I am new to crypto-currency. I bought a bit of bitcoin the other day on coinbase. Then I moved it to another crypto exchange which cost me ~ 10% of the total value of the bitcoin. IMHO, this is useless. I changed my BTC to bitcoin cash because of this. I have moved it around couple of times and the fee was only 0.001 BCH, which was really good. I read a bit about the difference between BTC and BCH and I could not find any justification for using BTC. Could someone explain to me the drawbacks of BCH? Maybe I can't find the right sources to educate myself.
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2Jameson Lopp does a good job outlining why most of the community rejected increasing block sizes here: medium.com/@lopp/…– Eric AllamCommented Nov 14, 2017 at 16:04
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2 Answers
Yes, the costs of using BTC are getting excessive. So much so that it is no longer practical to keep sending small amounts (< $5).
But this is a result of bitcoin being so popular and its value having risen so much in the last months. Also there's a lot of SPAM transactions going on, probably by miners in order to push everybody else to pay higher fees for their own profit.
But even then most technical users recognize that the solution taken by BCH is not the right one. Why? well because it is just a "kick the can" solution. It fixes things temporarily and it provides BCH users with a great experience (just like bitcoin had a few years ago) basically because no one is using it.
But that extra capacity doesn't come for free. If bitcoin did this, ALL nodes in the network would have their disk usage rate increased by a factor of 8, forever. The cost of that is that in the not so distant future almost nobody would be able to run a full node anymore and thus the number of nodes would decrease, leaving the network less and less decentralized. Remember that the whole value proposition of bitcoin rests on the fact that the network is decentralized enough to be resilient to attacks both from the outside as from the inside. So if we just allow the costs of running a node to increase 8 times faster, we'll probably end up with a network composed of nodes controlled by a cartel of powerful companies. This is a very dangerous scenario for bitcoin. Since it simplifies the work of governments that might want to control or censor it.
Instead of that, the bitcoin core team of developers actually just adopted another more carefully planned increase strategy that will eventually be equivalent to something close to 4x. This was already a compromise solution and one that actually opens the door to new off-chain scaling technologies.
Off-chain scaling can increase the system's capacity by orders of magnitude, not just simple 2, 4 or 8x. If you want to know more about it just google "lightning network". Beware however that it is a complex topic. Maybe that's the reason most people just dismiss it and tend to go to the simple kick-the-can solution like increasing the base block size.
Basically from my point of view Bitcoin Cash is an amateurish solution to a very complex problem. If adopted, their network will just keep on centralizing more and more (Some believe it is already very centralized). And if it actually gets a lot of traction it will inevitably face the same problem bitcoin is facing in a couple of years. The irony is that they'll be just fine if they fail to gain adoption, since they will remain much more usable than bitcoin.
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"ALL nodes in the network would have their disk usage rate increased by a factor of 8, forever"... You're ignoring the fact that most nodes can choose to prune old transactions. It's only ones that want a comprehensive long term history that need to keep the whole chain. Commented Nov 16, 2017 at 0:34
The fork happened because the main community of BTC didn't want 8MB block sizes so they ended up forking to BCH.
I agree the BTC transaction fees are insane so we may start to see a shift to BCH.
One scenario is if the BTC community decides to fork to make transaction fees smaller, in turn killing BCH, because now mainstream BTC's transaction fees are cheap again.
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How do you define "main community"? My understanding (limited as it is) is that the core developers are trying to balance the needs of the miners with the needs of the users, and the big miners in China are putting a lot of pressure on them to keep the blocksize low due to Chinese bandwidth limitations. I suppose it may also be the case that miners want limits on transactions because they know they'll get more fees. Commented Nov 16, 2017 at 0:37
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Main community imo means miners (mostly mining pools now days which isn't what satoshi was going for in the beginning) and the devs. If a big mining pool lets say switched to BCH it would most likely crash BTC price because transactions would then get stuck until the difficulty could adjust. Commented Nov 16, 2017 at 4:43
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I would consider users (and even, dare I say it, investors) part of the community too. Excluding key parts of the community from your definition doesn't seem right to me. I suggest rewording it to be more specific. Commented Nov 16, 2017 at 18:13
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Users to an extent. On a supply and demand currency I would say investors who flood the market with $1,000,000 worth of capital make a bigger dent then someone buying $100 in bitcoin like my girlfriend did. It would be interesting to see the breakdown of average bitcoin owned that was bought in the last year. Commented Nov 16, 2017 at 20:37
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1True, though low-spend-value users who actually spend their bitcoins at businesses drives adoption in a different way, without necessarily just bumping up the market price. The high transaction fees and slow confirmations are slowing down that kind of adoption at the moment. Commented Nov 16, 2017 at 20:41