Bitcoin Cash Miners Cap Blocks At 2MB—Is BCH No Better Than BTC?

The major selling point for Bitcoin Cash over BTC was supposedly the fact that the coin would scale better via bigger 32MB blocks. However, it appears that Bitcoin Cash miners are limiting block sizes to 2MB, which is more or less the limit for Bitcoin. The revelation raises questions as to whether BCH can continue to claim to be an upgrade from Bitcoin.

Bitcoin Cash famously came about in August 2017 after members of the Bitcoin developer community led by Roger Ver differed on how to scale up the Bitcoin protocol. Since then, BCH has taken a life of its own and is currently one of the world’s largest cryptocurrencies. A look at a BCH exchange shows prices of about $317 at press time. This relatively strong price obviously has a lot to do with the prominence of its preeminent parent coin.

Still, advocates like Ver initially vouched for 32MB blocks. This block size would be a way to scale the protocol ‘’on-chain’’ without relying on additional add-ons like Lightning Network or SegWit. This was met with concerns that an increase in block size would bring about corresponding reduction in decentralization of the network by putting more computer-resource demands on node operators.

Nonetheless, the Bitcoin Cash fork went ahead and all Bitcoin owners as of block 478,558 were also owners of Bitcoin Cash. In the course of operation, however, BCH appears to functionally have a similar block size limit to BTC.

For instance, in the first two days of September, Bitcoin Cash had 270,000 unconfirmed transactions in its “mempool” (transaction queue) due to an uptick in traffic. The unconfirmed transactions occupy approximately 50MB in block space.

That means that with 32MB blocks, it should have taken 2 blocks to clear the transactions. Incredibly, it took a full 15 blocks for the same to happen. These numbers are closer to what one would expect from Bitcoin mining.

Are BCH Miners Capping Block Sizes?

The probable explanation for this discrepancy is that Bitcoin Cash miners are still using mining software with default block limit set to 2MB. It is still true that 32MB blocks are technically valid on the Bitcoin Cash network. The irony, of course, is that a good number of these miners advocated for the bigger blocks in the first place.

What is intriguing is that; for profit-maximizing miners and organizations, including as many transactions as possible should be an incentive. The elephant of the room is that transaction inclusion is a cost in itself. This is why miners will rarely include a transaction without its cost attached.

At the moment, Bch miners are ignoring transaction fees of about $0.0006 per transaction. Moreover, the fact that Bch has significantly less quantitative and qualitative transaction value relative to BTC, a healthy fee market is yet to be realized.

The small size of the fees makes it unable to justify including the transactions in a block given the hassle for miners. Miners are not in the business for charitable ends. Therefore, with little difference between block rewards for a 1 MB or 22 MB block, why bother? The only reason to have larger blocks is having competitive fee rewards, which is yet to take shape for Bch.

The Significance of The Cap in The BTC Vs BCH Debate

BCH is certainly light years away from challenging Bitcoin in the most generous terms. However, the fact that Bch miners still cap blocks means that the possible reasons for switching to Bch diminish further. Moreover, the fact that Bch only controls a minority of SHA-256 mining algorithm hash power leaves it vulnerable to 51 percent attacks from large BTC miners.

To illustrate this, the Bitcoin Cash network suffered such an attack in May. Bitcoin Cash does not have a robust fee market to support more hash power. This means that as the network goes through each block reward halving, the resources necessary to attack the network reduce. It is fascinating to see whether Bitcoin Cash developers will follow Litecoin’s lead in choosing the Scrypt mining algorithm. In the meantime, however, the SHA-256 algorithm seems to be getting more precarious.

Bitcoin cash, therefore, technically supports a larger block size limit. However, the fact that traffic simply doesn’t match up for miners to utilize the difference with BTC is obvious.

Network stats support this assertion. Despite its larger block size limit, the Bitcoin Cash network rarely sees the traffic necessary to utilize the difference. The recent surge in transactions due to an overall better 2019 crypto market, this reality still endures.

Accordingly, the fact that Bch does not utilize its larger block size limit makes it very much a “poor man’s version” of Bitcoin. For detractors, this is proof that switching to Bch is unnecessary despite incessant campaigning from Roger Ver and co. Moving forward, it will be interesting to see how Bch copes with the lackluster performance. Until then, it further diminishes the remote chance that Bch can fundamentally compete with Bitcoin.