Understanding the history of BCH forks in one article

In addition to the ETH2.0 mortgage preheating, the hot topic in November is the BCH hard fork. As the direct relative of BTC, the BCH fork is of course attracting much attention.

Today we will sort out the causes and consequences of the BCH hard fork. Where will BCH go after the fork?

1. History of BCH forks: The fourth generation of Bitcoin is about to be born

Some people asked, didn’t BCH fork two years ago? Why is it happening again now?

If you look back at the picture above, you will understand that on November 15, 2018, BCH forked into BCH ABC and BCH SV, and BCH ABC inherited the name of its father.

In fact, BCH forks every year, on May 15 and November 15, but this fork is actually just an update of some algorithms, which will not affect users and will not result in any candy.

Strictly speaking, this fork can also be regarded as a fork of Bitcoin. Including this fork, there have been three forks of Bitcoin in history.

The first time: On August 1, 2017, because the block size of the first generation of Bitcoin could not meet the demand, it split into BTC and BCH. BTC is still the current BTC, but BCH is no longer the current BCH. Let’s call it the second generation BCH for now.

The second time: On November 15, 2018, conflicts arose in the BCH community consciousness, so the second-generation BCH was forcibly split into the third-generation BCH and the third-generation BSV.

The third time: on the 15th of this month, due to disagreements, the fourth generation was forked out.

However, this time the situation is not evenly matched like two years ago, but a one-sided trend.

2. The IFP (Workers’ Self-Help Plan) was born

Why is there a fork this time?

We have to mention the IFP plan. What is the IFP plan? To talk about IFP, we have to mention the dilemma of the BCH development team.

Unlike BTC and ETH, the BCH development team is a group of workers with no base salary or commission. There is no fixed and stable funding to support the development work of team members, and the developers have to bear a lot of life pressure for this.

So they proposed a proposal called IFP, which is to tax miners and extract 8% of the coins as rewards for each block to be used as future development funds. The BCHA that was separated this time is a chain with this tax extraction added.

In my opinion, this is actually nothing. It has no impact on users. It is even good to have a stable development team. This model is not the first of its kind in POW coins. Zcash has a similar fund.

However, this move also disturbed the cheese of the mining bosses, and community leader Roger Ver expressed his strong opposition!!!

3. BCHN is born and BCHA is in danger

What should I do if the bosses all disagree?

Then fork out a new project!

The new team Bitcoin Cash Node was born in February this year, which is the brother of BCHA - BCHN.

In the end, the IFP plan failed to be activated as planned, and supporters turned against it.

Roger Ver, mentioned above, was the first to express his opposition under pressure from the Western community; Jiang Zhuoer said that the Bitcoin ABC team could not reach a consensus on his ideas and could not communicate effectively, so he lost patience and publicly expressed his support for BCHN.

Although the team has just been established, BCHN's support rate is much higher than BCHA, so the ABC camp represented by BCHA can only accept its fate.

BCHN and BCHA have opened pre-fork transactions on P Network and Matcha. If we look at the price on Matcha, we will know how badly BCHA has been bullied.

BCHD Price: 237.4

BCHA Price: 16.8

4. When the gods fight, be careful of accidental injuries

Things like hard forks are originally a battle between gods. For retail investors, in addition to watching the show, of course they have to think about how to get a piece of the pie.

In the last fork, BSV was born. On the day of its birth, it surged to a historical high of 173. After hitting a historical low of 37 on November 23, BSV started to surge, hitting a local high of 141 again on November 26, and then the correction started a small cycle of oscillation.

What’s interesting is that when the global market plummeted afterwards, BSV actually withstood the plunge and its price even surpassed BCH at one point.

However, the price of BCH fell from $505 to $100 in just a few weeks, a drop of 80%. It is foreseeable that this fork may still cause drastic fluctuations in the price of the original token.

Since it is candy, there are some smarter ways than just holding it and waiting for the exchange to fork it. The current mainstream way is to hedge BCH, buy one BCH and short one BCH at the same time. Then, no matter how the price fluctuates after the fork, the corresponding legal currency assets are almost equal in value, and the BCHA received is your profit.

Finally, let’s talk about the ABC community represented by BCHA. I think that although ABC lost this time, it indirectly proved that they have greater potential.

To put it bluntly, this fork is a competition between developers and miners, and the core is that the overtime subsidies (IPF) demanded by developers involve the interests of miners.

But who can endure this kind of unpaid overtime work all the time?

Many mainstream media believe that BCHA will be a failure this time. To put it more extremely, no one may use the BCHA chain after the fork.

However, I think that fairness is the spirit of blockchain. Even if it fails this time, there will be countless forks due to IPF in the future. The ABC community is still awesome!