Bitcoin Cash Analysis: BCH Forecast, News & Trading Analysis

Bitcoin Cash Stress Test Clogs Up Network – Blockgeeks

Rajarshi Mitra
09/5/19 1:55 PM 2019-09-06 07:33:46
Bitcoin Cash suffered a transaction backlog after the bitcoin cash network went through a stress test on 1st September. Bitcoin Cash usually does somewhere between 30k-50k transactions per day.

Bitcoin Cash suffered a transaction backlog after the bitcoin cash network went through a stress test on 1st September.

Bitcoin Cash Stress Test

Bitcoin Cash usually does somewhere between 30k-50k transactions per day. However, as can be seen from the spike, on September 1, Bitcoin Cash had ~600,000 transactions. Theoretically speaking, this should have been easy for Bitcoin Cash to clear up, however, this test clogged up the entire network for hours.

Bitcoin Cash Network and Block Size

We are sure that you know the entire block size fiasco by now. To give you a short recap, Bitcoin has been facing scalability issues and a part of the community felt that the solution to this was to increase the block size. Several in the community rejected this notion and the detractors forked away from the protocol on August 1, 2017, creating Bitcoin Cash. Bitcoin Cash happened to have an 8 MB block size limit. Eventually, Bitcoin Cash got adopted an adjustable blocksize cap, wherein the block size could go all the way up to 32 MB if needed.

Alright, so let’s go back to the issue at hand.

Bitcoin cash stress test

Image Credit

There were three significant backlogs of transactions in the system. The biggest backlog saw ~270,000 transactions locked up in the mempool. According to the analyst going by “@StopAndDecrypt,” the total size of these transactions come up to 50 MB. If Bitcoin Cash produced 32 MB blocks, this should have cleared up within two blocks or roughly 20 mins. However, it took 15 blocks to clear up the 270,000 transactions, which equates to ~2.5 hours.

Miners capping blocks at 2 MB

Bitcoin Cash Stress Test

Image Credit: Trustnodes

The above image shows the blocks mined by the mining pools during the time of the test. This makes for interesting reading for several reasons:

  • Bitmain’s Antpool and Roger Ver’s Bitcoin pool were both using the client’s default soft limit of 2MB for some hours.
  • ViaBTC and BTC.top were both using blocks >2 MB, however, they were nowhere near the 32 MB limit.
  • There is one unknown miner who limited block size to 1 MB.

Both Roger Ver and Bitmain were the biggest vocal proponents of increasing the block size. However, it looks like they are themselves limiting the block size to its default minimum. As someone on Reddit pointed out:

“It is utterly shameful that pools and miners who were vocally supporting on-chain scaling set 2MB block limits for themselves.”

So, why are miners limiting the block size to just 2 MB when there is an adjustable cap till 32 MB? There are three possible reasons:

  • There isn’t enough demand.
  • No financial incentive to mine bigger blocks.
  • There is a risk of orphaning.

Not enough demand

Even though Bitcoin Cash has a larger block size than Bitcoin, BitInfoCharts tells us that the average Bitcoin block is larger than the average Bitcoin Cash block:

Bitcoin Cash stress test

So, why is that the average Bitcoin block is about 5-8 times bulkier than a Bitcoin Cash block? It’s simple. Bitcoin’s network happens to be a lot busier than Bitcoin Cash:

Bitcoin Cash stress test

Bitcoin usually always does more than 300,000 transactions in a day. Bitcoin Cash barely manages 50,000 transactions. Since there aren’t that many transactions, there isn’t a demand for big blocks.

No incentive to mine bigger blocks

As @StopAndDecrypt points out, miners don’t have a financial incentive to mine bigger blocks.

“BCash recently had 270,000 unconfirmed transactions in “the mempool”. It was about 50MB in size.

It took about 15 blocks for it to clear, despite blocksize being 32MB each. The total reward miners received from fees after processing them all was ~$150. That’s $10 per block.”

This was further elaborated on Reddit by a user named “Neutral_User_Name” :

“It’s all about incentives… Bitcoin is totally about incentives. The Fee reward is so low compared to the block reward that they do not bother increasing their block size. Whether they mine a 1 MB or 22 MB block, it’s pretty much the same reward to them.”

What this shows us is that the fee model in Bitcoin Cash is not that healthy. Since Bitcoin Cash processes lesser transactions with lesser dollar value than Bitcoin, it simply can’t create an internal fee market which is as healthy as Bitcoin’s.

Case in point, as @StopAndDecrypt again points out:

“In comparison, when Bitcoin’s “mempool” is at its LOWEST, miners are rewarded with ~0.2 BTC per block. That’s $2,000 per block vs. $10.”

The risk of orphaning

“Orphaning” is a phenomenon where a block is mined, but it never gets to be a part of the main blockchain. Usually, a healthy blockchain will have a low number of orphaned blocks. A network with a high number of orphans is extremely inefficient since it shows that the miners are spending a lot of energy for nothing. Bitcoin SV, which is a fork of Bitcoin Cash, has a block size limit of 128 MB.

In April 2019, BitMEX’s research team noted that Bitcoin SV “experienced two block re-organizations. First, a three block re-organization, followed by a six block re-organization.”

A re-organization happens when the network is forced to orphan blocks after they have been mined. Bitcoin SV suffers from this because of its bloated blocks. The reasoning behind this is simple. In a decentralized network, a block needs to propagate throughout the network before it can become a part of the blockchain. The larger the block, the more time it will take to gain the necessary approval from the network.

Maybe Bitcoin Cash miners want to avoid this scenario by not mining big blocks. But then, this begs the question – Why demand bigger blocks in the first place if you are not going to use it?

Rajarshi Mitra
Rajarshi started writing in the blockchain space after listening to Andreas Antonopoulos’ podcast with Joe Rogan. A content generating machine, Rajarshi has been consistently producing high-quality guides and articles for us since late 2016. His articles have been shared extensively in social media and several start-ups have used his guide as learning material for their staff. He is continuously invited all over his country to give talks in various crypto seminars and conferences. He has gained a solid reputation as a speaker/educator on top of being one of the most promising writers in the crypto space. When he is not busy nerding out over the latest in the blockchain/crypto space, he is usually busy watching re-runs of top gear and MMA.

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Phillip Sampson

Good article