Bitcoin Cash to Hard Fork: 32MB Block Size & Smart Contracts
On August 1st, 2017, Bitcoin Cash (BCH) came into existence as a hard fork of Bitcoin (BTC) largely due to developers not being satisfied with the Segregated Witness feature.
Since then, Bitcoin Cash and its supporters have created quite the ruckus in the cryptocurrency world, most notably the attempts to hijack Bitcoin’s title as the “true bitcoin”.
Today, Bitcoin Cash is receiving its own hard fork to a 32MB block size with the aim of increasing user adoption and giving users faster transactions and lower costs by removing the scalability bottlenecks.
To comment on this, we connected with the VP of Business Operations of BTC.com, Alejandro de la Torre. BTC.com consists of a team of 60+ employees in Amsterdam and Beijing, and built an open-source mining pool and wallet, which help to further build Bitcoin’s decentralized ecosystem.
BTC.com provides an interesting perspective on the fork, as it was recently acquired by Bitmain, a Beijing-based bitcoin miner, designer of ASIC chips, and operator of one of the largest Bitcoin mining pools.
The proposed fork would increase Bitcoin Cash’s block size from 8MB to 32MB, and will also enable developers to build smart contracts on top of the Bitcoin Cash network.
Alejandro noted differences between the 2017 hard fork and the one today.
This time around is more similar to the November hard fork, but slightly different. Today’s fork neither creates a new coin, nor does it correct an existing problem, but rather strictly innovates in two ways. The first major change is the tripling of the block size limit from 8 to 32 MB that is a forward-looking adjustment to accommodate greater transaction throughput per block. I feel better that this block size growth is occurring now, while the usage of Bitcoin Cash still has a ways to grow, rather than later when the network is at full throttle.
This the larger block size gives Bitcoin Cash some room to scale, something that other blockchains have been looking to tackle in other ways, e.g. Lightning Network and Proof of Stake. This makes Bitcoin Cash somewhat unique because it attempts to solve the scaling problem at the consensus protocol layer while maintaining the Proof of Work model.
Why Bitcoin Cash and not another coin? What will this fork accomplish that Bitcoin Cash can’t?
BTC.com is coin agnostic. We are not trying to say that you should buy Bitcoin Cash over another coin. We have an opinion over some of the benefits that the new product features enable.
For example, the block size limit increase gives Bitcoin Cash the largest block size limit of any of the big coins. This comes with some potential risks that the Bitcoin Core team warned against back in the days of the SegWit hard fork, but the fact remains that the easiest way to scale the Bitcoin network using Proof of Work is to increase the block size limit to allow more transactions per block.
The second main feature that we see as being beneficial to the Bitcoin Cash development community is the enabling of new and some old op-codes that permit colored tokens, second-layer automated processes, and smart-contract scripting.
What are the drawbacks of constantly increasing the block size?
The block size was originally restricted to prevent DDOS attacks from clogging the network. Therefore, in theory larger block sizes can be more vulnerable to spamming attack.
How will the smart contracts function?
After the block-size increase, the next advancement that Bitcoin Cash is putting forward is to add new and re-enable old, previously inactivated, machine-scripting operation codes, or more simply ‘op-codes’, that give developers tools to create smart contracts.
These machine codes, called “Satoshi Op-codes” by the Bitcoin Cash community, allow developers to create different types of metadata implementations. By having the ability to call these functions, developers can create “colored coins” or representative tokens. These are tokens that can be tagged in a specific way to correspond to bonds, stocks, precious metals, commodities, and any physical or virtual object.
Bitcoin Cash (BCH) is currently the 4th largest token with a market cap of around $23.3B.
It will be interesting to see how the Bitcoin Cash hard fork unfolds, and hopefully more scandal-free than the first Bitcoin Cash push.
Time will tell if this proposed hard fork is able to offer faster transaction speeds, lower costs, as well as a smart contract feature, and earn a high level of usability among developers, miners, and users.
Alejandro comments with a grounded optimism, “It is hard to say what might come out from this new functionality, but if we base our assumptions on what Ethereum has been able to accomplish from its second layer implementations, then I believe it will give Bitcoin Cash a lot of space for creative and productive ideas to blossom. To that end, we will have to see what the developers of the Bitcoin Cash community do with these new functionalities and if the market decides to settle in this newfound block size that has yet be driven to scale.”
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