Bitcoin Cash Defines Bitcoin

For anyone following the Bitcoin scene in the last year, it’s impossible to miss the ideological wars. Historically all the talk was about the technicalities of consensus in the blockchain, soft forks, and hard forks. But under all those discussions there was another kind of fork: a mental fork. Several groups see Bitcoin differently, through a different lens, and that makes technical discussions impossible since what one presents as a reason is absurd to the other.

Starting from the top

Recently though, I believe the group of people behind Bitcoin Cash recognized this and gave a major step forward. They recognized that the way they see Bitcoin and think about it is different from other groups and no amount of technical discussion will make others agree with the arguments.

The reason I find Bitcoin Cash interesting is because

  1. They start from the top with a definition: “Bitcoin is money”, and
  2. Although their definition of Bitcoin is the original definition, it does not match the majority’s view and were forced to fork.

The last point is interesting because of the organic part of Bitcoin. Despite of how it started, the reference implementation of Bitcoin, Bitcoin Core, is maintained by a group of people who subscribe to the vision that Bitcoin is a store of value. Since Core is the initial and reference implementation, and used by 80% of the users, that view gets spread and repeated a lot. Whenever the price of BTC against USD raises, that view also gets reinforced since no one holding BTC wants its value to go down.

Regarding Bitcoin Cash, I believe that “Bitcoin is money” is not the best definition and the site still has that ring of “yet another fork of the Bitcoin Core”. But starting from the top, with a clear definition of Bitcoin, and having the guts to hard fork is a good start. If successful, the group can even attract a good portion of the Bitcoin users because regardless of the differences in ideology, Bitcoin is still defended by all as a cryptocurrency. And a currency (crypto or not) implies the main purpose of Bitcoin is to be exchanged and not holded.

Bitcoin is a unit of exchange

The group behind Bitcoin Cash basically says “no” to the persisting view that Bitcoin stores value, that it is a security or a kind of property. What they say is

Bitcoin Cash brings sound money to the world. Merchants and users are empowered with low fees and reliable confirmations. […] help achieve Satoshi’s original vision of Bitcoin as Peer-to-Peer Electronic Cash.

The reason I believe the “Bitcoin is Money” is a bad definition is because money is a trichotomy: a unit of exchange, a unit of value, and a unit of measure. Since Bitcoin Cash is betting on Bitcoin as a unit of exchange and forking from Core which defends Bitcoin as a unit of value, calling Bitcoin “money” makes the point less clear. Also, it does not seem productive to keep comparing to gold since gold, the barbaric relic, is the most well known store of value.

A clear definition or asking the right questions

The tendency to refer to gold and the “Cash” part come from Satoshi’s original paper definition which, by the way, uses cash, coin, money, and currency interchangeably, although always in the context of transactions and exchange of bitcoins. What I believe was started by Bitcoin Cash, but is still incomplete, is a better definition of the concepts, now that Bitcoin is 10 years old. Bitcoin cannot be digital gold (although words like mining and ownership are used, they do not mean the same) and Bitcoin also cannot be digital fiat since it precludes a central bank. But it can change a lot from its current form while still being Bitcoin. It would therefore be good to know more precisely how Bitcoin Cash will handle conflicts and compromises between the three aspects of Bitcoin as money.

For example, to improve liquidity and facilitate exchange, in the future, it may make sense to increase the generation of bitcoins. Is that an acceptable compromise for Bitcoin Cash? Answering this type of questions will surely make the vision more clear to me and other people who think of Bitcoin as a cryptocurrency.