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Bitcoin SV Genesis Hard Fork 2020: What's New?

Author: Martin Moni
Martin Moni
All publications of the author

Perhaps the most expected news of the year in crypto is the halving of mining rewards for Bitcoin. However, that is a few weeks away, but you may want to think about the hard fork coming to Bitcoin SV on February 4, 2020. This coin is the 5th largest in the world by market cap according to CoinMarketCap, so it is definitely worth looking at closely. For such a significant coin, you may want to know everything about the coin so as to understand what the hard fork is all about and how it may affect you.

What is Bitcoin SV (BSV)?

The story of Bitcoin SV is an interesting one with all the makings of a good thriller dating back to 2018. To get there, though, we must address Bitcoin Cash (BCH) from which BSV is borne. 

Starting from the bottom

They say be careful what you wish for, and BTC suffered the consequences. For years BTC had been a novelty to be used by enthusiasts and other parties – criminals and money launderers. Satoshi Nakamoto intended to make BTC a global currency, and their wish was granted when the coin became the hottest topic around the world. As more people became aware of cryptocurrency, demand for BTC increased and this started to cause problems. The BTC web was no longer able to handle all the transactions and this reached a crescendo around July 2017. Transactions within the web would take hours and sometimes even days to get confirmed while also costing a lot. Something had to be done, and some developers came up with SegWit2x. (Do you know: What Will Be The Impact Of A BTC Fork?)

This proposal would increase the block size from 1MB to 2MB and allow more transactions to be confirmed within a minute. Transactions would be faster through the use of sidechains where some information is stored outside and only later incorporated into the ledger. You would think that such a solution would be embraced by everyone, but the nerds had to argue about nonsense. The other proposal was BTC Unlimited where the block size would be scrapped off altogether. This one would never come to happen, although SegWit2x was later implemented into the web.

One faction of developers thought a doubling of block size was not enough and they wanted to raise it to 8MB. There were some more changes too, but the main one was the increase in block size. In order for SegWit2x to take place, it required majority support among developers, but without this support, a new coin simply sprang up. What happened was that some developers within the web started to confirm transactions using a different protocol than the original BTC protocol. When this happens within the ledger, it essentially creates 2 separate ledgers because they now operate differently. (Have you ever wondered: How Did Tether Cryptocurrency Survive The Crypto Market Selloff?)

This new ledger created BTC Cash (BCH) after BTC’s ledger was transferred to the BCH web. After this fork, everyone who owned BTC suddenly had an equal amount of BCH because the entire ledger was copied onto the new web. From the start, BCH enjoyed a lot of support because it was almost immediately accepted by many major crypto exchanges and wallets. Its price also reflected the interest investors had in it, and it has remained among the top 10 coins ever since it was ‘born’ on the 1st of August, 2017. (BCH Vs. BTC: Confrontation Forecast in 2018)

And then there were five…

As if that was not enough, yet another dispute arose among the BTC community, this time the problem was the centralized nature BTC was taking. It was true that a few BTC miners were responsible for a majority of the mining across the web, and some believed this went against the vision Satoshi Nakamoto had for the coin. Using ASICs, a few companies had set up mining factories that effectively edged out the lowly individual and their personal mining rig. Some developers wanted to make BTC truly decentralized, and they came up with a different protocol called Equihash.

This protocol prevents the use of ASICS, thus allowing anyone to mine BTC. The only problem is that they could not summon the necessary majority to implement a platform-wide soft fork, forcing a hard fork into BTC Gold (BTG). Alas, these developers were beaten by the very system they were trying to overthrow (sound familiar, GOT fans?). Because BTC was dominated by only a few players who did most of the mining, it was nearly impossible to push new protocols, however beneficial, if they meant the demise of these big fish. (These are the: 10 Most Important Resources to a Cryptocurrency Trader)

Just like BCH, BTG was also widely accepted by exchanges and wallets, but it never reached the elite status of BCH. This was probably because it was not backed by any major developer in the crypto-sphere, and the coin has been swimming in double-digit waters ever since its launch on the 25th of October, 2017. (Learn more about the: New Rules and Crypto Regulations in Germany As Of 2020)

That still wasn’t the last fork, because BTC Diamond (BCD) followed a month later on the 25th of November. This new coin was an idea by Team Evey and Team 007 who are BTC miners. Their idea was pretty similar to that of BCH because they too increased the block size from 1MB to 8MB so as to speed up transaction processing. The most significant difference was to increase the total supply of BCD 10 times from 21 to 210 million. Performance of BTC Diamond was even worse than BTG, and now the coin is number 35 among the top coins according to CoinMarketCap. (Some of the: Cryptocurrency Regulations Around the World)

Then there was BTC Private (BTCP) launched on the 2nd of March, 2018. The story of BTC Private is different, though, because it is not simply a hard fork from BTC, but a fork merge. A fork merge is done simply by taking a snapshot of BTC and Zclassic addresses and then merging them into a single ledger – BTCP. After the fork merge, there were 20.4 million tokens of BTCP out of a total of 21 million, leaving only about 600,000 available for mining. Needless to say, many miners did not jump on the BTCP wagon and the coin is now 75th among other coins by market capitalization.

And then, Bitcoin SV

Except for BCH and, to some extent, BTG, none of the other forks had any significant impact on the price of BTC until BSV, and here is where the story becomes complicated and hilarious. Each year, BCH schedules two forks in order to implement upgrades to the web. The first upgrade was in May 2018, where the block size was increased from 8MB to 32MB for the web to accommodate even more transactions. The next scheduled fork was meant for the 15th of November, but it didn’t happen. The reason was that there was a conflict among developers about the direction BCH should take. (What Would Happen To BTC Price When It Is All Mined?)

The main group of developers within the BCH web is led by Roger Ver who was the driving force behind the fork of BCH from BTC. His claims that BCH is the ‘real BTC’ have given him the nickname BTC Judas. This group of developers holds the majority of miners’ votes, and they believe that the web does not need any radical changes since its current state is ‘sound’. They do, however, plan to implement numerous changes in future, although conservatively, to include features like smart contracts. This group’s main rival is BSV created in August 2018 with the aim of making radical changes to the BCH web. They do not have the majority of miners’ support, but the group’s leader, Craig Wright, has declared himself to be the real Satoshi Nakamoto, earning him the nickname Faketoshi.

This group of developers wanted to raise the block size from 32MB to 128MB during the November 15th fork, but they lacked support leading to the hard fork. Finally, is a neutral group of developers with a substantial amount of support from miners labelled BTC Unlimited. They did not have any proposals for the last fork but wanted the two warring groups to compromise. You can guess how that turned out. Because of a lack of consensus, a hard fork took place within the BCH web leading to the formation of BCH SV, later simply renamed BSV standing for BTC Satoshi Version. (Crypto Brokers: Evolution of Forex Brokers in 2020)

How have hard forks affected Bitcoin SV price before?

In November 2018, coin markets lost about 45% of the total market capitalization from a high of around $220 billion to a low of $120 billion. Toward the end of the month, though, there were some gains and market cap closed above $130 billion. Nevertheless, this is a far cry from the 8th January 2018 levels above $828 billion, almost close to a trillion. Most of this decrease, at least in November, can be attributed to the fallout following the hard fork of BSV from BCH. (Ethereum 2.0 Launch 2020: What’s new?)

As it happened

Prior to the fork, BTC had been rising in value because the SegWit2x fork had been suspended. This assured certainty in BTC, unlike BCH where developers had not agreed on a way forward and a hard fork seemed inevitable. Investors were, therefore, stocking up on BTC over BCH, causing the former to rise in value while the latter decreased. Eventually, the hard fork occurred in the BCH camp, and that caused trouble throughout the coin arena. (These are the: 5 Most Popular Uses of BTC and other Coins)

Unlike other hard forks where the groups quietly went their separate ways, these ones decided to go to war, metaphorically speaking. The war also forced exchanges to halt trading until the dust settled and a clear winner emerged, and thus commenced the hash wars. To prove which coin was winning, the developers had to show they possessed the mining power necessary and could create more blocks faster than the other. Each of the sides had to prove to the exchanges and users that they were better than the other to earn the top spot. On the side of BSV, Craig Wright was supported by companies such as CoinGeek, BTC.org and CalvinAyre. Backing BCH are Coinbase, Bitmain, Binance and BTC.com. (You should learn these: 5 Tips to Choosing the Ideal Cryptocurrency Exchange?)

Leaders from both sides took to Twitter to voice their views, leading to quotes like “continuous competition until one dies” by Craig Wright. The mining pools they own also shifted from mining BTC toward their respected forked version. At the peak of the hash war, hash rates for BCH had risen to 15.43% up from 9.54%, similar to that of BSV. However, BCH beat BSV in proof-of-work by about 50% meaning that the former had won the hash war. Following their success, BCH was awarded the BCH ticker by crypto exchanges and the other BSV. Meanwhile, hash rates for BTC had fallen from 90.46% to 84.57%, indicating that indeed the miners had shifted their resources away from BTC.

The crypto selloff

The result was clear because the value of BTC fell as soon as the hash wars began, but so did the rest of the crypto markets. The entire crypto market experienced a 45% drop in market capitalization from $220 billion to $120 billion. This indicated a massive selloff in coins across the industry by investors. It was also fuelled by the warring parties in both BCH camps who had to sell BTC and other coins to get money for renting hashing power from miners. These people hold a lot of coins, and when they started to sell, it caused crypto markets to fall. (Avoid being a victim: Learn How Crypto Scams Operate And Avoid Them)

Inasmuch as the war was meant for the nerds who understood the actual technology, they made their grievances public and attracted a lot of media attention. Investors do not like uncertainty, and therefore they simply dumped their coin holdings. This technology that was once considered to be revolutionary could now be viewed as a passing fad implemented by some nerds with computers. The main story has shifted from the actual technology to a war of egos and personalities, and investors have been torn between the main characters.

The debacle displayed a lack of consensus among crypto developers and also a lack of leadership, both important aspects that investors consider in an asset. In fact, management and leadership is among the three factors that Warren Buffet advised people to consider before making any investment. This is why some experts like Dary Merckens, CTO of Gunner Technology, told Finance Magnates that no one wants a group of ‘hard-headed nerds’ managing a currency. (These are: The Most Prominent Crypto Hacks and Scams You Should Know)

In came the conspiracy theories, or were they?

There were some who believed that the entire BCH debacle was simply all a conspiracy by some conniving investors. As the theory goes, there was a group of miners and investors based in China who hold a large portion of BCH tokens. They initially got these tokens the moment the hard fork occurred in 2017 and their value was low, so they simply accumulated a lot of them by buying them off the market. By creating demand, they were able to increase the value of BCH and consequently, their wealth. Following the suspension of SegWit2x on BTC, they spammed BTC to make transactions slower and to make BCH seem more favourable. Given BTC’s scaling problem, it is as easy as sending multiple small transactions across the web to slow down the platform. (Do you know: Which Are The Most Influential Cryptocurrency Markets By Country?)

As a result, the more investors bought BCH and dumped BTC, the higher their wealth grew since they held a majority of the tokens. Apparently, that wasn’t enough, so they dumped a lot of the tokens in the market, causing prices to drop and investors to panic also dumping their few tokens. Then while prices were low, they once again bought up the tokens at low market prices to accumulate an even bigger proportion of the BCH tokens.

Proponents of this theory point to the timely increase in BTC’s transaction costs following a spam attack and the rapid crash of BCH prices almost overnight. While the theory may be a conspiracy, that does not rule out the possibility of market manipulation by the whales in the industry.

So, what’s new this time?

Once again, Bitcoin SV is receiving a lot of increased attention in the crypto-sphere over the past month. It has also been one of the best-performing coins since the start of 2020, and most of this spike can be attributed to the upcoming hard fork labelled Genesis. Before getting there, we should look at how BSV has performed in the markets since it was launched. (Find out more about: OmiseGo (OMG) Coin and Price Prediction for 2020)

The historical price performance of BSV

Through the selloff in November 2018, BTC still remained the top coin by market capitalization. On CoinMarkeCap, BTC was worth about $6,365 on the 14th of November before dropping down to $3,740 by the 27th of November. The 40% drop was caused by the allocation of hash power toward BCH over BTC by major mining companies. Prior to this, the value of BTC had more or less remained consistent and now it is slowly edging its way back up.

BCH, on the other hand, suffered an even greater loss in value. In anticipation of the fork in the web, people bought more BCH tokens hoping to be rewarded with BSV, which is what happened. This is why BCH grew from $425 at the start of November to $630 by the 7th of November. However, the war between BSC and BCH seemed like it would cause mutually assured destruction, and investors quickly dumped the coin. It would eventually go below $170 by the 25th of November, wiping off over 70% in value and market cap. BCH would also lose its number 3 spot and be relegated to number 5. (These are the: Stellar Lumens (XLM) Price Predictions and Forecast for 2019)

BSV was also not a complete failure, because it has been among the top 10 coins by market capitalization. After the fork occurred, BCH holders all received an equal amount of BSV valued at around $175, but a lot of it was sold off leading to a drop of over 50% to $80. Prices later tapered off and stabilized around $90. As for the other BTC forks, they had not been very successful and still remained under the radar. You could still invest in them, though, since they followed, and still do, the general pattern in the crypto markets.

Since then, the value of BSV remained somewhat stable although it did decline. So much so that it even weathered a barrage of delisting from major crypto exchanges. These moves started on April 22, 2019, when Changpeng Zhao, CEO of Binance, threatened to delist BSV from his exchange if Craig Wright would not stop attacking users on Twitter who denied his identity as Satoshi Nakamoto. Instead, Wright went as far as taking legal action against his opponents, and CZ finally delisted BSV. Other major exchanges including ShapeShift and Kraken also did the same. When Craig Wright registered copyright claims to the Bitcoin whitepaper on May 21, 2019, the value of BSV jumped 200%. (To The Moon: Most Promising Asian Crypto Companies 2020)

The most notable growth spurt, however, came in January this year when prices rose from about $95 to a peak of $458 before settling at around $300, a gain of over 200% in a month. Some experts believe this is due to the Genesis update expected in February while others disagree. For one, Craig Wright himself admitted in an interview with Block TV that he knew who had caused the surge in price. Apparently, he knows the entity(ies) that bought massive amounts of BSV to cause the pump. If so, then this would mean the growth in BSV prices is not organic but it is, in fact, being manipulated. (Check out: UNUS SED LEO Price Prediction 2020)

Besides, there is also the belief that investors bought lots of BSV on the hope that there would be a huge dump of BTC by Craig Wright. Wright claimed to have access to the ‘Tulip Trust’ that held a lot of Bitcoin that he and his deceased partner Dave Kleiman had mined. When it became clear that Wright did not have access to the trust, a massive correction occurred around January 16, 2020. Today, prices have once again stabilized at around $260 as investors wait for the hard fork. (If you’ve heard of it, this is: How Libra Coin Will Change the World's Financial System)

What is involved in the Genesis hard fork?

According to an announcement by nChain, the company behind BSV, the upcoming change is more of a restoration than an upgrade - hence the term ‘Genesis’. The company’s CEOJimmy Nguyen likened the fork to the internet, where everyone can access information on a single public web. Genesis wants to bring all transactions, data and activity on-chain. The changes include:

  • removing a hard cap on block sizes - miners will from now on be able to adjust block sizes to accommodate activity on the network and adjust to the needs of users

  • restore changes made by Bitcoin developers and remove artificial limits - this is still quite contentious since there is no agreement on which changes were detrimental and which ones advantageous

  • stabilize protocols - return BSV to its original status according to Satoshi Nakamoto’s vision where transactions will always remain valid for years

How does this affect you?

Ultimately, the main question on your minds has to be, what to do with all this information. The truth is that Bitcoin Cash SV is a highly suspicious coin that, despite a huge market capitalization, is still shunned by major crypto exchanges like Binance. In January, its value rose sharply, but mainly due to a pump by parties Craig Wright confesses to knowing. This is very questionable for a coin since the main point is keeping coins free from manipulation by any party. (Find out: What is Huobi Coin and its Price Prediction for 2020?)

That being said, there is still a lot of potential in the coin as traders can benefit from the rapid price changes. Besides, other coins have also faced a lot of criticism but still thrive such as Tether (USDT). You may also want to consider that nChain has received patents on the underlying code of blockchain, and this places the company in a good position for negotiating with companies and central banks. Craig Wright also claims that they may also enforce those patents against companies such as Facebook when they decide to create a form of virtual currency. (Interested in learning more about USDT: How Did Tether Cryptocurrency Survive The Crypto Market)

 

The best way to learn about a coin is to hear from the experts. To this end, watch the following video to learn more about BSV and its future:

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Risk Warning: Your capital is at risk. Statistically, only 11-25% of traders gain profit when trading Forex and CFDs. The remaining 74-89% of customers lose their investment. Invest in capital that is willing to expose such risks.
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