BCH forks again: 8% withdrawal rejected, miners start a defense war

Bitcoin’s 12th anniversary, BCH forks again

On October 31, 2008, Satoshi Nakamoto published the Bitcoin white paper "Bitcoin: A Peer-to-Peer Electronic Cash System" on the mailing list of the Cypherpunk website. Today marks the 12th anniversary of the release of the Bitcoin white paper.

According to incomplete statistics, there have been more than hundreds of forked projects in the history of Bitcoin development, and Bitcoin's code base references are quite active.

Just like the rise of DeFi liquidity mining this year and the emergence of various forked projects of crop farming in the market, Bitcoin's forked projects have also made the entire ecosystem active.

Looking at these forks, we can find that BCH is the best developed one.

For forked coins, most of them are just temporary hot spots. If the team cannot continue to operate, develop projects, and develop communities and ecosystems, the price of the coin will eventually slowly return to zero. However, BCH has been continuously expanding consensus and attracting more users to participate due to the strong support of the community and a healthy development environment.

Looking back at the development history of BCH, BCH forked from BTC due to a dispute over capacity expansion. Later, BSV forked from BCH due to issues regarding BCH’s development path. Then BCH faced a new fork challenge - a new fork may occur on November 15.

The conflicting point of BCH’s fork this time is whether to start IFP.

The Chinese name of IFP is Infrastructure Financial Plan. If it is successfully launched, the BCH mined by miners will be deducted 8% by the development team.

The community is now divided into two factions, BCHN and BCHA. BCHA believes that the BCH team needs funds for project development and maintenance, and launching IFP will be able to solve the funding problem, which will be more conducive to the development of the project in the long run.

The BCHN group believes that the project's pumping of funds seriously violates the vision of decentralization. BCH's doing so will deviate from the original path of Bitcoin and is not in line with the spirit of blockchain. In particular, in the eyes of the miners, IFP is undoubtedly a "forced donation."

Previously, Wu Jihan wanted to promote IFP to provide more financial support to the BCH development team, but it ended up in vain for various reasons.

Analysts pointed out that the main reason why the BCH community opposes IFP is that the main supporters of BCH are miners, and IFP will reduce the income of miners. For large users, they may be more inclined to support IFP so that the development team has more funds to develop the project.

Although BCH does not have development funds from the chain itself, the BCH development team has always been supported by donated funds.

According to a Twitter user, BCH's development fund raising target by next year is 3.3 million US dollars. The team has already received more than 7,000 BCH, so it is not so short of development funds. However, from the perspective of the long-term development of the project, development funds are still a constraint.

At present, through information from the media and social platforms, we can classify the main supporters of the two lineups: one is the BCHN community, which is mainly composed of supporters such as Yang Haibo, Roger, and Jiang Zhuoer; the other is the BCHA community supported by BCH chief developer Amaury and his team.

Haipo Yang, founder of VIA Mining Pool and CoinEX, believes that the BCH fork is very successful. Although it has not yet surpassed Bitcoin, the community is quite strong. Haipo Yang is also a major participant in the upcoming BCH fork. CoinEx even launched BCHA and BCHN futures in August.

In Jiang Zhuoer's view, the fork can bring popularity and airdrop tokens to BCH, and allow some investors to participate in the community building of BCH, which is good news for BCH.

The BCH fork is undoubtedly a hot topic in the industry in the short term. Behind it is the game of interests between miners and development teams. However, for the BCH community, another split will inevitably make investors doubt BCH and its value.

Community Split, BCH's Past and Present

As mentioned above, forks have become commonplace for BCH. The birth and development of BCH are accompanied by forks.

The birth of BCH is not accidental. It stems from the long-standing irreconcilable expansion contradiction between Bitcoin core developers and miners.

In order to solve the problem of capacity expansion, on August 1, 2017, with the strong support of Bitmain, BCC (later renamed BCH) was hard forked from Bitcoin. It uses 8M (later changed to 32M) large blocks, does not support segregated witness (supported by Bitcoin), and the rest, such as the algorithm, is the same as Bitcoin. On November 13, the fork upgrade was executed again, BCC was renamed BCH, and the mining difficulty was adjusted, but no new tokens were generated.

After the fork, many miners hope that BCH, which has a more reasonable expansion plan, can become the real Bitcoin, but it turns out that the consensus of Bitcoin is difficult to break.

Shortly after the fork, BCH's influence continued to expand, the community was quite active, it received support from exchanges and wallets, and its market value remained stable in the top 10. However, BCH still failed to become the real Bitcoin, but was gradually called the "Prince" by everyone.

On November 16, 2018, BCH underwent another hard fork, and the original community was divided into two camps: BCHABC and BCHSV.

This time, the main conflicts between the two camps are concentrated in three aspects:

The first is the dispute over BCH capacity expansion. The BCHSV camp represented by Craig Wright wants to continue to expand the block capacity of BCH in order to improve transaction efficiency. However, Bitmain and BCHABC disagree. In their opinion, the existing 32M block limit is sufficient and there is no need to expand it to 128M.

The second is the disagreement on the development path. BCHSV advocates returning to the Bitcoin path and maintaining the same vision as Satoshi Nakamoto, while BCHABC wants to adapt to market development.

Finally, there is the struggle of interests behind the scenes. BCHABC and BCHSV are both supported by large mining pools, and miners are all profit-seekers, supporting whichever project has the highest returns. The switching of anonymous computing power in the computing power war also shows that there are conflicts of interest between several large mining pools behind this.

Many people may not understand the reason for the fork in BCH, but the impact of the fork on the entire cryptocurrency market is clear at a glance.

According to previous data from Bitmex Research, the hash rate war between BCH and BSV caused a total loss of $18 million to miners. The hash rate war triggered a massive sell-off in the entire market. Bitcoin fell by more than 10% that day, and the price of BCH also fell by as much as 75% thereafter. It can be said that it had a considerable impact on the market in the short term.

However, judging from the development of the two subsequent projects, BCH’s current market value is 4.47 billion US dollars, ranking 5th in market value. BSV’s current market value is 2.833 billion US dollars, ranking 12th in market value. Although BSV’s market value has shrunk severely, compared with the previous fork projects that eventually ended up with zero, it can be seen that this fork is relatively successful.

In short, from the birth of BCH to the fork of BCH, in addition to wanting to make the project develop better, there are more considerations of interests behind it. When the mining pool is capable enough to control the majority of the computing power of a project, who would give up the choice that is more beneficial to themselves?

On the eve of the new fork, the winner may be determined

BCH K-line chart for the past two months Source: binance.com

Since the news that BCH will fork again came out this year, the market has begun to move closer to BCH, and the price of BCH has slowly risen. Especially in the second half of October, the dense news about BCH fork also vaguely brought about a new round of market conditions.

Currently, Huobi and OKEx have expressed support for the BCH fork. Judging from the announcement, whether the name BCH can be inherited will depend on which of BCHA and BCHN has a higher price.

OKEx announced on October 28 that it would stop the BCH leveraged lending function on November 8, stop the recharge business and suspend the currency and leverage trading on November 14. And on November 15, the BCH hard fork snapshot will be airdropped to the user account at a 1:1 ratio.

BCH fork coin price details

Currently, CoinEx already supports two-way conversion between BCH, BCHA and BCHN. In its futures market, the price of BCHN is currently 13 times that of BCHA.

Judging from the current futures prices, BCHN has a relatively large advantage and is likely to inherit the name of BCH.

BCH block production percentage in the past 7 days Data source: Coin.dance

From the perspective of block production, BCHN currently has a great advantage. 74.7% of BCH blocks are mined by the BCHN camp, and the computing power of the BCHN camp has exceeded 50% of the entire network, while the computing power of BCHA is only 0.8%.

The main reason is that BCHA's route will make miners pay an 8% tax, which the miner group will naturally not support.

In the eyes of some people, although the fork has not yet started, there does not seem to be much suspense about the outcome.

In addition, related to the BCH fork are speculators in the market.

At present, there are investors who are hoarding BCH in the market. These investors want to get more benefits from airdrops than holding BCH. Some users even hedge in the contract market after buying spot, and get risk-free fork token airdrops through the combination of spot and futures.

However, the current BCH fork has great uncertainty, and trading or investing in forked futures tokens will involve considerable risks.

If a chain lacks the support of miners, it is likely to fail to survive, and the related tokens held will be at risk of becoming zero. Therefore, it is still necessary to be cautious when investing in BCH.

This fork actually illustrates one thing: BCH belongs to the community. Even the main development team cannot do things that violate the community consensus for the sake of profit, otherwise they will be abandoned by the community.

References:

BCH is about to hard fork Bitcoin’s “eldest grandson” is coming

OKEx Insights: On the eve of the second fork, understand the history of BCH forks in one article

BCH forks again, NODE development team versus ABC