Bitcoin Cash vs. Bitcoin

In 2010, Satoshi Nakamoto added a 1 MB block size limit to Bitcoin. At the time, blocks were mostly empty, and the limit was largely a defensive measure designed to protect a young network from abuse.

But Bitcoin was growing.

By 2013, transaction volume had increased enough for developers to begin asking an uncomfortable question: what happens when Bitcoin actually reaches the limit? For the moment, it was a problem for the future. Within a few years, that future arrived.

By 2016, congestion was no longer theoretical. Blocks were filling up, fees were rising, and the community faced a fundamental question: how should Bitcoin scale?

The answer divided the ecosystem.

Many of the largest mining pools, which collectively controlled most of Bitcoin's hash rate, favored the simplest solution: make the blocks bigger. From their perspective, larger blocks meant more transactions could be processed directly on the blockchain, preserving throughput and the fee revenue that came with it.

They were also deeply skeptical of Segregated Witness (SegWit), which proposed increasing effective transaction capacity through a soft fork rather than simply raising the block size limit. Some miners considered SegWit's implementation unnecessarily complex and objected to changes that they believed would reduce their influence over the protocol. There was also a more technical source of opposition: SegWit threatened to undermine covert ASICBoost, a patented mining optimization that some miners considered commercially valuable.

The disagreement was becoming dangerous. Bitcoin had no central authority capable of settling the dispute, so the major stakeholders tried to negotiate one.

In February 2016, miners, businesses, and developers gathered at the Hong Kong Roundtable. The resulting agreement attempted to bridge the divide: activate SegWit as a soft fork while simultaneously preparing a hard fork that would increase the non-witness block capacity to roughly 2 MB, with a maximum block size of 4 MB.

For a moment, compromise seemed possible.

Then Bitcoin entered one of the most explosive growth periods in its history.

In 2017, a powerful bull market brought an influx of users and transactions. Congestion intensified, and fees surged, eventually reaching an average of nearly $55 at the peak. The scaling debate was no longer about a problem that might eventually appear. It was happening in real time, and the Hong Kong agreement began to unravel.

What had started as an engineering debate was becoming a struggle over something much bigger: what Bitcoin should become, and who had the authority to decide.

In May 2017, major mining pools and businesses attempted another compromise through the New York Agreement, better known as SegWit2x. The proposal tied SegWit activation to a commitment to follow it with a 2 MB hard fork.

But this time, another group entered the fight: users and node operators.

Rather than negotiating with the miners, the grassroots User Activated Soft Fork (UASF) movement proposed enforcing SegWit directly from the economic side of the network. Under BIP 148, nodes would begin rejecting blocks that did not signal support for SegWit starting August 1.

This created a very different kind of threat for miners. They could continue mining blocks that rejected SegWit, but if the economically significant portion of the network refused to accept those blocks, the rewards from that mining could become worthless.

The balance of power was shifting.

As the August 1 deadline approached, major mining pools began signaling for SegWit through BIP 91, effectively clearing the way for its activation. The immediate threat of a UASF-driven split receded, and SegWit was ultimately locked in on the main chain.

For the big-block camp, however, the larger question remained unresolved. The promised 2 MB hard fork from SegWit2x was increasingly unlikely to happen, while the path toward scaling Bitcoin through larger base-layer blocks had lost the battle on the main chain.

The disagreement did not disappear. It became a fork.

On August 1, 2017, Bitcoin Cash split from Bitcoin, preserving the big-block approach and rejecting SegWit. On August 24, SegWit activated on the other chain.

The block size debate had finally produced its answer, not through a vote or a central authority, but by creating two competing networks.

1. Fulfilling the "Electronic Cash" Vision

To the big-block camp, Satoshi's 1 MB limit, added in 2010 to guard against abuse, was always meant to be temporary, never a permanent ceiling. Their argument was that increasing block capacity would preserve Bitcoin as a globally accessible medium of exchange, keeping on-chain transactions affordable for everyday commerce, micro-payments, and users in developing economies.

2. Avoiding the Friction and Centralization of Layer 2s

Proponents argued that moving transactions off-chain introduced additional complexity and could push liquidity and payment routing toward large, centralized hubs. Scaling the base layer instead would allow users to transact directly on Bitcoin without relying on additional infrastructure, custodians, or intermediaries.

3. Simplicity and Direct Scaling

From their perspective, increasing the block size was the most direct solution: change the capacity limit through a hard fork and let the blockchain process more transactions. They viewed alternatives such as SegWit and Layer 2 systems as increasingly complex solutions built around preserving the 1 MB constraint. To the big-block camp, a straightforward increase in capacity was a cleaner and more transparent way to scale the network.

On August 1, 2017, Bitcoin's shared history split in two.

At block 478,558, a user-activated hard fork created Bitcoin Cash (BCH). It was the last block shared by both chains. From there, BCH accepted blocks larger than Bitcoin's 1 MB limit, initially allowing up to 8 MB, while the other chain continued under the existing rules.

BCH kept SHA-256 proof-of-work, so the same mining hardware could secure either chain. It also added replay protection, preventing transactions on one chain from being replayed on the other. The two networks now shared a history, but they no longer shared the same rules.

Less than a month later, on August 24, the other chain activated SegWit at block 481,824, setting the two networks on different scaling paths. Over time, most of the market value, hash power, and liquidity remained there, while its scaling roadmap increasingly turned toward off-chain solutions such as the Lightning Network.

BCH had its own problems to solve.

Its first difficulty adjustment mechanism, the EDA, was designed to attract miners but instead created wild swings in hash power and block times as miners moved between the competing chains. The problem was serious enough to force BCH into its first major hard fork just three months after launch, replacing the EDA on November 13, 2017 with a new Difficulty Adjustment Algorithm (DAA) that recalculated difficulty after every block.

Six months later, BCH increased its maximum block size from 8 MB to 32 MB and re-enabled several Satoshi-era opcodes, expanding its capacity for more complex transactions.

But bigger blocks did not eliminate disagreements over governance.

In November 2018, a dispute between Bitcoin ABC and a faction led by Craig Wright and Calvin Ayre escalated into a "hash war," producing another chain split. The Wright and Ayre-backed chain became Bitcoin SV (BSV), while the other chain retained the Bitcoin Cash name.

Two years later, BCH split again. This time, the dispute centered on Bitcoin ABC's proposal to direct part of the block reward toward development funding. The chain rejecting the proposal kept the Bitcoin Cash name; the Bitcoin ABC chain became eCash.

Nine years later, BCH is a much smaller network by price and market-cap ranking than it was at launch. Yet it remains active, with ongoing development, miners securing the chain, and a community still committed to the big-block approach.

The block-size war didn't produce a simple winner. It produced competing experiments in scaling, mining economics, and decentralized governance. BCH is what happens when a disagreement over Bitcoin's rules stops being a debate and becomes a network.

Five Twitter (X) posts from January 2018 through September 2023, showing how Bitcoin Cash supporters and observers argued the case for BCH over Bitcoin in the years after the fork.

View post May 6, 2018

View post June 2, 2022

View post Sep 21, 2023

View post Sep 14, 2021

View post Jan 29, 2018

Monthly figures from CoinMetrics' public dataset, August 2017 through September 2026. All three charts share the same time axis and log-scaled y-axis, so a doubling always covers the same vertical distance whether it's early 2017 or today.

Parallels with the BCH Fork

• Contentious, Ideological Origins: Both emerged from bitter governance disputes involving factions that believed the main chain had moved away from Bitcoin's original vision.
• Minority-Chain Challenges: Both began with a minority share of hash power, creating a different security and mining dynamic from the established chain. Both introduced mining adjustments to make the new chain viable with less hash power.
• Exchange and Market Identity: Both had to establish a distinct market identity while competing against a chain that retained the original ticker, greater liquidity, and broader exchange support.
• Concentrated Leadership: With smaller communities and fewer participants involved in protocol development and governance, both ecosystems have relied on a relatively small group of prominent leaders to coordinate major decisions.

Parallels with BTC During the BCH Fork

• Tighter Block Space Constraints: During the 2017 split, the BTC side rejected larger blocks and emphasized the tradeoffs between block size, decentralization, and the ability to run a full node. BTCB2 follows a similar approach, going further by temporarily restricting block weight to 800,000 units, roughly 300 KB serialized.
• A Narrower Role for the Base Layer: BTC emphasized the base chain as a monetary settlement layer while rejecting the idea that every type of activity needed to occur directly on-chain. BTCB2 similarly emphasizes the blockchain as a monetary ledger and places tighter restrictions on arbitrary data.
• Node-Enforced Consensus: During the 2017 conflict, BTC proponents emphasized that consensus ultimately depended on the nodes enforcing the rules, rather than simply on the preferences of mining pools. BTCB2 similarly emerged with significant support from users running nodes and enforcing its rules.