Bitcoin gambling is rapidly becoming an important part of the online gambling industry. Although Bitcoin’s price plummeting from $20,000 to around $4,000 might have some people think the end of the cryptocurrency is near, nothing fundamental has changed about Bitcoin’s technology.
For gambling, Bitcoin still offers lowers fees and much faster withdrawals than with fiat currency. You also don’t need to look out for exchange rates if you’re betting in foreign countries, and Bitcoin casinos are much more transparent than casinos not running on blockchain technology.
But Bitcoin isn’t the only ‘Bitcoin’ around. This article will discuss the so-called Bitcoin ‘hard forks’ that have occurred over the last two years. More specifically, we will talk about the Bitcoin (BTC) and Bitcoin Cash (BCH) hard fork, and the recent Bitcoin ABC and Bitcoin SV hard fork in the BCH community, as well as the impact of the two hard forks on Bitcoin gambling in general.
To understand why Bitcoin split in two, we must first understand the fundamentals of Bitcoin. The key concept of Bitcoin, and indeed of blockchain in general, is decentralization. Anyone with an Internet connection can get a copy of the ledger, which is a book of transactions that acts as a record of everything that’s ever happened.
In Bitcoin’s example, this is a huge file with all the transactions that have ever occurred on the Bitcoin network. Bitcoin’s ledger is easily accessible; you can download it right here (although I wouldn’t recommend it; it’s over 200 GB already).
To make everything a bit more manageable, every blockchain groups together a bunch of its transactions into blocks. Each block is secured with a cryptographic hash. For Bitcoin, ‘miners’ use their computing power to find the key for that hash and unlock the block. Once a miner unlocks a block, they send it to the overall Bitcoin network, where other miners verify the block by comparing it with their own results. If enough results match, that particular block becomes the first block in a long chain of approved blocks (hence the name blockchain). The miner who’s the first to unlock a new block receives 12.5 BTC as a reward.
This whole process is a race, and it should be. After all, we want transactions on the network to be verified as soon as possible. You wouldn’t want to pay for a loaf of bread with BTC and have to wait two hours before the transaction’s verified and you can leave the bakery.
Why Did Bitcoin Split?
Everything was fine with Bitcoin’s technology in its first few years. But it started gathering significant momentum. Its price increased by many orders of magnitude in a short period of time. The sudden increase in traffic meant that 1) transactions fees were going up and 2) it started taking longer for transactions to be verified.
A debate started in the Bitcoin community on how to solve the scaling problem. One part of the community believed the solution lied in increasing the size of each block. After all, each Bitcoin block could only be around 1 MB full of transactions. A block size of 8 MB could accommodate many more transactions, lower transaction fees, and alleviate the pressure on the network.
But the other part of the community wanted to look for an alternative solution first. They believed the increase in block size would make it more difficult for smaller players to mine new blocks, as it would impose serious strain on bandwidth and computing power. This would lead to a few powerful mining pools, with heavy funding and powerful equipment, to control the mining and verification process of Bitcoin, which goes against its key principle of decentralization.
Instead, this part of the community wanted off-chain solutions, such as Segregated Witness (Segwit) and the Lightning Network, to solve Bitcoin’s scalability problems. Segwit separates the signatures from the transactions, which would make room inside each block for more transactions to fit in. The Lightning Network adds a payment channel between two parties on an extra layer of Bitcoin’s blockchain, which will allow for near-instant transactions with very low fees.
The two different groups couldn’t resolve their differences, and it eventually led to a hard fork on the 1st of August 2017. The group that wanted to see a bigger block size ultimately became Bitcoin Cash and received the BCH ticker, while the other group held on to the Bitcoin name and the BTC ticker.
How Did Bitcoin Cash Fare?
Once the dust had settled, nearly all crypto exchanges offered both BTC and BCH. Bitcoin Cash quickly grew to become what’s today the fourth-largest cryptocurrency, with a market cap of $3 billion and a price of $184 at the time of writing, compared to BTC’s market cap of $73 billion and a price of $4,186.
Bitcoin Cash upped its block size to 8 MB and then upped it again to 32 MB in May 2018. Its transaction fees are only a fraction of Bitcoin’s transaction fees, although that might have more to do with the fact that there are far fewer transactions on Bitcoin Cash’s network compared to Bitcoin’s network.
Despite its total number of transactions, Bitcoin Cash can theoretically accommodate many more transactions through its network at a much lower fee. This comes in handy particularly when you’re dealing with micro-transactions or dealing with fast-paced transaction environments, which is why BCH could be a better solution for online gambling than BTC. As such, popular crypto gambling platforms such as BitStarz, Cloudbet, and 1xBit have started accepting BCH as an accepted currency.
A Second Hard Fork
However, just over a year after its anniversary, Bitcoin Cash saw itself divided. History might not repeat itself, but it certainly rhymes. The community was split between one group, spearheaded by Roger Ver and Jihan Wu (the co-founder of mining pool Bitmain), that believed BCH didn’t require further radical change and just needed steady improvements, and another other group, headed by Craig Wright (who has claimed to be Satoshi Nakamoto, Bitcoin’s inventor), who wanted to restore Nakamoto’s original vision by changing the structure of BCH and increasing BCH’s block size from 32 to 128 MB.
The first group is called BCH ABC (for ‘Adjustable Blocksize Cap’) and the second group BCH SV (for ‘Satoshi’s Vision’). The second hard fork took place on Nov 15 2018. Ever since then, BCH ABC has won the allegiance of nearly all major crypto exchanges, like Bittrex, Kraken, Coinbase, and Bitstamp. These exchanges adopted the BCH ABC protocol and gave it the BCH ticker. Similar for CoinMarketCap, where BCH ABC has become BCH. Popular crypto wallet Ledger also resumed their BCH services with the BCH ABC protocol.
However, this doesn’t mean BCH SV is dead. Popular crypto exchange Binance remains neutral and still offers both BCH ABC and BCH SV. Currently, BCH is ranked ninth on CoinMarketCap, with a price of $96 and a market cap of $1.68 billion. So the project yet lives.
Consequences of Another Hard Fork
Although hard forks are an important aspect of blockchain technology that underpins the power of the community, multiple hard forks make everyone’s life more difficult. For outsiders, it’s difficult to keep up with the many new tickers and which ticker means what. For developers, it’s a veritable problem, because forks aren’t backwards-compatible. So any app or decentralized game (DGame) they built on the initial chain won’t work on the new chains. And for investors, it adds an extra element of risk to their investment, because they don’t know which chain will survive and prosper.
Although BCH might have had advantages for gambling, because it could handle more transactions for a lower fee, this second hard fork splits the community even more and makes it even less likely that BCH will become the ultimate means of payment for online casinos.
Meanwhile, Bitcoin has implemented Segwit, which lowered transaction fees, and is in the process of implementing the Lightning Network. Its block size is still 1 MB, but its developer team isn’t dogmatically set on keeping it that way. It wanted to look at other solutions first, before upping the block size and possibly making the network less decentralized.
Additionally, it’s not always the best technology that wins out. Microsoft Windows wasn’t the best Operating System, but it gathered enough traction to reach a critical mass and become unstoppable. It’s a similar story for Bitcoin. Already, coins such as Stellar, Ripple, and Nano are generally accepted to have better technology than Bitcoin. But Bitcoin has first-mover advantage and reached a critical mass that makes it difficult to displace.
For people outside the crypto community, Bitcoin is almost synonymous for blockchain and cryptocurrency. It’s increasingly accepted as the currency of choice for online gambling, with Bitcoin casinos such as BetChain, mBit, and Bitstarz becoming popular gambling websites.
Meanwhile, Bitcoin Cash’s second hard fork has unfortunately fractured and weakened its community. There’s always a chance either BCH ABC or BCH SV might come back and become the currency of choice for gambling. But there’s only so much leeway gambling sites will give cryptocurrencies that keep splitting because of internal disagreements. So I wouldn’t bet on the continued success of either BCH ABC or BCH SV.