BSV token’s agenda is to be a transaction-focused token and the technical aspects of its token are being developed to suit that purpose. The team states that there are four major factors that determine the development of BSV: stability, scalability, security and safe instant transactions.
The primary difference between the BSV token and its progenitors is the fact that it has a very large block size, which it believes is suitable for its purpose as a means of exchange and as a general approach to scalability. As mentioned before, Bitcoin is considered by some to be more of a store of value than a form of digital currency that can be exchanged.
Another significant ideological difference between Bitcoin Cash and Bitcoin SV is that the former didn’t see the need to establish support for smart contracts and enterprise solutions on the blockchain, but Bitcoin SV sees the development of smart contracts, atomic swaps and other solutions for businesses as a key part of its agenda.
Bitcoin SV’s purpose is rather straightforward - a digital currency envisioned by its founders to be the go-to means of exchange in the future. The last point, concerning safe instant transactions, refers to the team’s plans of making BSV a viable option for brick and mortar merchants.
It’s clear that Bitcoin SV is trying to be an enhancement over those that came before it. Scalability is one of its biggest challenges, besides competing with the networks it hard forked from to become the primary digital asset for exchanging value. The roadmap offers a more detailed explanation of the approach.
The controversy surrounding peaked at around the time of its hard fork, leading to events that has been described as a “hash war” and “civil war.” The two camps began directing hash rates towards the production of their own respective tokens, but the investment in this hashing contest saw both sides lose money, with token prices dropping considerably. Bitcoin’s price was also greatly affected.
There has also been much mud-slinging between Bitcoin Cash and Bitcoin SV supporters, delving into outright name calling and slander. Prominent members of the cryptocommunity, including Andreas M. Antonopoulos, have described this as being more of a clash of egos than having anything to do with the visions of each network.
The aggressive clashes between the two networks had also greatly affected the price, much to the chagrin of its investors. It went even so far as the BSV camp allegedly executing a 51% attack the Bitcoin Cash network.
The decisions made by the BSV team, and the general behaviour, saw exchanges band together in a move to discourage such aggressive tactics. Several exchanges had delisted the BSV token during this episode.
There is also the matter of orphaned blocks, which at one point on the Bitcoin SV network saw 6 consecutive blocks orphaned. Sometimes, when a block is too large, the miner will have to abandon the block - it is mined, but not added to the blockchain, forcing a reorganization of blocks. This has occurred a few times with Bitcoin SV.
Bitcoin SV, like that of Bitcoin and other payments focused tokens, does not have a particularly notable set of partners - partnerships are more of a focus for projects that have a direct influence on the operations of businesses. Ripple, for example, is a project that benefits enormously from partnerships.
However, some partnerships have been established. DRIVE, a payments company, has partnered with the project with the purpose of using BSV as a bridge currency for cross-border transactions, similar to what Ripple does. The International Professional Pool Association (IPA) has also partnered with Bitcoin SV, with the latter acting as a sponsor for the association’s league.
It is clear who the competitors of Bitcoin SV are: Bitcoin and Bitcoin Cash, in addition to several other payments focused tokens.
The contentious nature of Bitcoin SV’s existence makes it difficult to estimate to what degree it will succeed in the future. Sure, it’s band of supporters are ardent as any, but there is a great deal of resistance to its approach to scalability - besides having upset many in the cryptocommunity with its aggressive approach.
Whether or not Bitcoin SV’s approach to scalability and quicker transactions will amount to anything can only be determined with time. So far, it appears to be functioning well enough as an independent blockchain, having established itself after the hard fork.
Bitcoin is clearly at the top of this particular market - and it does not look like this is going to change anytime soon. It has been around the longest, continued to survive under all sorts of market scenarios and shows a continuous increase in institutional investment. Bitcoin SV and Bitcoin Cash certainly have a lot of ground to catch if they wish to genuinely displace Bitcoin from its throne.
Bitcoin SV is a notable project in the space, if not for all the right reasons. Its approach to becoming both a means of payment and as a platform for enterprises to build solutions on is certainly different from its competitors. It will no doubt be a challenge for it to compete with the other projects, but perhaps it will manage to corner some portion of the market for itself.
As is the case with projects that are very early on in its development life cycle - Bitcoin included - the best approach would be to keep an eye on how development progresses.