One year after launch, the Bitcoin (BTC) Segregated Witness (SegWit) upgrade has already seen impressive adoption, whereas Bitcoin Cash (BCH) appears to be gradually losing ground — according to a recent BitMEX report.
Barring the two periods of stress testing in August and September 2018, Bitcoin Cash (BCH) has gradually lost ground against SegWit in terms of numbers of transactions — decreasing from a maximum of around 10 percent of Bitcoin’s transaction volume in March 2018 to around 6 percent in October 2018.
Prior to the stress tests, SegWit transactions outnumbered BCH transactions by 20 to 1. Now, they’re currently standing at a total of just around 22 million SegWit transactions to 19 million Bitcoin Cash transactions.
SegWit adoption recently exceeded the 50 percent mark, briefly accounting for as much as 54.24 percent of all Bitcoin transactions on Oct 07, 2018, before falling back to just over 45% percent at the time of this writing.
The growth of SegWit activity has been gradual and relatively consistent since its activation in August 2017 — taking six months to reach 30 percent adoption.
According to the report, the absolute number of Bitcoin (BTC) and Bitcoin Cash (BCH) moved since SegWit’s implementation are remarkably similar, with 9.1 million individual bitcoins being moved, compared to 8.6 million individual Bitcoin Cash coins. This, however, should not be confused with total value moved, as each Bitcoin Cash is currently worth around $460, compared to around $6,600 for each Bitcoin.
These numbers could change drastically if an exchange opens that uses BCH as the base currency.
What are SegWit and Bitcoin Cash?
Both SegWit and Bitcoin Cash are solutions to the infamous Bitcoin scaling problem, but the way they go about this differs substantially.
Because the Bitcoin network has a maximum block size of 1MB, only a limited number of transactions can fit onto the next block and hence be confirmed. At this rate, the Bitcoin network was capable of handling around 7 transactions per second.
Segregated Witness (SegWit) is a soft fork introduced in August 2017 that changed the format of bitcoin transactions, allowing more transactions to fit within each 1MB block while also opening the door to further scaling solutions — such as the lightning network.
The limited throughput of the Bitcoin network saw it almost crippled in December 2017 when network load significantly spiked, causing the average transaction fee to spike as high as $55 due to transaction competition. The average Bitcoin transaction fee has drastically declined in tandem with SegWit adoption, to the point where it is currently a non-issue.
Unlike SegWit, Bitcoin Cash is the result of a hard fork. The altcoin split off from the main Bitcoin chain on August 01, 2017.
Bitcoin Cash attempts to address the Bitcoin scaling problem in a different way. Developers opted to increase the block size from 1MB up to 8MB, giving the Bitcoin Cash network much greater throughput than Bitcoin (BTC).
Rather than being agreed on by a majority consensus of Bitcoin’s mining network, Bitcoin Cash was instead created by a group of miners and Bitcoin developers that felt SegWit did not adequately address the scaling issue.
Given equal hash rate, it is expected that the BCH network is capable of handling 4x as many transactions as Bitcoin SegWit. Currently, the average BCH transaction fee sits at 15 cents, more than 2.5x lower than the average SegWit transaction.
What is your opinion on Bitcoin Cash and SegWit? Which one do you think is best prepared for scaling and second layer solutions? Let us know in the comments!
Images courtesy of Shutterstock, BitMEX Research, BitcoinFees.info.