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Chain Split, Hash War? What to expect from the Bitcoin Cash Hard Fork this Week

  • Bitcoin Cash is scheduled for a hard Fork on November 15. It isn’t merely a software upgrade this time.
  • Two main camps, led by Bitcoin ABC and Dr. Craig S. Wright are divided on the upgrade.
  • The hard fork may result into a chain-split with two BCH versions namely BCHABC and BCHSV. In such a case, for all the BCH you hold, you will receive equivalent amount of forked coin.
  • Due to no replay protection on both chains, users must be cautious about spending BCH until the hash war has settled or they stand to lose funds. 

Bitcoin cash hard fork is merely hours away and the questions from traders are pouring in. Should we buy BCH? Should we sell BCH? Will we get new coins? Will we lose our coins? These are some of the non-technical queries that frankly all traders who are still in market after this long bear market can have. After all, many traders are in it for the profit.

For the article, we will keep aside the drama surrounding stakeholders of Bitcoin Cash such as Roger Ver, Jihan Wu, Dr. Craig S. Wright and solely focus on what are the possibilities around the Hard fork and what users can expect for BCH. 

What is the Bitcoin Cash Hard Fork? 

I would like to explain this Bitcoin Cash Hard Fork in the simplest and shortest way possible. Bitcoin Cash goes through a hard fork every six months. If consensus is met, the software is upgraded to include more features on the Bitcoin Cash Network such as the last upgrade to increase block size to 32 MB.

The November 15, 2018 fork do not have consensus. The upgrade proposed by Bitcoin ABC is in line with the goal that BCH network will allow smart contracts on the network and introduce Canonical transaction ordering. 

Craig Wright, self-proclaimed Satoshi Nakamoto is against the idea and wants to upgrade block size to 128 MB only. He believes this is how they are staying true to Satoshi’s vision, aka what Satoshi says on the Bitcoin White paper about treating Bitcoin as an electronic form of cash. 

The two camps are divided, what remains to see after the hard fork is where the miners would like to flock. It is possible that only one chain will survive or both chains will exist side by side like BTC and BCH, or ETC and ETH right now. If that happens, all holders of BCH will have equivalent amount of the forked chain coins – either BCHSV or BCHABC. 

For a more detailed explanation on the Civil War, you can read the following article: 

Bitcoin Cash Civil War – The Entire Story

Who will Win this War?

Isn’t it ironic that BCH split from BTC because they wanted to stay true to Satoshi’s white paper and now BCH is splitting again with one camp wanting to stay true to Satoshi’s Vision? But that is a matter to discuss some other day.

A quick look on Bitcoin Cash network on CoinDance, a platform providing statistics on different blockchain networks, shows Craig Wright’s camp is gaining the hash power they need to take on Bitcoin ABC. SVPool, CoinGeek and nChain’s BMG Pool are at the time of this writing controlling ~55% of the hash. 

However, this is a completely different outlook compared to how traders perceive things. The pre-fork trading of SV and ABC on exchanges such as Poloniex and HitBTC show ABC trading at over double the value of SV. 

Bitcoin Cash mining pool data on Coin Dacne
SVPool, CoinGeek and BMGPool are controlling ~55% Hash power

After the fork, miners may switch from one network to another to increase profitability, similar to what was happening with BTC and BCH in 2017.

Traders can split their BCH coins on exchanges like Poloniex and HitBTC for trading the ABC and SV coins right now, before the fork. For Indian traders, CoinDCX exchange is supporting the HitBTC based trading for ABC and SV coins.

 In principle, Price of One $BCH = Price of $BCHABC + Price of $BCHSV

Exchanges Supporting the Hard Fork

International exchanges such as Poloniex, Okex, Binance, Bittrex, UpBit, Coinbase have announced their support for the Bitcoin Cash Hard Fork. 

However, exchanges such as CoinBase have made their support clear for Bitcoin ABC rather than supporting both coins. In any case, all exchanges supporting Bitcoin Cash Hard Fork are likely to keep withdrawal suspended until after the network is stable. 

Indian exchanges on the other hand have taken two routes. For instance, Koinex and pocketbits are supporting the hard fork but haven’t announced support for split-chain. But, exchanges like WazirX, Bitbns and Coindelta have announced splitting the tokens 1:1 ratio. For each BCH you hold, you will receive one BCHSV coin, supporting the BitcoinABC version of Bitcoin Cash.

And then there is CoinDCX which is currently trading BCH, BCHABC and BCHSV, but have also announced support for the fork. 

Traders May Lose Funds – if not careful

Both chains, SV and ABC have no replay protection. It means that when a user sends coins on one chain, the same transaction can take place on the second chain and user ends up losing those coins on second chain.

If you have 10 BCH before the fork, after the fork you may have 10 ABC coins and 10 SV coins. If you send 5 ABC coins to an address, the receiving user can then use the transaction to also receive 5 of your SV coins. This is called a “replay attack”. 

Exchanges will remain careful about this and will not allow withdrawals until they have run the checks thoroughly, but a naive user holding these coins in a private wallet can be a victim to such an attack. So users are advised to not immediately transfer funds after the fork. 

Bitcoin Cash Price Action ahead of Fork

Obviously a fork such as this has increased interest of traders who do not want to miss an opportunity on receiving “free coins”. Seems the trend is working as Bitcoin Cash was up 33% since Nov 01, 2018 but did fall back to the $500 range. However, at the time of this writing, Bitcoin Cash pumped 4% to $540. 

With a couple days left until the fork, it is likely the prices will go up as buying volume increases to satisfy the greed of receiving free tokens. 

Bitcoin Cash price action

Disclaimer: None of the information in the article is an investment advise. Coin Crunch India is not responsible for any losses or damages occurring from relying on the information for cryptocurrency trading. Cryptocurrencies are very volatile investments in nature. Users are advised to do their own research before investing. 

Update: The status of Bitbns and CoinDCX exchange on Bitcoin Cash Hardfork was updated. 

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