BCH had a hard fork at around 9 pm on November 15th. The two parties to the fork were the ABC development team (BCHA) and the BCHN development team (BCHN). The main disagreement between the two parties was whether to implement IFP (miner donation development). This fork was relatively low-key, causing many people outside the community to not know what happened, so I wrote this article to introduce it.

1. Why has the exchange rate of BCH to BTC been falling recently?

Before talking about the fork, let’s talk about the price of the currency that many people are concerned about. The status of BCH in this round of bull market is similar to that of LTC in the previous round of bull market . Both appear as the second currency of the same type as BTC. The slogan of LTC is “Bitcoin Gold, Litecoin Silver”, and the slogan of BCH is “Real Bitcoin”, “Cash Bitcoin”, and it is called “Prince” by the community. Therefore, the historical trend of LTC in the previous round of bull market has important reference value for BCH .

The interesting thing about LTC’s last round of performance is that the increase from the lowest to the highest point is nearly 3 times that of BTC, but the increase is very uneven.

BTC has increased 120 times from its lowest to its highest point, and the rate of increase is relatively average (the graph is in logarithmic coordinates, with one grid increase corresponding to a 10-fold increase).

LTC did not increase much in the first half of the year, but it rebounded in April and May 2017.

It will be more obvious if we look at the exchange rate of LTC to BTC. Although the highest point of LTC/BTC doubled compared to the starting point of the bull market, it fell by 78% at one point in the middle . Of course, it only fell against BTC. It still rose from 2.994 to 3.888 against the US dollar, an increase of 30%.

But from March 30 to May 10, 2017, LTC/BTC experienced an astonishing 8-fold surge because BTC broke through its previous high.

2. Pre-bull market vs. post-bull market

Depending on whether the previous high is broken, the bull market can be divided into two stages: "pre-bull market" and "post-bull market" . In the pre-bull market (including the second half of the bear market), funds pay more attention to risk. It is not known whether the coins you buy can survive to the next round of bull market, so people are more willing to buy BTC that will definitely survive to the next round .

Once BTC breaks through the previous high, it means a large number of new people will pour in . Because more than 80% of people learned about Bitcoin through the news of new highs during the last bubble period of a bull market, and most of them will not delve into it, and their understanding of Bitcoin remains in the news that "Bitcoin is a scam, a bubble, and the Ponzi scheme is about to collapse and return to zero."

The brainwashing will continue until Bitcoin breaks through its previous high and creates another round of news. Then , people who heard about Bitcoin at the end of the previous bull market will find out: "Hey, Bitcoin is not dead yet? It has reached a new high again? It doesn't look like a bubble scam?" Thus, a new round of users poured into the cryptocurrency circle along with the news of Bitcoin's repeated record highs, and the wheel of history rolled forward.

When newcomers enter the cryptocurrency circle, will they buy Bitcoin? Most of them will not, because they think Bitcoin is too expensive, and Bitcoin has already reached ATH (All time high). It is better to buy mainstream coins and altcoins that have smaller market caps, more stories, have not reached previous highs, and have a larger increase multiple .

As a result, not only LTC, but the top 20 currencies have started the main upward trend, leaving Bitcoin far behind.

3. History Repeats Itself

I like talking about history very much, because history is surprisingly similar to history. The cryptocurrency world is a place where history repeats itself, and even each round of K-line is surprisingly similar .

This is the top 20 decentralized currencies in terms of market capitalization (excluding USDT and exchange tokens, etc.). In this round of pre-bull market, BTC once again took the lead, while other currencies remained basically unchanged or rose slightly , and EOS fell miserably by 39%.

By the way, my BTC+BCH+ETH combination accurately avoids the three pitfalls of XRP, EOS, and LTC, which are ranked at the top of the market value. I wonder how many people copied my homework? If you did, then your profit should be higher than 90% of people now :)

Now BTC is at $16,500, and it is only two trading limits away from the previous high of $19,891. Once it breaks through the previous high, a large number of newcomers will come in. What do you think they will buy? For example, if a newcomer to Paypal has $500, will he buy 0.03 BTC, or at least a few ETH, BCH, or LTC?

Now that we have finished talking about the price of the currency, those who only care about the price of the currency can withdraw now. The previous content is worth at least 300% doubling of assets . Later we will talk about some more far-reaching issues.

4. What is IFP?

IFP is a change proposed by the ABC development team. In IFP, miners will donate 8% of the theoretical output of mining blocks to the development team to solve the problem of funding sources for the development team.

The funding source of the development team has always been one of the difficult problems for currencies to solve. For example, in order to solve the funding source problem, the main members of the BTC Core development team established Blockstream, a company that relies on developing side chains for profit. As we all know, when the main chain is not congested, no one will take off their pants to fart and use the side chain. Therefore, the attitude of Core has evolved from accepting limited expansion (such as 2MB) to completely violating Satoshi Nakamoto's expansion plan and refusing any expansion , which has led to the split of Bitcoin into BTC and BCH, bringing far-reaching disasters to the Bitcoin community and laying the hidden dangers of BTC's decline.

5. Do miners support IFP?

There is a common misunderstanding here. Some articles say that BCH miners refuse to donate to the development team, but in fact miners are happy to donate to the development team , not only for the better development of BCH, but also for an interesting reason: miners who donate will not lose 8% of their income, but only about 0.13% of their income .

BTC and BCH both use the sha256 algorithm, so the two coins actually share a computing power pool. Miners (especially machine gun pools) will switch back and forth to mine the two coins, mining whichever has higher returns, making the per-T revenue of the two coins basically the same .

When the output of BCH decreases by 8%, some miners will stop mining BCH and switch to mining BTC, which will increase the mining income per ton of BCH and slightly decrease the mining income of BTC. According to the current price of BCH=BTC 1.6%, the final effect is to extract 1.6% (BCH/BTC price)*8% (donation ratio)=0.13% of the output from the entire computing power pool, and both BTC and BCH will reduce their mining income by 0.13% .

This has almost no impact on the income of BCH miners and can support the development of BCH , so BCH expansion miners are happy to make IFP donations.

6. What are the reasons of IFP opponents?

In order to prevent the tragedy of the commons (some miners donate, while others do not, and sit back and reap the benefits), IFP requires all miners to make unified donations, which makes IFP look very much like compulsory taxation and further leads to associations with government, centralization, etc. Therefore, IFP has received a lot of opposition in the foreign BCH community.

Relatively speaking, IFP has more supporters in China. Wu Jihan has promoted the implementation of IFP several times before, but all failed due to the large number of opponents . The difference between China and foreign countries is mainly because Chinese culture recognizes collectivism and collective action more . For example, during the COVID-19 pandemic, Europe and the United States paid more attention to the protection of individual freedom, while China was more willing to give up certain freedoms and obey collective action to curb the epidemic.

By the way, when BCH and BTC just forked, because Bitmain played a major role in the fork, the small block faction has been smearing "BCH is Bitmain's corporate coin". But in fact, BCH is the result of Bitcoin's three-year expansion dispute, and the emergence of expansion fork coins is a historical necessity .

Assuming that in another time and space, there is no Bitmain, there will be other forces that fork BCH. Conservation is one of the most important theorems of this universe. The idea of ​​big blocks is eternal. As long as Core violates Satoshi Nakamoto's expansion plan, it will inevitably produce expansion fork coins .

Therefore, Wu Jihan’s failure to promote IFP several times shows that Bitmain’s influence on BCH is limited. BCH has its own firm community supporters and core strength, its own ideas and vitality.

7. How do the two forks compare in terms of support?

The BCHA price on CoinEx.com started to fall from 20% of BCH and is now stable at around 5%. Therefore, it can be seen that the community mainly supports BCHN. This fork did not cause a serious split, but was close to a candy coin fork .

The pre-fork transactions on CoinEx.com also made the ABC development team aware of the current situation. ABC has now been named BCHA in the latest client, and has stated that it will continue to maintain the BCH and BCHA chains.

For ABC, this was a wrong choice. ABC has good development capabilities, but Amaury's communication skills are weak, and there are misunderstandings between him and many members of the community, so the community support is weak. The reason for pushing IFP this time is that ABC has always been troubled by insufficient funds.

I am a supporter of IFP, but I think IFP is a nice feature. It is good and can speed up the development of BCH, but without BCH it will be slower. It is not a matter of life and death. Therefore, if the community cannot reach a consensus, I do not agree to the fork caused by forcing IFP. This is different from the expansion at that time. If the capacity is not expanded, there will be a user ceiling of 1M blocks, which will eventually lead to the decline of BTC. I will talk about this at the end.

8. Why does BCH keep forking?

Because BCH is a decentralized currency.

In view of the large number of newcomers recently, I would like to share some scientific knowledge: Technically speaking, blockchain = database + decentralization. The only value of blockchain lies in decentralization (no center can control, attack, or eliminate it) . Without decentralization, blockchain is a worthless database. With decentralization, blockchain is worth trillions of yuan. Through decentralization, Bitcoin is resistant to audit, cannot be frozen, can flow freely around the world, and cannot be issued . Without decentralization, Bitcoin is not as good as Q coins.

However, decentralization means that there is no decision-making center and community disputes cannot be resolved. Therefore , decentralized currencies will inevitably have forks . BTC and ETH have had forks before. And conversely, any currency that cannot have forks is not a decentralized currency. It is just data stored in a centralized database and has no value in the long run .

8. Will continuous forking weaken the consensus of BCH?

Consensus is not the fundamental thing; what is fundamental is correctness and usefulness .

Was there a consensus when Satoshi Nakamoto mined the Genesis Block? Was there a consensus when Vitalik Buterin launched ETH?

Does the development of a currency depend on correctness, usefulness, demand, users, or consensus?

A coin must first be useful, have demand, and have users before consensus can be generated.

Consensus is the result, not the cause .

Forking is the only way for decentralized coins to resolve community disputes. Some disputes may be resolved during forking . For example, in the BCH fork, the ABC development team took the initiative to abandon the name of BCH and announced that it would continue to maintain the two chains of BCHA and BCH. If there is no showdown and fork, the two parties in dispute will only continue to argue and affect the development of BCH.

Some forks may take a long time to determine whether they are right or wrong . Such forks may seem to split the consensus in a short period of time, but they allow the correct direction to develop independently, rather than being dragged down by the wrong direction and finally dying in a dead end together . This is like biological evolution. A creature that cannot mutate will eventually die in a dead end. No one can ensure that every choice is correct. Only forks can ensure Bitcoin .

This fork also solved a problem: What defines Bitcoin? Is it the development team? The domain name? The mining pool? Or the exchange? The BCH fork answered this question:

Only the community can define Bitcoin, and only the price formed by real money and silver can define Bitcoin. Whoever has the highest total market value is the real Bitcoin:)

10. How will the price of BCH change after the fork?

As mentioned above, the fork affects the long-term development of a coin, but has little impact on the price of the coin. What determines the price of the coin is whether it is in a bull market or bear market cycle.

When BTC and BCH forked for the first time, the market was in a state of panic, and many people thought that the consensus had broken down and the price would fall, but what was the result? Since it was in a bull market cycle, the price of the currency soared all the way after the fork , from $2,855 on August 1, 2017, to $20,000 without any callback in the middle.

Why did BCH fall after the second fork? Because the market is in a bear market, it is a market consensus that the $6,000 support line cannot be maintained , or conversely, if $6,000 is the bottom, then this round of bear market has only fallen by 70%, far less than the 93% and 88% in the previous two rounds of bear market.

So, after the BCH fork, will the long-term price of BCH rise or fall? It is likely to rise, because:

1. The market is in a bull cycle.

2. BTC breaks through its previous high (or possibly earlier), and a surge in LTC similar to the last bull market may happen at any time.

11. In the next ten years, can BTC still be the number one in market value?

At this point, the article is already very long, so I will simply list the facts and expand on them in the next article.

a. In the last bull market, ETH once reached 80% of BTC’s total market value.

b. Melcav's law states:

The value of a network is proportional to the square of the number of connected users.

The value of a coin is proportional to the square of the number of active users of the coin. The number of active users can be estimated by the "number of active addresses".

c. The reason for the surge in ETH’s total market value is the surge in the number of “active addresses” (ICO craze), from 23,000 to 190,000.

d. Both BTC and ETH are now limited by transaction congestion, but the reason for BTC congestion is its unwillingness to expand capacity, while the reason for ETH is reaching the upper limit of computer hardware performance.

e. ETH 2.0 is developing expansion (sharding), while BTC is determined to be digital gold. Of course, BTC is also difficult to expand now. Expansion = hard fork = another BCH? It is better to go directly to BCH :)

5. Ethereum developer Evan Van Ness tweeted:

ETH is 50% technology, 30% finance, and 20% religion.
BTC is 7% technology, 3% finance, and 90% religion.
Make wise choices.

What will happen once ETH's number of active users exceeds BTC?

What will happen once the total market value of ETH exceeds that of BTC? (After all, the last bull market reached 80%, and it is only one step away)

What happens when religious belief is shattered?

From the perspective of conservation, it is impossible to input wealth in the long term without outputting information entropy.

Are those who mindlessly hoard coins outputting information entropy?

In the long run, in the next cycle, or even this cycle,

BTC is likely to be surpassed by ETH first, and then by BCH

In this process, a huge amount of wealth transfer will occur.

Those who hoard coins without thinking will be slaughtered