Introduction
Bitcoin Cash (BCH) and Bitcoin SV (BSV) emerged from hard forks of Bitcoin (BTC), each aiming to fulfill Bitcoin's original vision as a peer-to-peer electronic cash system. While both promised lower fees and larger blocks to facilitate everyday transactions, their journey has been markedly different from Bitcoin's. This analysis explores the current state of BCH and BSV, examining their utility as mediums of exchange, block size utilization, and network security compared to BTC.
The Forking History
Bitcoin Cash (BCH)
BCH originated in August 2017 from a contentious hard fork of Bitcoin. Proponents argued that BTC was evolving into a store of value rather than a medium of exchange, contrary to Satoshi Nakamoto's original vision. To address this, BCH increased the block size from 1 MB to 8 MB, later expanding to 32 MB, aiming to accommodate more transactions per block and reduce fees.
Bitcoin SV (BSV)
In November 2018, BSV forked from BCH, further escalating the block size to 128 MB (and recently to 2 GB). BSV also removed limits on OP_RETURN transactions, enabling more data storage on-chain. It omitted the OP_CHECKDATASIG opcode adopted by BCH, focusing instead on becoming a global payment system with better user experience and lower merchant costs.
Medium of Exchange Analysis
Transaction Fees
Low fees are critical for a token aiming to be a medium of exchange. Both BSV and BCH have maintained median transaction fees near zero for most of 2019, while BTC's fees fluctuated between $1 and $3. However, low fees pose long-term security risks as miners rely on fees once block rewards diminish.
- BTC: Fees often exceed $1 million daily.
- BCH/BSV: Fees remain below $1,000 daily.
Transaction Counts
BTC dominates in total transaction counts, though BCH and BSV have seen periods of high activity. However, most BCH and BSV transactions involve data storage via OP_RETURN outputs rather than value transfer.
- BSV: Over 94% of transactions are OP_RETURN-based, primarily from weather data applications like WeatherSV.
- BCH: Approximately 67% of transactions use OP_RETURN.
- BTC: Only 25% of transactions involve OP_RETURN, mostly from Omni and Veriblock.
Adjusted Transfer Value
This metric estimates the total value of economic activity by excluding self-transfers and spam. BTC leads significantly:
- BTC: Peak daily adjusted transfer value reached $3.58 billion.
- BCH: Peaked at $325.5 million.
- BSV: Peaked at $144.2 million.
BTC consistently holds over 85% of the market share in adjusted transfer value among the three assets.
Median Transfer Value
BTC's median transfer value ranges between $50 and $100, while BCH and BSV typically range from $1 to $10. This suggests BTC is used for higher-value transactions, whereas BCH and BSV may cater to micro-transactions.
Active Addresses
Active addresses approximate unique users. BTC averages 600,000–1,000,000 daily active addresses, while BCH and BSV rarely exceed 100,000 and 50,000, respectively.
Address Balance Distribution
As of July 1, 2019:
- BTC: Nearly 20 million addresses held over $1.
- BCH: 5.5 million addresses held over $1.
- BSV: 4.19 million addresses held over $1.
Block Size Utilization
Total Block Size
Despite larger block size limits, BTC consistently leads in total daily block size (in bytes). BSV's block size surges are largely due to OP_RETURN data storage.
Average Block Size
BTC maintains an average block size of around 1 MB, while BCH and BSV often remain below this value. BSV occasionally produces full blocks, but these have led to orphaned blocks due to slower propagation times.
Average Transaction Size
BSV transactions are larger on average due to embedded data in OP_RETURN outputs, increasing their byte size compared to BTC and BCH.
Security and Mining
Hash Rate
Hash rate measures network security. BTC dominates with over 95% of the combined hash rate of BTC, BCH, and BSV:
- BTC: Peak hash rate of 74.55M TH/s.
- BCH: Peak hash rate of 2.7M TH/s.
- BSV: Peak hash rate of 1.49M TH/s.
Mining Revenue
Mining revenue (block rewards + fees) incentivizes miners. BTC's daily revenue is magnitudes higher than BCH and BSV combined. With block rewards halving periodically, low fee revenue poses a significant risk to BCH and BSV's long-term security.
Blockchain Rewrite Time
In a theoretical attack, BTC miners could rewrite 10 days of BSV's history in ~3 hours and BCH's in ~7 hours. BCH has implemented deep reorganization protection to mitigate this risk.
Frequently Asked Questions
Q: What was the main goal of BCH and BSV?
A: Both aimed to become peer-to-peer electronic cash systems by increasing block sizes to reduce transaction fees and support more transactions per block.
Q: Why are BCH and BSV transactions cheaper than BTC?
A: Their larger block sizes allow more transactions per block, reducing competition for block space and keeping fees low.
Q: How are BCH and BSV being used currently?
A: They are increasingly used for data storage via OP_RETURN transactions rather than as mediums of exchange. For example, BSV's WeatherSV application records climate data on-chain.
Q: Is BTC more secure than BCH and BSV?
A: Yes, BTC has a significantly higher hash rate and mining revenue, making it more resistant to attacks.
Q: Can BCH and BSV overtake BTC in adoption?
A: Currently, they handle only a fraction of BTC's economic activity. Their future depends on whether they can expand beyond data storage to become widely used payment networks.
Q: What are the risks of low transaction fees for BCH and BSV?
A: Low fees may discourage miners once block rewards diminish, potentially compromising network security.
Conclusion
BCH and BSV have not achieved their goal of becoming dominant mediums of exchange. While they offer low fees, their usage remains a fraction of BTC's when measured by adjusted transfer value, active addresses, and economic activity. Both are increasingly used for on-chain data storage, with BSV in particular seeing over 94% of its transactions dedicated to OP_RETURN outputs.
Despite larger block sizes, BCH and BSV have not consistently utilized this extra capacity, often producing smaller average blocks than BTC. Security metrics also favor BTC, which commands over 95% of the combined hash rate and significantly higher mining revenue.
For those interested in exploring real-time data and advanced blockchain metrics, check out detailed analytics here. The future of BCH and BSV depends on their ability to carve out niches beyond data storage and attract sustained economic activity.