The history of hard forks in the world: the whole story of BCH’s internal turmoil and the mystery of replay protection

Entering November, BCH is about to usher in another upgrade. This is already commonplace for everyone, but because this upgrade is likely to cause another fork, BCH has attracted much attention recently.

Different people have different attitudes towards forks. Some people agree with forks, believing that forks are a healthy development of new things replacing old things, while some people oppose forks, believing that forks are unfavorable behaviors that damage consensus. Some people gain fame and fortune because of forks, while others argue over forks. We will not comment on whether forks are good or bad. We will only provide scientific knowledge and take you to understand several famous fork events in the blockchain world.

What is a hard fork?

The so-called hard fork refers to a permanent divergence in the blockchain. After the new consensus rules are released, some nodes that have not been upgraded in time will not be able to verify the blocks generated by the upgraded nodes. At this time, a hard fork will occur.

A hard fork has three characteristics: first, there is no forward compatibility, and the previous version will no longer be usable and requires a forced upgrade; second, there will be two forked chains at the blockchain level, one old chain and one forked new chain; third, everyone needs to agree to the fork upgrade at a certain point in time, and those who disagree will enter the old chain.

Event 1: BTC fork accident

On March 12, 2013, Bitcoin Qt 0.8.0 was released. Version 0.8 adopted a new database, level db. Some miners upgraded their nodes to Bitcoin Qt 0.8, while others continued to use Bitcoin Qt 0.7. Both parties produced blocks, but the blocks produced by the new database used by Bitcoin Qt 0.8 were rejected by the nodes of Qt 0.7. The specific reason was that the old database sometimes did not accept blocks larger than 800Kb. Therefore, at block height 225430, the Bitcoin blockchain was split into two chains, resulting in two chains of Bitcoin blockchain, one containing blocks larger than 800kb, and the other refusing to recognize these chains containing larger blocks, which resulted in a hard fork. At that time, miners using Bitcoin Qt 0.8 gave up the chain they were mining and returned to Bitcoin Qt 0.7 to continue mining.

This hard fork was an accident. It was caused by a bug in the bitcoin qt 0.8 version of the software, which caused the nodes using the old software to refuse to verify the blocks produced by the nodes using the new software. But the cause of the hard fork was that the nodes using the old software version refused to verify the blocks produced by the nodes using the new software version, and then both parties mined separately.

Event 2: The DAO event

Ethereum has also experienced a large-scale hard fork event, and the "Doomsday Chariot" ETC was born as a result.

On June 17, 2016, due to a vulnerability in The DAO, a famous Ethereum project, hackers stole about $60 million worth of Ethereum at the time. This error did not come from Ethereum itself, but from the applications built on Ethereum.

In order to recover the losses, the Ethereum development team modified the Ethereum software code and forcibly transferred all the funds of The DAO and its sub-DAOs to a specific refund contract address in block 1920000, thereby "taking back" the DAO contract coins controlled by the hacker. The chain that was rolled back is ETH.

Although this process was agreed by most people, a few members of the Ethereum team disagreed. They believed that one of the basic characteristics of blockchain is that transactions are irreversible, and the practice of rolling back transactions violated the spirit of blockchain that cannot be tampered with. As a result, Ethereum hard forked into two chains: ETH, which rolled back transactions, and ETC, which refused to roll back transactions.

In this fork, due to the lack of replay protection, transactions conducted on ETH after the fork were also conducted on ETC, and vice versa, resulting in asset losses for exchanges and users. This phenomenon occurred because the two chains were completely identical in data structure when the fork occurred. This weakness directly resulted in the same transaction being completely legal on both chains. Some people took advantage of this loophole and continued to charge and withdraw ETH on the exchange, causing the exchange to inexplicably lose a large amount of ETC.

Event 3: The birth of BCH

The birth of BCH is a milestone fork event in the currency circle. As we all know, BCH was created by Bitcoin through a hard fork. This is because during the development of BTC, the block size limit of only 1M led to transaction delays and high transaction fees, which could not meet the growing transaction needs. In order to solve this problem, the community was divided. One faction was the supporters of large blocks, who believed that the capacity should be expanded by directly changing the consensus, while the other faction was the supporters of small blockchains, who placed their hopes on second-layer applications such as the Lightning Network. After a long discussion, no consensus was reached on this issue. In the end, Bitcoin was forked into BTC and BCH after the block height of 478558 on August 1, 2017, and BCH expanded the block size to 8M. Shortly after the birth of BCH, BCH received support from a large number of exchanges, wallets, and application facilities.

In this process, BCH proactively added replay protection, changing the lock of the coin receiving transaction to a different lock from Bitcoin, and changing the transaction signature to a completely different rule from BTC, SIGHASH_FORKID, making this fork a safe fork. Without replay protection, for the two chains that have just been separated, although they are nominally two chains, because they share a set of private keys, public keys, and addresses, when users transfer money on one chain, they will also transfer the coins on the other chain. After adding replay protection, when the miners of one chain receive transactions or blocks from another chain, they will reject the transactions or blocks of the other chain, so that the two chains will be completely separated and will not affect each other.

During the birth of BCH, exchanges airdropped BCH based on the amount of Bitcoin held, and investors benefited a lot. This process triggered a hard fork craze, and forked chains based on BTC emerged one after another. BTG (Bitcoin Gold), BCD (Bitcoin Diamond), SBTC (Super Bitcoin), etc. all appeared at this time. However, they gradually declined due to lack of value support.

Event 4: BCH hash rate war

At the beginning of its birth, BCH was developed and maintained by multiple teams including BitcoinABC, Bitcoin Unlimited, Bitprim, Nchain, Bitcrust, ElectrumX, Parity and Bitcoin XT. In the development of BCH, with the inconsistency of community concepts and the exploration and advancement of technology, the BCH development team soon had differences in development direction.

Bitcoin ABC supporters hope that while the block size remains at 32MB, BCH should be developed towards the direction of infrastructure public chain. In this way, BCH can open up more application scenarios like Ethereum.

Bitcoin SV supporters hope to return to the most original version of Bitcoin and firmly believe that Craig S. Wright is Satoshi Nakamoto. In order to attract Walmart-level companies to use BSV, the block size is expanded to 128MB in advance.

The disagreement in the community stems from whether to achieve the future development direction of BCH from expansion or adding or reactivating several Bitcoin script operation codes (op codes). The deeper conflict is the ideological disagreement between Bitcoin fundamentalism and evolution, and whether CSW is the real or fake Satoshi Nakamoto.

The two parties holding different opinions also caused the consensus protocol of BCH to be incompatible, which had to be resolved through a hard fork. It was agreed that the longest chain after the hard fork would be the main chain and obtain the naming rights of BCH.

Since no replay protection was added to the hard fork, it was difficult for exchanges to handle it. Both the naming and the airdrop candy posed a problem for the exchange. At the end of the hard fork, BCH, BCHABC, BCHSV, BSV, etc. had appeared. In the end, after the computing power war between the two chains, BCHABC received a lot of support and obtained the name of BCH. In the end, both chains had stable computing power support, and both could produce blocks normally. The difficulty adjustment fluctuation was within the normal range. BCH and BSV were separated into two chains and began to develop separately. The exchange also airdropped BSV candy according to the user's BCH holdings.

Back to the Present: BCHN Usurping Power

On November 15, 2020, as usual, the BCH network is about to usher in another hard fork upgrade. However, unlike previous hard fork upgrades, due to the IFP controversy, the development teams ABC and BCHN seem to be implementing completely different rules after the protocol upgrade, which may lead to the split of the two chains.

The dispute between BCHN and ABC over IFP can be traced back to January 22, when the "BCH Infrastructure Financing Plan" proposed donating block rewards to developers. This proposal triggered heated discussions in the community. In the end, the development team did not reach a consensus on the matter. ABC included IFP in this upgrade, and the rules included giving 8% of the block rewards to developers. Bitcoin Cash Node, as the party opposing IFP, copied the ABC code and deleted IFP. Due to the difference in concepts, the two client versions are incompatible with each other, and BCH is likely to fork into two chains again.

Regarding this fork, the developer said that replay protection has not been added yet, which may affect the normal use of the BCH main chain. But for users, if BCH is split into two, users can get candies of new coins. Therefore, various exchanges and wallets announced that they would suspend BCH-related businesses to protect investors.

As a digital asset financial service platform, Matrixport has expressed support for the BCH fork and will suspend BCH deposit and withdrawal services at 12:00 (GMT+8) on November 15, 2020, Singapore time. Matrixport will also handle any technical issues in the hard fork for users, and will resume deposit and withdrawal services as soon as the blockchain network runs stably.

At present, Matrixport has made full preparations for the BCH fork. If BCH forks into two chains, Matrixport will use dyed UTXO to confuse and prevent replay. The principle is to find the UTXO before the fork, sign it twice on different forked chains, spend the seed used as the dyed UTXO, and after security confirmation, if the UTXOs used to generate transactions in subsequent transactions are all before the fork, the seed UTXO will be automatically included. In this way, once BCH forks, the newly generated block data of the two chains ABC and BCHN are independent. The newly issued coins on the ABC chain, that is, the generated coinbase transactions, are considered legal on this chain, but illegal on the BCHN chain, and vice versa.

For example: a transaction is broadcasted to the ABC chain, and the UTXO of an illegal transaction (legal in ABC, illegal in BCHN) is cited as input. Then this transaction is equivalent to being tainted and will not be recognized by the BCHN chain, so this transaction is immune to replay; correspondingly, a transaction is broadcasted to the BCHN chain, and the UTXO of an illegal transaction (legal in BCHN, illegal in ABC) is cited as input. Then this transaction is equivalent to being tainted and will not be recognized by the ABC chain, so this transaction is immune to replay.

In this way, not only can replay be effectively prevented, but Matrixport can also effectively protect users' assets. Due to the complexity of the technology, users can store their assets on the Matrixport platform, which not only protects the security of their assets, but also allows them to easily obtain new currency candies if BCH forks.

Who is the last BCH?

Regarding this BCH fork, since it involves the naming rights of "BCH", different trading platforms have shown different attitudes.

The first is that the highest bidder gets the BCH name.

Such trading platforms include: CoinEx, OKEX.

They said that after the fork is completed, they will refer to the trading prices of forked coin pairs on major exchanges, select the chain with the higher price to inherit the BCH name, and the tokens of the other chain will be airdropped to the user's fund account at a 1:1 ratio.

The second is to determine the BCH name after the community reaches a consensus.

Such trading platforms include: Huobi, Binance, and Bithumb Global.

They stated that if a new forked coin is generated after the hard fork, they will respect the opinions and consensus of the community and users, and will name the solution that receives more support from the community BCH. The tokens on the other chain will take a snapshot of their holdings and airdrop them to user accounts at a 1:1 ratio.

The third is to support BCHN and oppose Bitcoin ABC.

Such trading platforms include: Coinbase, Kraken.

Coinbase directly announced its support for BCHN, stating that once the hard fork is completed, Coinbase.com and Coinbase Pro will not support the sending and receiving of ABC forked coins.

Kraken stated that it will support BCHN regardless of the outcome of the fork. On its platform, BCHN will be called BCH. Only when ABC's computing power accounts for 10% or more of the BCH network will the platform support ABC services, and the token code will use "BAB".

The leading mining pool BTC.com said that it has fully tested and verified the two clients, BitcoinABC and Bitcoin Cash Node (BCHN), and has been communicating with the technical teams of both sides. The BTC.com mining pool will choose BCHN as the node solution after the fork, and will notify you in a timely manner if there are any subsequent changes.

At the same time, BTC.com launched the BCH hard fork countdown, updating the prices, computing power, node occupancy, number of blocks, node information and other data of both parties in real time, helping users who are concerned about this fork to understand the dynamics of the BCH hard fork more intuitively.