Bitcoin Cash Split 2020

Bitcoin Cash Split 2020

By Guarda Wallet | Guarda Wallet Blog | 16 Nov 2020


Update as of November 18

The feature to split your BCH is available on Guarda now.

If you had BCH wallet at the time of the hard fork (November 15, 2020), you can get two coins: BCHN and BCHABC. Your balance will be duplicated in two networks. Before sending any transaction, you need to split your coins before it, otherwise, the transaction will be sent on both networks. To prevent a replay attack, holders mix the outputs before and after the hard fork.

SPLIT BCH

 

Introduction

Bitcoin ABC client refused the Bitcoin protocol in 2017 to create its own cryptocurrency: Bitcoin Cash. Since then, Bitcoin Cash periodically conducts non-critical network updates, which usually do not affect users; however, in 2018, an update led to a fork, which pointed to the division into two coins: Bitcoin Cash and Bitcoin SV.

On November 15th, 2020, another network dispute may again lead to the appearance of another coin.

This time the community divided into two groups of developers. On the one hand, Bitcoin ABC, which introduced the activation of the “rules of coin receivers”, according to miners must pay developers an 8% tax on remuneration for each new block created to continue funding for network development. On the other hand, the Bitcoin Cash Node (BCHN) group, which rejects the proposal of its rival team and protects the activation of a new algorithm for adjusting the complexity of the mining.

What is a fork? 

To understand the concept of bitcoin cash fork, we should first go deeper into the theoretical part. If it seems boring to you and you already know everything, you can safely flip through the first paragraphs. However, for those of you who are still interested, let's take a little look at what fork is. 

Crypto networks, or blockchains, often get updates after forking. It is essentially a fundamental change in a blockchain code that divides it into two different nodes. Then, these networks exist in parallel, and each of them has its digital currency. 

The update is aimed at configuring the network settings/protocols, usually to increase performance and security. For example, during the BTC fork, which will be discussed today, the primary purpose of creating BCH was to increase the block's size to accommodate more transactions.

Bitcoin Cash Hardfork 2020

On November 15, the established Bitcoin Cash network has divided into two:

BCHN and BCHA

Both of these tokens include regularly scheduled upgrades, while BCHA also offers developers a fee for the unit fee paid to the miners.

By the way, BCHN is more prevalent in the community because of its hash power. And BCHA will likely fall into the background when BCHN becomes a leading blockchain. In this case, it will be supported by all currency exchanges which support BCH, and tokens BCHN will still be called “Bitcoin Cash” and will be denoted by the acronym “BCH.”

BCHN Vs. BCHA

Both of these tokens include regularly scheduled upgrades, while BCHA also offers developers a fee for the unit fee paid to the miners.

By the way, BCHN is more prevalent in the community because of its hash power. And BCHA will likely fall into the background when BCHN becomes a leading blockchain. In this case, it will be supported by all currency exchanges which support BCH, and tokens BCHN will still be called "Bitcoin Cash" and will be denoted by the acronym "BCH."

Some support BCHN, others support BCHA – Guarda supports all.

Long months of stress in anticipation of the fork’s implementation is finally coming to its logical conclusion, and it seems that Bitcoin Cash Node will take the place of the leading token. Bitcoin ABC, the historically dominant implementation of Bitcoin Cash (BCH), appears to be about to give way to a community-led riot in the form of a Bitcoin Cash Node (BCHN).

According to various estimates, over 75% of users signaled in favor of BCHN last week, while a small 1% showed support for ABC.

However, Guarda will support both coins so as not to be controversial in the community, moreover, we will have the split functionality available almost immediately after the fork.

Community disagreements or why does Bitcoin Cash need a fork?

BCHN came in response to ABC's announcement of a new "monetary base rule," redirecting 8% of the block's compensation to a development fund controlled by ABC's leading developer, Amory Sechet, along with changes in BCH's complexity algorithm, scheduled for November 15 by the update of Bitcoin Cash. The new release of Bitcoin ABC client number 0.22.1 supports this proposal, and the update will be activated on November 15. This client has 42% Bitcoin Cash nodes. Other clients, including Bitcoin Unlimited and BCHN, do not support the offer; they account for 55% of active nodes.

Proponents of BCHN insist that the rule is not necessary, arguing that they can fund development through voluntary community support. Although Sechet has threatened that "the BCHN chain will be eliminated" if the BCHN chain becomes longer than the BCHN chain after the chain is divided, the current BCHN domain assumes that a competitive implementation will appear dominant on November 15, which represents an uncertain future for ABC.

Does hard-fork include any other protocol changes?

Both Bitcoin ABC and Bitcoin Node have deployed a new complexity adjustment algorithm.

New Bitcoin Cash blocks (for example, Bitcoin blocks) should be detected approximately once every 10 minutes on average. However, because Bitcoin Cash uses the algorithm of marshaling with Bitcoins, some Bitcoins sometimes switch to marshaling Bitcoin Cash when it is more profitable to marshal this blockchain. Since Bitcoin Cash usually has only a small fraction of Bitcoin's hash power, this switching leads to large Bitcoin Cash hash power fluctuations. This, in turn, leads to periodic bursts when blocks are detected much faster than every 10 minutes, followed by a jump in complexity. The switched miners then return to Bitcoin mining, leaving the original Bitcoin Cash miners in a chain that is now less profitable. Moreover, a sharp decrease in hash power results in a much slower production speed of blocks.

To help stabilize the block production rate, the Bitcoin ABC team originally proposed a new complexity adjustment algorithm called Grasberg. However, Grasberg will include an additional change: block production will be deliberately slowed down by several years to correct the "historical drift." (For several reasons, including the previous complexity algorithm, Bitcoin Cash blocks have so far been produced faster than initially planned).

How do exchanges respond to the hard-fork of Bitcoin Cash?

On November 6, BitPay Crypto Exchange announced that it would completely stop performing operations with Bitcoin Cash on the 15th to prevent an attack known as a "replay attack." 

"In order to restore safe and secure BCH payment processing and to reduce the risk of wallet customers losing BCH funds due to replay attacks, we are planning to temporarily suspend BCH transactions for all payment processing — effective November 13, 2020, at 1 pm ET — prior to the scheduled fork. We will resume payment processing for BCH after there is a consensus reached on the network. We will still be processing BTC, ETH, XRP, USDC, GUSD, PAX, and BUSD payments as normal."

The Huobi exchange stated it would support the hard-fork. However, it dissolves its responsibility in advance due to unforeseen circumstances.

"Bitcoin Cash is expected to perform a hard fork protocol upgrade at 20:00 on November 15, 2020 (UTC+8). Huobi Global will support the BCH hard fork if it occurs. In order to reduce the potential trading risks of market fluctuations during the fork and fully guarantee the security of our users' assets, we will adopt the following plans: Since there are still many uncertainties in the current fork, if one of the two parties decides to abandon the fork, HuobiGlobal will respect the opinions of the community and name the final winner BCH."

Information regarding the Bitcoin Cash fork appeared on Coinbase stated that they will take only to the side of BCHN and will no longer support BCHABC after the fork.

Kraken announced that they would "support Bitcoin Cash Node regardless of the outcome of the fork. Bitcoin ABC will only be supported if its hash power is at least 10% BCHN. If this will happen, it will be traded as Bitcoin Cash ABC under the BAB ticker."

BitGo and Trezor also made their choice in favor of BCHN.  

Binance, OKEx, FTX, Gate.io, and Poloniex plan to support both versions of Bitcoin Cash.

BitMEX, in turn, said they would closely monitor the process and make decisions post facto. 

What happens after the BCH Split?

After the hardfork, your address and balance will be duplicated in ABC/BCHN networks. Any transaction will also be duplicated in both Networks. In order to avoid losing funds, you can split your address using Guarda BCH Split functionality and automatically get two separate addresses with current balances.

Split Feature will be available shortly after the hardfork. Stay tuned!


Guarda Wallet
Guarda Wallet

Guarda is a custody-free multi-platform cryptocurrency wallet with a user-friendly interface designed to store, buy, stake, and exchange crypto assets. https://guarda.com


Guarda Wallet Blog
Guarda Wallet Blog

Guarda is a custody-free multi-platform cryptocurrency wallet with a user-friendly interface designed to store, buy, stake, and exchange crypto assets. https://guarda.com

Send a $0.01 microtip in crypto to the author, and earn yourself as you read!

20% to author / 80% to me.
We pay the tips from our rewards pool.