BCH interest disputes re-emerge, the outcome of the hard fork is not yet determined

Author | Hash Party - LucyCheng

Article word count: about 3200 words Reading time: about 3 minutes

BCH, which was hard forked from the Bitcoin network, seems to have been at odds with forks in recent years.

Current market capitalization rankings of BTC, BCH, and BSV (data source: Coinmarketcap; deadline: November 4, 2020)

On August 1, 2017, after two years of debate, the Bitcoin Core and Classic development teams broke up completely, giving birth to Bitcoin Cash, which supports large block expansion. With the strong support of Bitmain, the BCH network and community grew rapidly, and it became a mainstream currency soon after its birth. A year later, the expansion conflict resurfaced, and Craig Wright publicly protested against the Bitcoin ABC version, and then announced that he would set up his own company, forking out a new chain BSV in November 2018, and has been in a stalemate with Bitcoin Cash ever since.

After a year of peace, this year, due to the modification of the difficulty adjustment algorithm and the mandatory taxation plan, the field has once again seen differences of opinion, and the community has formed two camps: the core development team BCH ABC and BCH Node. If the two sides fail to reach a consensus before the 15th of this month, Bitcoin Cash will once again split into two chains - BCHA and BCHN. However, judging from network data and community reactions, compared with the previous two massive hard fork battles, the market seems to be less interested in this dispute.

BCH's second hard fork is imminent, but the market response is cold

Price changes of BTC, BCH, and BSV since 2017 (data source: Coinmarketcap)

Now, less than two weeks after the Bitcoin Cash hard fork, the price of BCH has basically followed the market trend. Except for a drop of about 11% from November 2 to November 3, it is still in a state of sideways fluctuation. As of November 5, 2020, the price of BCH remained at around $240, and the average daily trading volume during the week was about $4.8 billion, a decrease of three percentage points from the previous month.

Changes in network computing power since the birth of BCH and BSV (data source: bitinfocharts)

On the other hand, unlike the trend of continuous increase in BCH network computing power on the eve of the BCH/BSV computing power war, the hash rate in the network has not increased but decreased in recent months. Starting from October 19, it has fallen from the high of 4.39 EH/s in the past six months to the current level of 1.74 EH/s, with a cumulative decline of 60%.

Search index of BCH since its birth (data source: Baidu Index; Google Trend)

Not only are the market and on-chain data mediocre, the industry is not paying much attention to the recurring community split in Bitcoin Cash. Judging from the popularity of searches for the currency over the years, the market's reaction to this hard fork dispute is no different from BCH's usual network upgrades, which do not involve strong disagreements .

Rejecting mandatory taxation, developers and miners play a power game

However, most community members have long been dissatisfied with the situation where the development power is in the hands of a single development team, and almost every upgrade will cause various internal conflicts over different issues. For example, the 2018 hash rate war was caused by Bitcoin SV, represented by nChain, strongly protesting against Bitcoin ABC's upgrade plan to pave the way for BCH's transformation into smart contracts, which gradually gave rise to the hard fork drama; and this time, what triggered the community conflict was the IPF Coinbase rules that Bitcoin ABC insisted on introducing in the November upgrade.

The so-called IPF Coinbase new rules refer to allocating 8% of the new coins produced by the block to the Infrastructure Development Fund (IFP) as the key development fund for the Bitcoin ABC protocol. However, it was not the developer team that first proposed this miner donation plan, but Jiang Zhuoer, the founder of the Litecoin Mining Pool. On January 22 this year, he published an article titled "Bitcoin Cash Infrastructure Financing Plan" on Weibo and Medium, proposing that based on the consideration of stable development funds, 12.5% ​​of the block rewards in the main mining pools will be donated to a fund specially established to support BCH infrastructure over a period of six months, thereby providing sufficient funds for protocol developers.

Screenshot from: Weibo of Jiang Zhuoer, founder of Litecoin Mining Pool

As soon as the plan was released, it caused heated discussions in the BCH community. Domestic participants had mixed comments; while the foreign community, which concentrated most of the BCH developers and core personnel, staged a more dramatic tug-of-war. One day after the donation plan was released, Amaury Séchet, the chief developer of the Bitcoin ABC team, Jonald Fyookball of the light wallet Electron Cash, and other core community members immediately posted articles to express their support. The former even recommended himself and claimed that he was qualified to manage this fund. However, developers led by Imaginary Username expressed opposition, believing that the donation plan is necessary, but it should not be mandatory, otherwise it is easy to cause corruption, and more importantly, it violates the spirit of blockchain decentralization.

In the face of various oppositions and dissatisfactions from the community, the Bitcoin ABC team seemed to ignore them and continued to promote the donation plan in an orderly manner. Not only did they modify the collection rate, but they also announced on February 18 that they had added the relevant code to the ABC version 0.21.0 client. Bitcoin ABC's practice of not listening to public opinion further intensified the conflicts in the community. Freetrader, one of the earliest developers of the BCH ecosystem, immediately took the lead in creating a full node called BCH Node and removed the donation plan in this version. At this point, the community was completely divided into two camps, the supporters led by the ABC team, Electron Cash wallet, and BCHD, and the opposition composed of BU, BCHN, etc.

The game between the two parties highlights the drawbacks of the BCH community's lack of an effective governance mechanism and reflects the unsustainability of the community's voluntary donation funding + part-time development model. In the case of weak funding stability, part-time developers will not focus all their energy on development, and long-term developers will choose to leave because they cannot make a living, thus affecting the development progress of the project. Therefore, considering the ecological development process of BCH, it is understandable that the developer team seeks more stable funding for themselves .

The daily revenue of using 1TH/s for BCH mining over the years (data source: bitinfocharts.com)

Moreover, according to the Bitcoin ABC team, the 8% donation ratio within the IPF Coinbase rules does not mean that miners will lose 8% of their income. After the difficulty adjustment, the mining income will only decrease by 0.2%. From the surface data, it seems that the income that miners need to sacrifice is not much, but under the pressure of the block reward halving this year and the bear market, some BCH computing power is already on the verge of fleeing; if part of the block reward needs to be donated to the development team, it will undoubtedly make the miners, whose mining income has gradually decreased, worse . Faced with this situation where their interests are forcibly seized, it is normal for the miners to raise objections and for the community to form opposition.

The community voice is one-sided, and it is clear who wins and who loses.

Block production of BCHN and BCH ABC clients in the past six months (data source: Coindance)

According to data from Coindance, since September, the number of blocks mined using BCH Node has surpassed that mined using the Bitcoin ABC client; as of press time, more than 75.2% of the 1,000 BCH blocks produced recently came from BCHN, and the proportion of blocks mined through Bitcoin ABC was less than 1%. Although Bitcoin ABC is still the most used node version in the BCH ecosystem, it has dropped by nearly 20 percentage points compared to the share of more than half at the beginning of the year.

Current usage percentage of various BCH clients (data source: Coindance)

Moreover, the secondary market also has a high degree of recognition for BCHN. From the data of platforms such as Huobi, OKEx and CoinEx that have issued announcements to support the fork and launched related transactions, it can be seen that the current price of BCHN far exceeds BCHA, with a gap of nearly 16 times. What is more interesting is that yesterday 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 BCH ABC forked coins.

The current price of BCHN and BCHA forked coins (data source: CoinEx, time: November 6, 2020)

The current overwhelming situation and one-sided attitude of the community show signs of abandoning Bitcoin ABC . If this trend continues, after the hard fork on November 15, the BCHA chain is likely to be unable to continue due to lack of computing power support; after all, the upgrade plan of the ABC team this time involves the direct interests of miners, and the choice is obvious. Moreover, in mainstream currencies with relatively complete ecosystems, miners, exchanges, applications, etc. are inseparable links, and problems in any link will affect the stability of the project; therefore, when the winner is relatively obvious, instead of investing funds and technology in a wasteful fork game, it is better to directly choose the uncontroversial BCHN.

Of course, there is still uncertainty as to whether Bitcoin ABC will compromise in the next few days and whether it will be excluded from the community after the hard fork. However, investors who want to make a small profit through the forked coin candy may be disappointed. There is a greater risk of zero return for BCHA that may not be able to continue .