Bitcoin Cash (BCH) has undergone several significant hard forks since its inception, each representing a pivotal moment in its development. These events often stem from disagreements within the community regarding technical upgrades, funding models, and fundamental visions for the cryptocurrency's future.
The Origins of BCH: From Bitcoin’s Scalability Debate
Bitcoin was initially designed as a peer-to-peer electronic cash system. However, as adoption grew, the 1MB block size limit led to network congestion, high transaction fees, and slow confirmation times. These limitations sparked intense debates within the Bitcoin community.
Some advocated for increasing the block size to enable more transactions per block (on-chain scaling). Others supported off-chain solutions like the Lightning Network and Segregated Witness (SegWit). Unable to reach consensus, a group of developers and miners initiated a hard fork in August 2017, creating Bitcoin Cash (BCH). BCH increased the block size to 8MB (later 32MB) and removed SegWit, aiming to become a fast, low-fee electronic cash system.
Major BCH Hard Forks and Their Causes
The BCH and BSV Split (November 2018)
One of the most significant splits occurred in November 2018, resulting in two chains: BCH ABC and Bitcoin SV (BSV). The conflict centered on BCH’s future development roadmap.
The BCH ABC development team, led by Bitcoin ABC, proposed upgrading the network to support more complex smart contracts by reactivating certain OP_Codes. This was seen as a way to expand BCH’s functionality beyond simple payments.
In opposition, Craig Wright (who claims to be Satoshi Nakamoto) and his project nChain argued that BCH should focus solely on scaling and stability. They advocated for increasing the block size to 128MB and “locking down” the protocol to prevent further changes. This fundamental disagreement led to a contentious hard fork, creating Bitcoin SV (Satoshi’s Vision).
Following the split, BSV continued its path of massive on-chain scaling, eventually increasing its block size limit to 2GB.
The 2020 IFP Controversy and BCHN Fork
In 2020, another major disagreement emerged, this time over funding. The Bitcoin ABC team proposed the Infrastructure Funding Plan (IFP). This plan would have directed 8% of the block reward to a fund supporting BCH development teams.
Proponents argued that sustainable, protocol-level funding was crucial for long-term development and security. However, many in the community strongly opposed the IFP, viewing it as a form of forced taxation that violated cryptocurrency’s decentralized and voluntary principles.
In response, a group of developers created a new implementation called Bitcoin Cash Node (BCHN), which removed the IFP code. As the November 2020 upgrade approached, a majority of miners and exchanges signaled support for BCHN. When the network forked, BCHN became the dominant chain, effectively inheriting the BCH ticker. The minority chain, which included the IFP, continued as Bitcoin Cash ABC (BCHA), later rebranding to eCash (XEC).
Key Differences: BTC, BCH, and BSV
The forks created three distinct cryptocurrencies with different philosophies.
- Bitcoin (BTC): Prioritizes decentralization and security above all else. It maintains a small 1MB block size (with a slight effective increase via SegWit) and relies on second-layer solutions like the Lightning Network for scaling. Its primary narrative has shifted to being a “digital gold” or store of value.
- Bitcoin Cash (BCH): Focuses on being peer-to-peer electronic cash. Its larger 32MB blocks allow for more transactions on-chain, aiming for low fees and fast confirmations. Its development continues to emphasize usability for everyday payments.
- Bitcoin SV (BSV): Aims to become a global enterprise-level data ledger. It has removed the block size limit entirely, promoting “unlimited scaling” on-chain. Its goal is to support large-scale data processing and applications, striving for regulatory compliance.
The Impact of Hard Forks on the Ecosystem
Hard forks have profound effects on users, miners, and the network’s security.
For Holders: Fork events often result in holders receiving new tokens on the forked chain(s) on a 1:1 basis. This can create unexpected windfalls. However, users must be cautious about replay attacks, where a transaction valid on one chain is broadcast and confirmed on another, potentially leading to loss of funds. It is generally advised to avoid moving funds during a fork event until protective measures are in place.
For Miners: Since BTC, BCH, and BSV all use the SHA-256 algorithm, miners can easily switch their hashing power between networks. They typically mine the coin that is most profitable at any given time. A fork can split the hashrate of the original chain, temporarily making both new chains more vulnerable to a 51% attack until their difficulty adjusts.
For the Market: Forks often create significant short-term price volatility due to uncertainty. The long-term value of the new chains depends on market perception, community support, and their subsequent utility. To track the health of these networks post-fork, analysts monitor metrics like hashrate, transaction volume, and developer activity 👉 explore more network strategies.
Frequently Asked Questions
What is a cryptocurrency hard fork?
A hard fork is a radical change to a blockchain's protocol that makes previously invalid blocks and transactions valid, or vice-versa. It requires all nodes or users to upgrade to the latest version of the protocol software. If a group of users refuses to upgrade, it results in a permanent split, creating two separate blockchains.
Why does Bitcoin Cash fork so often?
BCH schedules protocol upgrades every six months to introduce new features and improvements. Most of these are non-contentious and are adopted by the entire network. However, when the community cannot agree on a proposed change—as with the block size or IFP—it leads to a contentious hard fork and a chain split.
How do I claim forked coins?
If you hold BCH in a self-custody wallet where you control the private keys at the time of the snapshot block height, you will have an equal balance on both chains. You would then use a wallet that supports the new forked coin to access it, often by importing your private key. Never share your private keys with anyone. If your coins are on an exchange during a fork, the exchange will typically handle the distribution automatically based on their announced policy.
What happens to the price of BCH after a fork?
Price action is unpredictable. Sometimes, the combined value of the two new assets exceeds the pre-fork value of BCH, benefiting holders. Other times, market uncertainty and selling pressure can lead to a decrease in price. The long-term price is determined by the utility and adoption each chain achieves.
Are hard forks good or bad for Bitcoin Cash?
There are two perspectives. Hard forks can be seen as a healthy expression of decentralized governance, allowing different groups to pursue their vision without being forced into a compromise. Conversely, they can fragment the community, dilute developer talent, and create confusion in the market, potentially hindering widespread adoption.
What is the main challenge facing BCH development today?
A primary ongoing challenge is securing sustainable, decentralized funding for development teams without relying on mandatory miner donations or venture capital, which can lead to centralization of influence. Finding a community-accepted solution for funding core infrastructure remains a key topic of discussion.