BCH, BSV has No Real Usage over BTC as a Medium of Exchange Despite Larger Block Size & Low Fees: Report

  • BCH and BSV only have a small fraction of usage of BTC
  • Both the forks are increasingly used as a way to store data on-chain
  • Bitcoin dominates the hash rate (95%) and mining revenue

In its latest research report, Coin Metrics evaluate Bitcoin and its hard fork Bitcoin Cash and Bitcoin SV.

In August 2017, BCH forked from Bitcoin, due to conflicting views on increasing the block size of 1 MB to 8 MB as Bitcoin Cash proponents believe BTC was becoming a store of value as opposed to its original purpose, a medium of exchange.

Then, in November 2018, a new fork split from BCH, Bitcoin Satoshi’s Vision (BSV). The goal was similar yet again and BSV increased the block size to 128 MB.

BCH and BSV currently have the 5th and 11th highest realized cap.

The report found the BSV and BCH has some of the desirable features of a medium of exchange asset such as low transaction fees, but it doesn't have a large increase in activity as compared to BTC.

Both BCH and BSV actually have only a small fraction of usage of BTC when measured in active addresses and adjusted transfer value.

Data: 6/18/19 – 7/18/19

BCH and BSV are increasingly used as a way to store data on-chain

BCH and BSV are rather increasingly used as a way to store data on-chain and not as a medium of exchange. BSV particularly is predominantly used as a way to record on-chain data. Interestingly, 94% of transactions contain OP_RETURN, a majority of which comes from a single weather application.

Moreover, although BSV and BCH have larger block sizes than BTC, they haven't utilized this extra space yet and their average block size remained well below Bitcoin’s 1 MB average, for the most part.

The blocks of both the hard forked digital currency exceeded Bitcoin’s maximum blocks. Though increased bock size may become a factor if either gain adoption, it isn’t currently for being a medium of exchange.

Bitcoin Dominates the Hash Rate (95%) and Mining Revenue

Bitcoin is clearly the winner when it comes to being secure. Bitcoin has over 95% of the hash rate market share as of July 2019.

Bitcoin also dominates the daily mining revenue, with 30 and 60 times more than that of BCH and BSV respectively. This will even become more of an issue as block reward continue to halve, given the fact the total transaction fees of BCH ad BSV are “negligible” compared to BTC’s.

The research also found out that theoretically, for Bitcoin miners to attack BCH, it would only take 7 hours to rewrite ten days of the blockchain. In the case of BSV, it’ just 3 hours.

“As of now, BCH and BSV are not gaining real usage over BTC as a medium of exchange, and are not utilizing their larger block sizes,”

concludes the report.

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