Bitcoin Is Winning The Civil War Against BCH
Bitcoin Cash, the contentious hard fork of August 2017, has suffered an almost 13% drop over the past two weeks, sinking to lows of 0.12 BTC (~$1,241) on the Poloniex exchange. While this isn’t unusual, with all altcoins suffering in the recent market correction, BCH has fallen harder than the crowd.
This coincides with several key developments in Bitcoin that have reduced any competitive advantage Bitcoin Cash might have had over the original.
Segregated Witness (Segwit) Adoption
The controversial Segwit upgrade of November 2017 left the Bitcoin community divided in disagreement, but implementation has provided a network capacity increase and allowed significant reduction of fees. This has now been adopted on three of the largest cryptocurrency exchanges: Coinbase, Bitstamp and Bitfinex, allowing users to benefit from lower withdrawal fees and improved processing times. Bitfinex released the news on Medium:
[bs-quote quote=”Today Bitfinex is delighted to announce support for bitcoin deposit and withdrawals using P2SH Segregated Witness (SegWit) addresses. ” style=”default” align=”left” author_name=”Bitfinex” author_job=”(via Medium)” author_avatar=”https://cryptobriefing.com/wp-content/uploads/2018/02/Bitfinex-Icon.jpg”][/bs-quote]
Increased Transaction Batching
By combining multiple payments into a single transaction, batching creates lower fees. Output data from Aquarius suggests we are seeing an increased use of batching by larger exchanges.
BitStamp boasted on Twitter that increased transaction batching and Segwit adoption enables them to offer minimal confirmation fees.
All this makes the original Bitcoin an increasingly streamlined and efficient machine, more capable of outperforming Bitcoin Cash in the long run.
So What about Bitcoin Cash?
Tension between the two coins, promoted by two rival subreddits, came to a head in late November 2017 with the aborted Segwit 2X fork. This led to a sharp rise in value for Bitcoin Cash, as some speculated the crypto world was about to pivot on its axis and adopt BCH as its new mother.
This might seem laughable now, but at the time ‘the cashening’ was only too real for some, and the BCH/BTC price ratio catapulted to over 0.53.
Since then prices have returned to more usual levels, but Roger Ver, the polarising mouthpiece of Bitcoin Cash, has continued to argue that this hard fork of Bitcoin is in line with Satoshi’s ‘original vision of P2P cash’, claiming that high network capacity, fast transactions, and low fees make the original Bitcoin defunct.
This premise has now been shown to be false – with average fee data from Blockchair showing negligible difference between fees for the two coins.
There are however, those that argue otherwise – speculating that low BTC fees are the result of a recent decline in the number of transactions and not sustainable in the long run.
Just as the buying frenzy of late 2017 has subsided, so have the number of transactions broadcast to the bitcoin network, correlating with recent news of STEAM and Microsoft cancelling Bitcoin payments (although Microsoft has since restored this function).
Data from Blockchain shows that the number of transactions added to the mempool per second is hitting lows not seen for over a year, suggesting that the reason for such low fees might not be quite what it seems.
Perhaps only time will tell if these new technological developments can maintain fast transactions and low fees when the next wave of demand hits.
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