On November 15, 2020, at 12:00 UTC, the Bitcoin Cash (BCH) network underwent a significant event: a chain split. This resulted in two distinct blockchains: Bitcoin Cash Node (BCH) and Bitcoin Cash ABC (BCH ABC). Such events, known as forks, occur when there are fundamental disagreements within a cryptocurrency community about the future direction of the network's rules.
This article provides a clear explanation of what happened, why it occurred, and what it meant for users holding Bitcoin Cash at the time. We will break down the key concepts and implications in simple terms.
What Is a Blockchain Fork?
A fork happens when a blockchain’s existing code is changed, resulting in a split into two separate paths. There are two primary types:
- Soft Fork: A backward-compatible upgrade where the new rules still work with the old ones. The chain does not split.
- Hard Fork: A permanent divergence from the previous version of the blockchain. Nodes that do not upgrade to the new rules will follow a separate chain, creating a new cryptocurrency.
The November 2020 Bitcoin Cash event was a hard fork. It was the result of the community being unable to reach a consensus on a proposed change to the network's monetary policy, specifically the introduction of a new coinbase rule that would divert 8% of the block reward to a development fund.
The Two Resulting Chains: BCH Node vs. BCH ABC
The disagreement led to the creation of two competing chains:
- Bitcoin Cash Node (BCH): This chain continued with the original rules without the controversial development fund. It was supported by a large portion of the community, including major exchanges and mining pools.
- Bitcoin Cash ABC (BCH ABC): This chain implemented the new rules, including the coinbase rule. It was led by the main development team at the time but saw significantly less community and miner support.
The market overwhelmingly favored the Bitcoin Cash Node chain, which inherited the BCH ticker and value. The BCH ABC chain struggled to gain traction and was largely considered unsuccessful.
Impact on Users and Exchange Operations
For users holding BCH on an exchange during a fork, the platform's policy dictates what happens. Most major exchanges, including Blockchain.com at the time, announced support for the chain with the greatest consensus—Bitcoin Cash Node (BCH).
This meant that for users who kept their BCH on the exchange:
- Their existing BCH balance automatically became coins on the dominant BCH chain.
- They typically would not receive any of the new forked coin (BCH ABC) if the exchange did not support it.
To protect users during the unstable period around the fork, exchanges like Blockchain.com implemented temporary safety measures:
- Halting deposits and withdrawals for BCH.
- Pausing trading for the BCH/USD and other BCH trading pairs.
- Increasing the number of network confirmations required for deposits after services resumed.
These measures were crucial to prevent transaction reversals and loss of funds due to chain reorganizations that are common during forks.
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Key Lessons from the Bitcoin Cash Fork
The 2020 split offers several important takeaways for cryptocurrency users:
- Not All Forks Create Valuable Assets: The market ultimately decides which chain holds value. While some forks (like Ethereum and Ethereum Classic) result in two valuable networks, many do not.
- The Importance of Self-Custody: If you want to claim forked coins from both chains, holding your coins in a private wallet where you control the private keys is essential. This gives you the freedom to transact on both chains independently.
- Exchange Support is Critical: An exchange's announcement regarding which chain it will support is vital. Your assets will follow the chain that the exchange supports.
- Always Do Your Own Research (DYOR): Understanding the reasons behind a fork helps you assess the potential risks and opportunities.
Frequently Asked Questions
What happened to the BCH ABC coin after the fork?
The BCH ABC chain failed to gain significant miner support or market value. It was later rebranded to eCash (XEC) with a new 1:1,000,000 redenomination plan, effectively creating a new project separate from the original Bitcoin Cash vision.
If I held BCH on an exchange during the fork, did I get free coins?
You received the value on the chain the exchange supported (BCH Node). Most exchanges, including Blockchain.com, did not support the BCH ABC chain, so users did not automatically receive those coins. To claim them, you would have needed to withdraw your BCH to a private wallet before the fork.
How can I stay safe during future network forks?
Keep your coins in a personal wallet where you control the private keys for any fork where you wish to potentially claim both assets. Always follow official announcements from your exchange to understand their support plans and any necessary actions you need to take.
Was this fork considered a success?
For the Bitcoin Cash Node community, yes. The original chain continued without the contentious change. For the Bitcoin Cash ABC team, the fork was not successful as their new chain was rejected by the vast majority of the ecosystem.
What is the main difference between a hard fork and an airdrop?
A hard fork is a permanent split in a blockchain's protocol, creating two separate chains. An airdrop is a distribution of free tokens or coins to specific wallet addresses, usually to promote a new project, and does not involve a change to an existing blockchain's rules.
Should I always expect a new coin during a fork?
Not every fork results in a valuable new coin. A new coin only gains value if it is mined, traded, and has a community that believes in its purpose. Many forked coins quickly become worthless.