Weekly Analyst Thoughts
On November 15th, Bitcoin Cash (BCH) will undergo a contentious hard fork where two competing parties will split from each other and go their separate ways. One party, Bitcoin ABC, believes in taking 8% of the coinbase reward—the mining reward for when a miner finds a new block—to fund developers and other blockchain projects. The other party consists of a group of five nodes (Bitcoin Unlimited, BCHN, etc.) who reject the Bitcoin ABC party’s proposal to take hard earned rewards away from miners and distribute them to developers. This party believes that the best way to fund developers is through voluntary funding mechanisms like Flipstarter, which has been extremely successful funding development teams, charity projects, and non-fungible tokens.
The upcoming Bitcoin Cash hard fork will not have replay protection, so users must be vigilant when splitting coins and claiming their fork. The lack of replay protection on cryptocurrency hard forks is problematic because if a transaction occurs on the Bitcoin Cash A chain, it is possible for the transaction to be replayed, or duplicated, on the Bitcoin Cash B chain due to how similar the blockchains are. Replay risk exposes users to the risk of double-counting transactions.
In summary, the November 15th Bitcoin Cash fork splits the chain into two functions: one to fund developers and other projects with an 8% distribution of the coinbase mining reward, and another where developer funding comes from Bitcoin Cash community members.
By Jacob Stelter