BCH may usher in a second fork, and the game of thrones will be played between miners and developers

Author | Ruzai

Produced by | Benpao Finance

On August 1, three years ago, Bitcoin miners executed a hard fork at block height 478558. Six hours later, the ViaBTC mining pool successfully mined the first blockchain of BCH. Since then, Bitcoin has officially been divided into two chains: BTC and BCH.

Now, three years have passed, and Yang Haipo, the founder of ViaBTC who supported BCH at the beginning, has threatened to fork BCH again. Why does BTC always face forks during its development? What happened in the past three years? What is the reason for BCH's fork this time?

Review of BCH's Second Fork

On August 4, Ethereum founder Vitalik Buterin expressed his views on BCH in a Twitter reply to netizens. He did not understand why the BCH team cared so much about the details of the difficulty adjustment algorithm and was disappointed with the performance of the BCH development team.

On August 5, Vibit founder Yang Haipo expressed his idea of ​​forking BCH on Weibo. The reason was that the Bitcoin ABC team announced the launch of a new dynamic difficulty adjustment (DAA) algorithm, Grasberg, on July 23, but in fact the algorithm ignored some important facts. The entire community was dissatisfied with the existing developers of Bitcoin ABC, so they wanted to fork and upgrade BCH again.

On the evening of August 6, several BCH developers issued a joint statement that they will implement the aserti3-2d difficulty adjustment algorithm (ASERT DAA) on the BCH chain on November 15, 2020. These developers are from BU, Electron Cash, BCHD, BCHN and other teams, and there is no Bitcoin ABC team.

The birth of BCH

To fully understand why BCH is facing another fork, it is best to first review the history of BCH’s birth, which is also the history of Bitcoin’s expansion.

As early as 2010, Bitcoin developer Jeff Garzik posted on the Bitcointalk forum, suggesting that the block size of Bitcoin be expanded to 7.1M. Satoshi Nakamoto then replied that the Bitcoin network blocks are not yet full, but preparations need to be made for future expansion.

It was not until 2013, when Bitcoin’s first global bull market came, that the Bitcoin network began to face the problem of skyrocketing transactions, with the occupancy of each block reaching 150K, or about 15%. At this time, the topic of capacity expansion on Bitcointalk was already an absolute hot topic, and the expansionists and anti-expansionists began to emerge.

Although the market subsequently encountered a bear market, the number of people using the Bitcoin network did not decrease. By January 2015, the occupancy rate of each block in the Bitcoin network had reached 300K, or 30%. At this time, developers believed that if the development progress was taken into account, capacity expansion was imminent.

Not long after, Blockstream, the financial backer behind the Bitcoin Core technical team, began to develop Lightning Network technology. In February 2015, the Lightning Network white paper was released, and in December of the same year, the Segregated Witness (Segwit) scheme was proposed. Since then, the Lightning Network has been written into the Bitcoin roadmap, forming a technical route of "Segregated Witness + Lightning Network". At this time, the contradiction between the expansionists and the anti-expansionists was intensifying.

By 2017, as we all know, this year was the beginning of the bull market. In May, the Bitcoin block usage exceeded 1M. At this time, Bitcoin had officially begun to suffer from the problem of network congestion. The debate in the Bitcoin community about capacity expansion became increasingly fierce. After facing the failure of the Hong Kong Consensus and the New York Consensus, the supporters of the expansion faction made up their minds to fork.

Mining leaders, led by Bitmain's Jihan Wu, ViaBTC's Haipo Yang, nChain's Craig Wright (Australian Satoshi), Roger Ver (Bitcoin Jesus), and Jiang Zhuoer, all agreed that the Lightning Network technology is only a temporary solution and is not safe. They believe that directly increasing the block size of the forked network to 8M is more in line with the situation of the Bitcoin network.

The fork is not only a dispute about block size, but also a dispute about faith. On August 1, 2017, supporters of the expansion plan forked a new chain from the Bitcoin network - Bitcoin Cash.

At this time, the BCH community ushered in a brief period of harmony. The two main development teams were Bitcoin ABC and nChain, and there were five other development communities.

The story of BCH and BSV

It stands to reason that the new BCH has expanded the block capacity and the “peer-to-peer electronic cash system” has also been reflected, but the harmony did not last long and internal conflicts arose.

In April 2018, the Bitcoin ABC development team of BCH released a mid-term development roadmap, which was strongly opposed by nChain chief scientist Craig Wright. This was the first time that Bitcoin ABC caused dissatisfaction within the team.

Then in July, Craig Wright has been threatening to implement a fork called Bitcoin Satoshi Vision on the BCH protocol, firmly supporting Satoshi Nakamoto's idea, which is BSV. On November 15, BCH was upgraded for the third time, and BCH officially forked into BCHABC and BCHSV.

The fork to BSV was the first time that the original BCH community had internal conflicts due to development concepts. Craig Wright was very dissatisfied with other development teams represented by Bitcoin ABC.

Regarding the 32M block size and BCH scalability plan, Craig Wright believes that it is necessary to continue to support Satoshi Nakamoto's wishes and insist on expansion. This fork was initiated by Craig Wright, and no replay protection was set. The two sides once engaged in a fierce battle of computing power.

Up to this point, although Bitcoin ABC and nChain were both supporters of the expansion faction, Bitcoin ABC’s development concept caused Craig Wright’s dissatisfaction, which eventually led to the two companies parting ways.

The core reason for the BCH fork

If the last time BSV was born was because Craig Wright had different ideas with the Bitcoin ABC team, then the reason for this fork is similar, except that a different group of people were involved.

First of all, I need to introduce the current situation of miners. Many miners are not focused on mining a certain currency, but will join the "machine gun pool". The difference between the machine gun pool and the ordinary mining pool is that the machine gun pool will automatically select the currency with the highest current mining income based on various parameters such as hash rate, mining difficulty, and currency price. In other words, miners in the machine gun pool simply mine whichever currency makes more money, and the computing power switches very quickly.

As we all know, Bitcoin produces one block every 10 minutes, and the difficulty adjustment period is about 14 days. After the BCH upgrade in November 2017, the DAA difficulty adjustment mechanism has been adopted. Under this mechanism, the difficulty adjustment period is greatly shortened to about 144 blocks, which is about 1 day.

Theoretically, the DAA mechanism can make BCH block production more stable than BTC, but in reality, due to the existence of the machine gun pool, BCH block production has become extremely unstable.

When the difficulty of BCH decreases, the speed of BCH block generation becomes faster and the income increases. The computing power of the machine gun pool miners immediately cuts into the BCH mining pool, so the computing power of the BCH mining pool increases sharply, and the difficulty of block generation begins to increase. When the difficulty is high to a certain level, the mining income becomes lower, the computing power is cut out again, and the BCH block generation becomes slower again. This cycle repeats, and the interests of some fixed mining pool miners that are not machine gun pools will be greatly affected.

Therefore, one of the BCH development teams proposed to change the DAA algorithm to the EMA algorithm, which can make the block time smoother. Some people also proposed to use the ASERT algorithm for optimization. In short, they can reduce the impact of the machine gun pool on the block speed. According to the plan, the DAA algorithm will be modified in November this year, and the way to modify it is hard fork.

But the problem is that Amuary, the head of the Bitcoin ABC team, was not happy. He also proposed an algorithm, but all other developers and communities opposed it. However, he was the boss of the development team with the most extensive client applications, and his decision was more important than the attitude of the mining community. So the events mentioned at the beginning of the article occurred: Vitalik Buterin complained and Yang Haipo was very dissatisfied with Bitcoin ABC.

Conclusion

The apparent reason for the conflict in the BCH community this time is that the machine gun pool miners seriously affected the interests of fixed miners, and the algorithm modification unanimously requested by the community was rejected by the Bitcoin ABC team, and the community broke up with Bitcoin ABC.

The core reason is that in addition to the disagreement on the difficulty algorithm, "Yang Haipo" and others are more dissatisfied with the Bitcoin ABC team's control over BCH. From his statement on Weibo, it can be seen that the Bitcoin ABC team does not respect other opinions in the community at all.

We can actually find that all the forks in the past, whether due to development concepts or miners’ interests and other reasons, are just a ****. The ultimate core reason is the dissatisfaction of the forking party with the party with decision-making power, that is, the disgust with power. Instead of being restrained by others, it is better to be independent. The centralization of power seriously violates the decentralized nature of blockchain.

How to resolve the various different opinions within a community and whether the core characteristic of blockchain, decentralization, is too good to be true, the outcome of this game of thrones will reveal a lot.