Why doesn't Bitcoin hard fork split into two coins?

Many people’s fear of hard forks comes from the fact that ETC was split after the ETH hard fork, but this does not mean that the BTC hard fork will split into two coins - just like the blue screen of a Windows computer does not mean that the Apple computer will also blue screen. The huge differences between BTC and ETH in technical parameters and communities make the BTC small fork doomed .

In the BTC world, users' sunk costs are calculated in minutes - they can sell coins in minutes if necessary, while the sunk costs of mining are calculated in years. When the coin price collapses, everyone can escape, except the mining industry. But now it is the mining industry that cannot escape that chooses hard forks . More and more mining pools support expansion and BU, but users are afraid of hard forks. Why?

The reason is simple:
1. The huge sunk costs in the mining industry require the mining industry to consider the long-term development of Bitcoin, including the number of users and price of Bitcoin in a few years, rather than just the current price fluctuations.
2. The mining industry understands mining-related technologies and knows the insurmountable chasm that BTC small forks cannot overcome, but users do not know.
These natural barriers include:

1. The BTC small fork needs to burn 200 million in costs to survive.

In terms of block time, there is an extremely important difference between BTC and ETH: BTC adjusts the mining difficulty every 14 days, while ETH adjusts the difficulty block by block (a few seconds). Adjusting the difficulty block by block is an improvement of BTC by altcoins, with the aim of ensuring continuous block production in the face of large changes in computing power. For example, when the ETH computing power drops by 90%, the interval between the first block is only extended from a few seconds to tens of seconds, and the difficulty of the next block will be lowered, and it only takes a few minutes to adapt to the 90% computing power change. Therefore, when ETH hard forks, after 99% of the computing power leaves the original chain, the remaining 1% of the computing power can still continue to produce blocks and maintain the normal operation of ETC.

But BTC is different. When the BTC computing power drops by 90%, the block time of the remaining 10% computing power will be extended from 10 minutes to 100 minutes, and it will take up to 140 days to enter the next difficulty adjustment cycle . During these 140 days and 5 months, the already congested 1M block will be further reduced to 0.1M block, and it will take 10 hours to wait for 6 confirmations, which makes the original chain extremely difficult to use.

But this is not the most fatal. The most fatal thing is that when mining the 2016 blocks of the first difficulty adjustment cycle, the theoretical output of the large computing power fork and the small computing power fork is the same. No matter which fork a miner mines, the number of coins mined is the same, so rational miners will inevitably choose to mine the fork with a higher coin price . In other words, after the 90% computing power hard fork assumed above, the remaining 10% computing power will struggle to hold on for 140 days until the difficulty adjustment. After the hard fork occurs, no rational miner will continue to mine the fork with a low coin price . All miners will "whoosh" and concentrate on the fork with a high coin price.

a. Of course, some people will say that they have other purposes and are stubbornly supporting the miners of small forks? Then let's calculate how much money the miners who support small coins will burn. Based on the experience of ETH and ETC, assuming that the price of small fork coins (hereinafter referred to as small coins) is 20% of the big coin, and the price of the big coin is 10,000, then the miners who mine small coins will lose 8,000 yuan for every small coin worth 2,000 yuan (they could have mined a big coin worth 10,000 yuan). In total, they will have to burn 2016 blocks * 12.5 coins per block * 8,000 yuan loss per coin = 201.6 million yuan to survive until the difficulty adjustment .

b. Of course, some people will say, isn’t it just 200 million to burn? With so many speculators speculating on small forks, won’t they be able to come up with 200 million to burn? That’s right, they really can’t come up with 200 million to burn. This is a typical tragedy of the commons problem. There are many speculators, but who will come up with 200 million to burn, and who will have to rent at least 10% of the computing power, and then let others take a free ride?

c. Of course, some people will say that maybe there is a big speculator who bought 200 million small coins, and then is willing to burn 200 million to mine, so that the 200 million small coins can be increased to 1 billion?
This is a good question. The 200 million yuan cost is the first chasm. Let’s talk about the second chasm:

2. Mining has the interest, determination and ability to kill small forks

There is no doubt that the emergence of two Bitcoins is not in the interests of everyone, so once a small fork appears, almost everyone will either acquiesce or agree that the mining industry will kill the small fork, and the action of the mining industry to kill the small fork will have moral legitimacy. The mining industry is the army of the Bitcoin world . The US army burned the blood of hundreds of thousands of people in the Civil War, and the Chinese army burned the blood of more than one million people in the War of Liberation. The mining industry just burned some electricity bills.

When the price is 75:25, under the natural rules of Bitcoin, the hashrate is not 75%:25%, but 100%:0%. Instead of a small fork, the winner takes all and the small fork chain dies. This is a rule designed by Satoshi Nakamoto that is difficult for the separatist faction to cross. Once a big speculator violates Satoshi Nakamoto's rules and forcibly burns money to keep the small fork alive, attempting to split Bitcoin and make a profit from speculation, the mining industry will never sit idly by.

The so-called killing of small forks is not simply launching a few 51% attacks, but a more thorough suppression: starting from the first block of the small fork, no transactions will be packaged, and any blocks with transactions will be isolated (invalidated), so that any transactions on the small fork cannot be confirmed. The cost of suppression depends on the money burned by speculators. If speculators mine n blocks, the mining industry only needs to mine n+1 blocks to cover and invalidate the chain mined by speculators. If speculators no longer burn money, the mining industry does not need to burn money anymore. Every penny burned by the mining industry is padded with the corpse of the money burned by speculators.

This is another winner-takes-all fight, with only two possible outcomes: complete victory or complete defeat. Speculators may be richer than the mining industry, but they will never have more computing power, nor will they have more interests and determination in Bitcoin than the mining industry . The outcome of this fight is predictable.

3. Mining will adopt a gentler transition approach when necessary

The one who most simply hopes that the price of coins will rise is undoubtedly the mining industry, so when necessary, the mining industry will adopt a more moderate method to complete the hard fork to avoid market panic and volatility . There are many options in this regard, such as synthetic fork, which is a good solution.

In simple terms, synthetic forks are soft forks when BU computing power is absolutely dominant but hard forks have not yet been initiated. This soft fork reduces the rules of valid blocks, reducing "Core and BU blocks are both legal blocks" to "only BU blocks are legal blocks". At this time, if the mining pool still insists on mining Core blocks and does not switch to mining BU blocks, all the mined Core blocks will be isolated (invalidated) . There are only two ways to deal with the mining pool that supports Core:

1. Confrontation : A soft fork is also initiated to define the BU block as an illegal block. However, since the BU computing power is absolutely dominant at this time, all users who have not changed the rules will regard the longer BU chain as the legal chain . Without the support of exchanges, users, and the community, the small mining pool chain that actively forks from the main chain has no chance of survival.

2. Compliance : Fake voting to mine BU blocks, but declare that they actually support Core blocks, and will mine Core blocks again after the hard fork is initiated. However, the synthetic fork stage can last long enough for everyone in the market to see that 100% of the computing power supports BU, and unanimously agree to end the dispute and expand to large blocks . At this time, the Core trend is gone, and the mining pool that fake votes for BU will receive much less support when it mines Core blocks again, greatly reducing the possibility of Bitcoin splitting.

In essence, synthetic forks are to divide the "one step" of a hard fork into two "half steps", unifying the computing power first and then hard forking. When BU takes a half step forward and puts the dagger at the throat of Core, Core will face a dilemma . If it turns against Core, it will be impossible to get everyone to update their soft forks uniformly, and it will be difficult to win the market; if it does not turn against Core, BU's next half step will be to cut the throat directly, and Game Over.

4. Changing the POW algorithm = ostrich policy, changing the POS algorithm = Taiwan giving up its seat in the United Nations

Of course, Core has another option that it has repeatedly used to threaten the mining industry: changing the POW algorithm. But anyone who knows a little about mining knows that this is a joke. Is it safer to move from a largest mining machine to a smaller mining machine? In the mining industry, there are no graphics card mining machines that can kill small forks of the graphics card algorithm?

At present, the computing power of the graphics card market (only counting the four major currencies ETH+ETC+ZEC+XMR) is about 840,000 RX480 graphics cards, with a total equipment value of 1.45 billion yuan. If Core hard forks and changes the POW algorithm, it will directly contradict the previous claim that "no expansion is due to the danger of hard forks" . This divisive behavior will be unanimously condemned by the community and the support rate will be greatly reduced. Assuming that the price after changing the POW algorithm is 10% of the large block currency (it is impossible to be more), it will account for 12.3% of the daily output value of graphics cards, corresponding to an equipment value of 180 million yuan.

With this level of computing power protection, not to mention the mining industry, any big player can attack. There is a fundamental difference between graphics card miners and Bitcoin miners. Bitcoin miners can only mine Bitcoin. You can buy mining machines to attack Bitcoin, but it is impossible to rent enough Bitcoin miners for just two or three days. Graphics card miners have no loyalty to the coins they mine. They mine whichever one has the highest return. You want to rent graphics card miners to attack Core coins? No problem, as long as you pay . With just 1 million yuan, you can attack Core coins for a day and make hundreds of millions by shorting. Do you think anyone would do it?

As for the change to POS algorithm, I have said before that I welcome Core to change to POS algorithm. After the change, it will no longer be Satoshi Nakamoto's Bitcoin. The only way for Core to survive under POW is to change its name to CoreCoin. I also welcome Core to go its own way and freely practice the idea of ​​small blocks, instead of kidnapping Bitcoin, which Satoshi Nakamoto has already given the expansion code and clearly stated that it should develop into a large block .

5. It is the market, not mining, that kills small forks

Some people may have noticed that all the above inferences are based on one basis: large computing power (large block) forks have higher prices . Why not small computing power (small block) forks have higher prices? Of course it is possible, but if so, the mining industry will not initiate a hard fork, otherwise the mining industry will face all the difficulties described above. Therefore, in essence, it is the market, not the mining industry, that kills small forks .

There are rumors that if BU wins, the mining industry will control Bitcoin. This is obviously a fallacy. No one can fight the market unless he has more money than the market. What the mining industry does is just to respond to the market's demand for expansion, prepare for hard forks (or synthetic forks), and wait for the market to make a decision. Only the market can decide that large block coins have higher prices. Only the market has the strength and confidence to press the button to start the hard fork and pull the trigger to kill the small fork . The mining industry is just to kill the small fork as soon as possible after the market makes a decision, and end the possible chaos as soon as possible.

At present, there is a constant debate about which fork is called "BTC". There is no point in arguing about it. The market will force the name "BTC" on the fork with more users and higher prices, and it will be unable to refuse. The market calls the fork "ETH" and the original chain "ETC" because the fork has more users and higher prices.

Talk is cheap,

Show me the price.

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