BCH tripled in two weeks. Is the revival of PoW narrative a dream?

No one could have predicted that the biggest beneficiary of this round of market driven by mainstream financial institutions applying for Bitcoin spot ETFs would be the Bitcoin fork project - BCH (Bitcoin Cash).

Coingecko data shows that in the past week, BCH has led other cryptocurrencies with a 106.5% increase; in the past two weeks, BCH has risen from US$101 to US$325, with a maximum increase of 221%, and is currently trading at US$294.

Interestingly, as BCH rose, several other forked coin projects also saw good gains: BCH fork project eCash (formerly known as BCHA) rose 58.2% in the week, ranking second; Bitcoin SV (BSV), another BCH fork project led by CSW (nicknamed "Australian Satoshi"), ranked fourth with a weekly increase of 35.2%. Since these tokens are all POW mechanisms, the community shouted: Make Pow Great Again, and a group of old POW public chain tokens such as Litecoin (LTC), DASH and Ethereum Classic (ETC) also generally rose by more than 10% today.

In addition to the token price increase, the BCH community is also discussing that the former BCH champion Wu Jihan is about to return to the construction, and the community is shouting that the next pressure point for BCH is $1,000 (the historical high price is $1,650). Although there is no official news to verify the rumors, the name Wu Jihan is important in the BCH community - just like Vitalik Buterin is to Ethereum.

For crypto newcomers who started investing after the outbreak of DeFi, Wu Jihan, who has rarely spoken in the past two years, seems to be a strange existence, but before 2021, he was a top star. As one of the founders of Bitmain, the world's largest mining machine manufacturer, and a "mining tyrant" in the media, Wu Jihan is a "godfather" of the currency circle, and his every word and action has an important impact on the entire market, just like CZ, the founder of Binance today.

BCH was once the hottest fork coin in the market in 2017 under the promotion of Jihan Wu. However, with two hard forks and Jihan Wu's deep involvement in the "palace fight" of Bitmain, and without chasing the DeFi wave that will truly ignite the next bull market, BCH has gradually faded out of the mainstream circle.

But the wonderful drama of BCH in the past is no less than the various industry stories and accidents today.

(1) Jihan Wu forked Bitcoin, and BCH was born

In 2017, a fierce conflict broke out in the Bitcoin community: one faction was represented by Bitcoin ABC, which advocated increasing the block size limit (from 1 MB to 8 MB) to increase the transaction speed of Bitcoin; the other faction was represented by Bitcoin Core, which advocated solving the scalability problem through advanced technologies (such as the Lightning Network) without changing the Bitcoin network code.

Finally, with the support of Bitmain, which controls a large amount of computing power, the first fork in Bitcoin history occurred, and Bitcoin Cash (BCH) was born. At its peak, BCH's market value once squeezed into the top four - in December 2017, the BCH/BTC exchange rate reached a historical high of 0.284 (now 0.01), and has never reached that level since then.

After BCH, hundreds of Bitcoin fork projects were born in the market, but none of them were short-lived and eventually died, and it was difficult for them to achieve the results of BCH. Wu Jihan, who took the lead in forking Bitcoin, was also given various infamy, but this did not hinder his satisfaction with the "work" he created.

“Bitcoin Cash has become an important player in the digital currency market. It not only has its own unique characteristics and advantages, but can also complement and coexist with other digital currencies.” “Although the Bitcoin Cash fork has generated some controversy and volatility, it has also brought more opportunities and challenges to the entire digital currency market.”

Although in an interview in February 2018, Wu Jihan criticized some of the designs and implementation plans of BCH and believed that the project could not achieve its original goals, he did not give up on BCH, as can be seen from the subsequent fork war.

(2) BCH fork, Wu Jihan vs. CSW

One year after the birth of BCH, CSW (Craig Wright), an Australian who called himself Satoshi Nakamoto, began to fork BCH, and Wu Jihan also experienced the pain brought by the fork.

In November 2018, BCH was upgraded and a new feature called Canonical Transaction Ordering (CTOR) was introduced. However, this upgrade did not receive consensus from all members. Activist CSW proposed to directly adopt the 128M super-large block and "lock" the client to version 0.1 of the Satoshi era, which was opposed by Wu Jihan and the Bitcoin ABC team. Wu and CSW quickly launched a protracted war of words, with both sides swearing at each other.

Eventually, two incompatible versions were born, namely BCHABC (supported by Wu Jihan, Roger Ver and others) and BCHSV (supported by CWS and others). At the beginning of the fork, both sides claimed to be the orthodox BCH and sought community support and market recognition; subsequently, the competition between the two sides became increasingly fierce, including mining power competition, community voting, and various propaganda attacks and defenses. In the end, Wu Jihan won, BCH ABC was renamed BCH again, and BCHSV was replaced by BSV.

Although Wu Jihan won, the price of BCH plummeted after the fork - in just one month, the price of BCH coin plummeted from US$552 before the fork to US$74, a drop of 83%; even if the BSV generated after the fork was taken into account, investors still suffered heavy losses.

(3) ABC team backstabbed Wu Jihan, BCH forked again

“Congratulations! There will be no more troublemakers in the BCH community after this new block!” Wu Jihan tweeted after defeating CSW on November 16, 2018. But at that time, he did not expect that BCH would experience another fork two years later.

At the heart of the fork is an upgrade known as the Infrastructure Funding Plan (IFP), which will force 8% of each block reward (earned by miners in Bitcoin Cash) to be delegated to software projects that power BCH, such as Bitcoin ABC.

IFP forces all BCH miners to give up more profits to donate to developers, which is what miners do not want to see. Therefore, Freetrader, an early BCH developer, chose to fork on his own and won the favor of many miners, communities and users. In the end, BCH hard forked into two chains again: BCHN (Bitcoin Cash Node, no IFP restrictions) and BCHA (Bitcoin Cash ABC, with IFP restrictions).

With the fork coming again, a new round of competition for the "BCH" naming rights has begun. It was originally thought that the ABC team, which had led the development of BCH for three years, would win, but in the end, BCHN, which had an advantage in public opinion and support, won and obtained the BCH naming rights. BCHA also announced in August 2021 that it would be renamed eCash (XEC).

The question is, why didn’t Wu Jihan step out when his gold medal team ABC backstabbed and split the community? The answer is that Wu Jihan was deeply involved in the palace fight in Bitcoin mainland at this time and had no intention of managing BCH at all.

(4) Bitmain’s palace fight

Since 2019, the long-accumulated conflicts between Wu Jihan and Bitmain's other founder, Zhan Ketuan, have become public.

In October of that year, Wu Jihan issued an internal letter to employees, removing Zhan Ketuan from all positions in Bitmain; in November, Wu Jihan convened a "special shareholders' meeting" in Beijing, completely depriving Zhan Ketuan of his absolute control over the company.

Zhan Ketuan, who was kicked out of the company, had no choice but to sue. He also wrote an open letter saying that he was stabbed in the back by his most trusted partner and brother who had worked together. Zhan Ketuan then sued in many places, and in January 2020, the Haidian District People's Government supported Zhan Ketuan and asked the Municipal Supervision Bureau to change the legal person of Bitmain to Zhan Ketuan. On May 8 of that year, a dramatic scene took place. After Zhan Ketuan received his business license at the Haidian District Government Service Center, it was snatched away by a group of unidentified men, causing an uproar in public opinion.

After that, the two sides entered into negotiations, which lasted for several months and finally reached an agreement in January 2021. Zhan Ketuan purchased nearly half of the shares of Bitmain held by Wu Jihan and a group of founding shareholders for US$600 million. Wu Jihan officially resigned from Bitmain; Bitmain will divest its mining pool and cloud mining business, namely BitDeer, from Bitmain along with the mining farms in the United States and Norway, and Wu Jihan will serve as the chairman of BitDeer.

In the following two years, Wu Jihan began to speak less publicly. After several splits and Wu Jihan's departure, BCH was no longer valued by Bitmain and eventually fell into decline. At the same time, as Ethereum turned to PoS according to the established route, the mainstream narrative and direction of the industry also changed. Multiple new PoS public chain ecosystems emerged, DeFi ignited a new bull market, and the POW narrative and the mining industry that once controlled the lifeblood of the industry gradually left the center of the stage under the heavy hammer of supervision. BCH developers also tried to embrace DeFi for a time, but it did not cause much splash.

However, the current situation seems to be a turning point for BCH. First, the attraction of Bitcoin spot ETF is getting higher and higher, and it is expected to trigger a bull market; the Bitcoin ecosystem has a new story with the popularity of Ordinals; in addition, EDX Markets, supported by the leading traditional financial giants, recently launched four token transactions including BCH - BCH has not been listed as a security by the SEC, while many PoS tokens are listed as securities.

Is this a short-term market manipulation, or a narrative revival or even a return to value in the crypto industry? It is too early to say.