Investigation into the truth of BCH fork: Whose money is Craig Wright using to attack mining tycoon Jihan Wu?

Text丨ST Source丨31QU

WU: BCH is going to be upgraded. Are the funds for advertising and price manipulation in place?

CSW: The media is asking for too much in this bear market, and since we are about to go public, big funds cannot be mobilized, so we need to find another way out.

WU: Is there any good way to promote and boost sales without spending any money?

CSW: Yes, how about we split up? Yours is called ABC, mine is called BSV. We can each do our own thing, and we don’t need to explain the technology to the media. They can all compete to research, promote each other, and promote the market.

WU: That’s a good idea, let’s do it!

(The above supplement has nothing to do with the main text)

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On August 1, 2018, Wu Jihan, Craig Steven Wright (CSW) and Roger discussed together at the BCH Hong Kong Conference. At the meeting, Wu Jihan and CSW also released a second-layer smart contract product based on BCH - the Wormhole Protocol.

On August 8, 2018, as the BCH (ABC) 0.18 version code was about to be completed, CSW took the initiative to protest against the ABC version of BCH through Twitter and publicly threatened: "The November upgrade will fail and he will replace the developer."

On the 20th day after CSW publicly declared war (August 29, 2018), its stakeholder company nChain officially launched the BSV node client.

In September, a new BCH client appeared; BSV also announced that it would split into a new, incompatible protocol at the same time as the BCH hard fork.

BCH's hard fork is scheduled for 0:40 am on November 16, but the war of division has already begun.

(Computing power comparison chart on November 13, from https://cash.coin.dance/)

Currently, the two warring parties in the BCH fork war are ABC and CSW.

ABC faction: mainly Bitmain, BitcoinABC development team, btc.top mining pool, ViaBTC mining pool, Coinex exchange and bitcoin.com.

CSW faction: headed by Craig Steven Wright (CSW for short) and Calvin Ayre, it only leads nchain and Coingeek on the surface , but in fact there are more stakeholders behind it.

Behind the fork war is a conflict of consensus, and behind the conflict of consensus is a conflict of interests.

Regarding the BCH split, 31QU will explore the historical events of CSW and Bitmain: What is the essence of the interests of the ABC and BSV consensus dispute? Where will the respective destinations be behind the consensus differences?

1

CSW in the eyes of Wu Jihan: From "ally" to "spy"

The BCH community these days is filled with turmoil over the upcoming fork and excitement about making history.

A Peking University PhD named "changyong" wrote:

"Internal wars and forks are an inevitable process for any decentralized cryptocurrency and are the driving force behind the development of the system."

Although the split is the self-evolution of BCH, this split is actually a naked conflict of interests between CSW and Bitmain. To be more precise, it is a war that CSW initiated against Bitmain.

In order to achieve this goal, CSW has been planning for a long time.

According to Wikipedia: CSW is an Australian computer scientist and businessman born in October 1970. Although CSW's personal experience is quite legendary, before December 2015, CSW, as a "scientist businessman" with some achievements, was far from being well-known in the world.

CSW became famous in December 2015 when two news websites, Wired and Gizmodo, claimed that CSW might be the inventor of Bitcoin. However, after being investigated by multiple media outlets including THE NEW YORKER, this rumor was confirmed to be a "prank" carefully planned by CSW himself.

However, as Bitcoin reached a new high in price in 2016, CSW’s plan to “continue to be Satoshi Nakamoto” was immediately launched.

On May 2, 2016, the British Broadcasting Corporation and the Economist published an article claiming that CSW had performed cryptographic signatures during the creation of Bitcoin. This statement was corroborated by Gavin, the designated successor of Satoshi Nakamoto, and the topic of "CSW is Satoshi Nakamoto" once again became the focus of heated discussion in the Bitcoin community.

What happened later turned out to be just like what CSW had been investigated for: when the community asked CSW to further demonstrate his encrypted signature, CSW made excuses for various reasons.

CSW’s behavior also caused Gavin to lose his reputation in the Bitcoin community and even lost his position as head of Bitcoin Core.

In fact, to this day we still cannot prove that CSW is not Satoshi Nakamoto, but at the same time CSW cannot prove that he is Satoshi Nakamoto.

But this somewhat clumsy plan made CSW famous in the crypto community. However, most people in the crypto community believe that CSW is "not Satoshi Nakamoto" and label him a "liar", jokingly calling him "Ao Bencong".

CSW’s breach of trust stems not only from this conspiracy, but also from his falsification of real experience.

CSW has publicly claimed many times that he holds a doctorate in theology and a doctorate in computer science from Charles Sturt University. However, in a Forbes investigation, Charles Sturt University personally issued an announcement confirming that CSW only holds two master's degrees.

(One of the investigative articles on CSW)

In addition to the degree fraud, CSW also attacked Ethereum and other public chains, attacked or blacklisted almost all people with different opinions, and hoarded computing power in a high-profile manner, claiming to "kill BTC", which was also dug up and reported by the media.

Simply put, CSW’s personal reputation was already “notorious” before he joined the BCH camp in 2017.

But even such a hype master gradually became one of Wu Jihan's allies in 2017 because he supported Bitcoin Unlimited (BU), the technical team of Bitmain's expansion plan.

In fact, Wu Jihan had always been wary of CSW’s overtures, but the BU team at the time needed external support so badly.

In March 2017, an attack on BU nodes directly caused its nodes to drop sharply from 800 to 300.

So faced with limited allies on the expansion fork, Wu Jihan chose to accept CSW and invited CSW to participate in BCH's high-level meetings many times.

（nchain company homepage）

In order to establish his own position in the BCH community, CSW's nchain company did provide some code construction for BU and indirectly promoted the progress of BCH.

But according to BCH community members: the code that CSW contributed to BCH is completely secret and non-public.

In fact, when CSW first entered the BCH community, he repeatedly claimed to have received support from "rich friends". Since then, there have been continuous news about investing in the BCH ecosystem, including deploying mining farms and mining pools, and investing in BCH application projects.

CSW's investment in the construction of the BCH ecosystem has made CSW look more like a BCH builder.

At first, everyone thought he was really supporting the development of BCH, but recently CSW said in an interview that he did not support the BCH fork in August 2017. In order to correct this mistake, he is rapidly accumulating computing power, threatening to attack the developing fork chain of BCH, and further attack and eliminate BTC, so that Bitcoin will return to the time before Core dominated.

Once these remarks were made, the friendship between CSW and Bitmain was instantly shattered. So from the moment CSW entered the BCH community, the divergence of interests between him and Bitmain had already begun.

This speculation was confirmed in an email that CSW received from Gregory Maxwell, CTO of Blockstream, in November 2018. The title of the email was: “I think we may share a common interest.”

Blockstream is another "mortal enemy" of Bitmain. It is a blockchain technology company co-founded by Gregory Maxwell, Pieter Wuille and others and led by Adam Back.

Because Blockstream used capital power to control the Core team of Bitcoin's development organization in the early years, and was very opposed to Bitcoin's expansion plan based on the need to build its own side chain (Lightning Network), it was regarded as the dictator of Bitcoin by Bitmain and miners.

So after CSW publicly admitted the incident, Wu Jihan directly said on Twitter in a suspicious tone: "From the beginning I had a conspiracy theory that CSW was a spy controlled by Blockstream."

2

What is the computing power war about?

Returning to the version dispute between ABC and SV, from the appearance of the split between ABC and BSV:

The idea behind the ABC version is that BCH is in an era when blockchain technology is still immature, so if BCH wants to become a world currency, it needs to continue to explore the underlying code and keep up with the technological development of blockchain in a timely manner.

The disadvantage is that because the underlying protocol of the ABC version is not stable, the ABC version of BCH is not conducive for developers to contribute code to the new code platform in the short term.

The appeal of the BSV version is: return to the classics. Simply put, it is to cancel the expansion limit of BCH and let BCH infinitely return to Satoshi Nakamoto's original description of Bitcoin in the white paper.

But at the same time, because Satoshi Nakamoto did not have the concept of running smart contracts in the future when he first designed it, BSV will only be a pure cryptocurrency, and will not be able to run Dapps or adapt to new changes in future code iterations.

(BCH community vote)

In terms of consensus alone, there is no difference between ABC and BSV. The only difference between them is the debate over who will be the world's currency in the future.

In fact, Bitmain is quite radical in the upgrade direction of the ABC version. Since BCH expanded last year, according to third-party data, its block size rarely exceeds 1MB due to its low transaction volume, and hard fork expansion is actually almost meaningless.

Therefore, in the trial of the ABC version, Bitmain decided to suspend the expansion first, and increase the transaction time from the previous 10 minutes to 2 minutes by modifying the underlying protocol.

Judging from the upgrade on November 16, 2018 alone, the ABC version of BCH is just a normal improvement of Bitmain on the original basis.

Bitmain’s radicalism gave CSW, who has called himself “Satoshi Nakamoto” since his debut, a perfect reason to rebel.

The reason is that there are many believers in the community who support Satoshi Nakamoto's original code, so CSW, by calling himself "Satoshi Nakamoto", began to call on supporters to generate a second consensus other than the ABC version.

However, from CSW’s personal perspective, apart from the slogan of “restoring Satoshi Nakamoto’s vision” that CSW insists on, the emergence of BSV still has traces of its private interest motives.

Because according to members of the BCH Chinese community: CSW has applied for 2,500 cryptocurrency-related patents, and in 2018, there were 43 blockchain patents under the name of nChain, ranking sixth in the world, and most of these patents are related to the original code of Bitcoin.

Therefore, some BSV opponents believe that the purpose of stabilizing the BCH underlying protocol is to maintain the validity of its patents and obtain economic benefits through patents.

Bitmain’s modification of the agreement on the ABC version has seriously undermined CSW’s possibility of making profits on the original patent.

The incident of CSW applying for a patent has caused CSW to be accused by Wu Jihan and many crypto enthusiasts in the BCH community of destroying the spirit of blockchain. However, compared with these infamy, it is obvious that CSW values ​​the interests of wealth more.

Because CSW, who calls himself "Satoshi Nakamoto", once told Planet Daily in the face of the controversy with BCH:

“There is no democracy, we are only talking about money. I just want Bitcoin to become the world currency. Did your vote change anything? No, so there is no democracy, let’s talk about money.”

Therefore, taking into account CSW’s various behaviors after his debut in 2015, the motivation of using money as the only criterion seems to provide a preliminary explanation for CSW’s behavior in the various ugly behaviors of “Satoshi Nakamoto”.

After all, CSW, who is determined to create the world's currency, applied for many patents for his own encryption code when he chose to blackmail "Bitcoin", for fear that the "Bitcoin" belonging to this world would escape his control one day.

At this point, it is no wonder that after CSW publicly broke with BCH, the founder of Ethereum, Vitalik Buterin, said on Twitter: "CSW should be allowed to fork BCH, because this will remove CSW from the BCH community and is beneficial to the long-term development of BCH."

3

CSW’s trump card

From the moment CSW split from the ABC team, it was destined that CSW and Bitmain would openly challenge each other. However, as Bitmain is the world's largest mining machine manufacturer with a valuation of over US$12 billion, what background does CSW have to compete with Bitmain?

At the same time, as the disgraced "Australian Satoshi", why did CSW's fork plan on BCH receive responses from more than a dozen exchanges and crypto wallets including Binance, OKEx and Huobi?

(From the BCH community)

In response to outside doubts that his computing power is not as good as Bitmain, CSW directly stated: "We just have money. Wu Jihan thinks he can control the computing power, and we - all we have is money."

In fact, after entering the BCH community, CSW has repeatedly emphasized that he is a "billionaire" and often shows off his luxury cars, mansions and some large Bitcoin addresses.

But based on the current information, the key to CSW's ability to compete with Bitmain is a "Tulip Trust" that CSW himself revealed in 2016. The trust document shows that Dave Kleiman has entrusted 1.1 million BTC to CSW, and agreed to return it to CSW in 2020.

(Tulip Trust)

But Kleiman has passed away, so the "Tulip Trust" has become a historical mystery about CSW's real wealth. However, even if the liar's trust is true, BTC in 2020 has long lost the chance to fork on November 16.

Therefore, after excluding the "Tulip Trust", according to the announcement of the Bitmex exchange: the forces currently supporting BSV include Coingeek, BMG Pool, SV Pool and Canadian listed mining company Squire Mining.

Let's analyze the relationship between these supporters and CSW one by one:

The founder of the Coingeek mining pool is Calvin Ayre, and Calvin Ayre has publicly expressed his support for CSW's BSV plan since CSW split BCH.

In addition, according to the announcement of Bitmex, CSW holds a 25% stake in the Coingeek mining pool.

The BMG pool also has a close relationship with CSW. CSW holds a 12.5% ​​stake in the mining pool through the BMG department of the nChain Group.

(BCH hashrate on November 13)

As for the SV pool, it is a new mining pool specially set up by CSW to launch a computing power attack on the ABC version of BCH.

Currently, according to data from November 14, 2018, Coingeek, BMG pool and SV pool alone have controlled 71.53% of the BCH computing power, which is far higher than the current computing power of Bitmain.

Because BCH computing power is out of control, the price of BCH has fallen to around $508 after reaching $631 on November 7.

According to the announcement of Bitmex, CSW’s sudden increase in computing power may be related to Squire Mining (SQR CN), a Canadian listed mining company with a market value of 65 million Canadian dollars (about 340 million RMB).

Because in the company presentation that Squire had presented to investors, Stefan Matthews was a director of the mining machine company and held a 9.3% stake in the company.

In a book about CSW, "The Satoshi Affair" published in June 2016, CSW repeatedly hinted that Matthews was a long-time close friend of CSW.

(The fork countdown page captured on November 13)

Therefore, despite the lack of community support for the Bitcoin SV hard fork, BSV caught Bitmain off guard in the surprise war of the BCH fork due to CSW’s careful preparation.

However, as the world's largest mining machine manufacturer and the absolute power holder of Bitcoin world computing power, will Bitmain really passively accept it without any means of counterattack?

4

BCH once soared

The most eye-catching thing in this fork war is the crazy rise in the price of BCH over time.

The reason for its price increase was initially due to the cryptocurrency exchange Binance announcing that they would support the Bitcoin Cash hard fork. After that, BCH trading volume increased nearly 7 times.

(BCH recent price changes)

In the past period of time, there has been some good news related to BCH: Gemini Exchange announced in early November that they will try to obtain regulatory approval for the listing of Bitcoin Cash (BCH) and launch BCH transactions after approval.

In fact, there are already more than a dozen exchanges that support the BCH fork. Before the rapid growth of CSW's computing power, some users in the BCH community have always regarded the BSV solution as a candy benefit of the Bitcoin Cash ABC version.

As the third major split in the history of cryptocurrencies after BTC and ETH, this surge in BCH is not without trace. Earlier, BCH and ETC both achieved 50% of the price and market value of BTC and ETH at their highest.

Such benefits are enough to make short-term arbitrageurs in this long bear market speculate crazily. Moreover, this new token split from BCH has been directly listed on the trading list of the world's top exchanges since its birth, and has received free publicity from many media in this colorless day.

5

The battle of computing power, where to go?

The Daily Planet previously asked CSW: What do you want to gain from this battle?

CSW responded: “Victory. Ultimately, native Bitcoin. No other compromises, and there won’t be any compromises. No compromises here from me.”

In CSW's plan, after this fork, in addition to attacking the ABC version of Bitcoin Cash, he will continue to hoard computing power and launch an attack on BTC one day until all the disputes about Bitcoin in the world return to the BSV chain he leads.

Although CSW’s computing power currently has an absolute advantage over BCH in the split on November 16, one fact that cannot be ignored is that Bitmain still has the highest ratio of combined computing power between BTC and BCH.

(Image from https://cash.coin.dance/)

According to public information, the mining pools that currently support ABC and Wu Jihan mainly include: btc.com, antipool, btc.top, viabtc and bitcoin.com.

According to 31QU statistics, after taking the computing power on Bitcoin into account, Bitmain has more than 50% of the computing power of the entire BTC and BCH network.

Therefore, in order to eliminate this computing power gap, according to the BCH community members, CSW is still frantically purchasing and deploying BCH computing power mining machines in private. The extent of his madness can be seen from the fact that the SV mining pool has increased its comprehensive computing power from less than 5% to more than 18% in a few days.

Compared with CSW's actions, Bitmain's share of computing power is continuously losing. This situation of strong enemies and weak ourselves has slapped the faces of many people who previously questioned CSW's launching of a computing power war.

In fact, the entire BCH community has begun to feel a sense of panic that a major war is imminent, and the previous relaxed atmosphere of calling "BSV" candy has long been lost.

The result of this battle of computing power was introduced by Jiang Zhuoer in his article on November 13:

It could be a guerrilla war or a war of annihilation.

If it is a guerrilla war, both sides interfere with each other, and the result is that the two chains coexist.

But if the situation really develops into a war of annihilation as CSW publicly declared, the final victory or defeat will depend on the combined influence of computing power and funds.

According to the current BCH network computing power of 6322PH/s, CSW currently has a computing power of nearly 4500PH/s, and what is even more terrifying is that this computing power is still growing.

Jiang Zhuoer even speculated that CSW's computing power has the possibility of reaching 14,000PH/s, because according to Jiang Zhuoer: CSW can also control more computing power through leasing, such as mining pools, large mining farms, and computing power platforms such as nicehash, so it is not difficult for CSW to own + lease computing power to 10,000P.

(Demonstration diagram of possible results released by Jiang Zhuoer in the BCH community)

If CSW can temporarily reach a computing power of 14,000 PH/s, its computing power will have reached nearly 3/5 of Bitmain’s total self-sustaining computing power of 25,000 PH/s. This makes CSW’s wild statement in the interview with Planet Daily, “We are ready to crush ABC into slag, and we are also ready to crush Bitmain into slag (We grind Bitmain into nothing)”, have a certain degree of truthfulness.

Therefore, this BCH split war may be more intense than many media expected.

The terrifying thing about the hash war is that hash power is the highest arbitration mechanism of Bitcoin, and hash power can really kill a chain. The attacker only needs to mine one more block than the defender to declare the defender's previous block invalid.

Finally, Jiang Zhuoer concluded: The less computing power CSW has, the greater the financial advantage he needs; the greater the computing power, the smaller the financial advantage he needs. If CSW has a huge financial advantage, even if he only has 4000P computing power, he can win the computing power war and force Bitmain to give up its defense.

However, for BCH, which is now less than two days away from splitting, the best prediction is probably to wait for further actions from both sides after the split on November 16th Beijing time (around 4:40 pm on November 15th US time).

In order to deal with the BCH crisis that could get out of control, Bitmain had already removed Wu Jihan from his position of real power in the company to a nominal position of supervisor in its filing changes a few days ago. According to other media analysis, this move was to reduce the impact of the BCH fork on Bitmain's listing process.

Therefore, this war, which developed from a farce, is already on the final brink of a "life and death decision."

As ordinary investors, what we hope to see is: maintaining consensus and common development.

This article partially references:

1. Andrew O'Hagan's investigation of CSW:

http://archive.is/kjuLi

2. How I met Satoshi:

https://medium.com/@jonmatonis/how-i-met-satoshi-96e85727dc5a

3. Wu Jihan’s conspiracy theory:

http://www.btc798.com/articles/28347.html

4. BCH’s evolution and struggle:

https://bch.club/index.php?app=team&mod=Forum&act=detail&topic_id=606&team_id=1

5. Jiang Zhuoer’s views on the computing war:

https://bch.club/index.php?app=team&mod=Forum&act=detail&topic_id=682&team_id=1

6. BITMEX Announcement:

https://blog.bitmex.com/

7. Planet Daily’s interview with CSW:

https://mp.weixin.qq.com/s/AygNDYYsTGUPwM8f886NJw

8. CSW's Wikipedia:

https://en.wikipedia.org/wiki/Craig_Steven_Wright

9. Tulip Trust:

file:///C:/Users/sishi/Desktop/Tulip-Trust-Redacted.pdf

10. CSW cannot prove his identity:

http://www.metzdowd.com/pipermail/cryptography/2016-May/029323.html

11. BCH strikes enemies from within:

https://www.yours.org/content/bch--fighting-the-enemy-from-within--975f4f279f60/

12. Craig Wright was sued by Ira Kleiman, brother of the late coder Dave Kleiman, and his estate:

https://web.archive.org/web/20180301131629/https://motherboard.vice.com/en_us/article/3k74qj/craig-wright-is-being-sued-for-10-billion-dave-kleiman?utm_source=mbtwitter