The possibility of survival of Bitcoin's small computing power branch chain

Chapter 0 Introduction

Open and free discussion is healthy for decentralized communities like Bitcoin. Today, let’s talk about a very confrontational topic, the challenges of creating and surviving small hashrate forks.

The topic is quite confrontational, so please try not to get emotional.

Chapter 1 The possibility of creating a small computing power branch chain

Currently, more and more public statements indicate that Bitcoin may have one or more small computing power branches in the competition between the on-chain expansion plan and the segregated witness plan. In particular, Luke-jr's statement on modifying the algorithm to expel disobedient miners.

There are several possibilities for the generation of small computing power branch chains:

1. If the majority of the computing power decides to support software such as Bitcoin Unlimited that expands the block size, for example, 90% of miners decide to run Bitcoin Unlimited and expand the block limit. This will be a hard fork. If the remaining 10% of miners decide to continue running Bitcoin Core, it is possible that the chain will split into two, forming a BU chain with high computing power and a BC chain with low computing power.

Of course, BU and BC here are just examples. It is also possible that the majority of computing power decides to support Segregated Witness, and when it reaches 95% of the computing power, Segregated Witness will be locked and activated. If the remaining 5% of the computing power decides not to upgrade Segregated Witness, and because Segregated Witness is a soft fork, this 5% of the computing power must initiate a hard fork to be independent. This will form a small computing power branch chain, a large computing power Segregated Witness chain, and a small computing power large blockchain.

It must be emphasized that it is very difficult for 10% of the computing power to produce blocks. Before the difficulty adjustment, it took an average of 100 minutes for a 10% small computing power branch to produce a block. After 2016 blocks were mined, that is, 201600 minutes (140 days), it could be adjusted to 25 minutes. (In order to prevent the difficulty from changing too quickly, the Bitcoin system sets the difficulty adjustment amplitude of each cycle (2016 blocks, about two weeks) to be less than 4 times.) Then after 2016 25 minutes (35 days) of block time, the block time can be adjusted to 10 minutes. That is, it will take 175 days for the small computing power branch chain to adjust the block time to normal block production. These 175 days require a lot of electricity consumption and the opportunity cost of mining a large computing power chain. Some people have estimated that if 10% of the computing power wants to survive the difficulty adjustment, the cost under current conditions will be more than 100 million yuan. This is almost impossible to achieve.

2. If the situation 1 occurs, the small computing power chain needs to consume such a huge cost to mine normally, and it is possible that the small computing power branch chain will initiate a hard fork by itself, modify the difficulty value of the Bitcoin blockchain, directly skip two rounds of abnormal mining of 2016 blocks, and directly achieve the normal 10-minute block generation, thereby maintaining a small computing power branch.

Similarly, there are also big block enthusiasts who may not be able to wait for the miners to vote, and directly modify the difficulty to initiate a hard fork, mining large blocks by themselves, thus forming a high-computing power 1M chain and a small-computing power large blockchain.

3. Because in cases 1 and 2, both chains with large computing power and small computing power use the same algorithm, and the mining machines on both sides can be used universally. Then it is possible that the computing power of the large computing power branch chain will suddenly switch to the small computing power branch chain, and attack the small computing power chain, such as empty packets or even 51% attacks. Make the small computing power branch chain unable to work normally. It is also possible that the computing power of the small computing power branch is too small. In order to deal with these two situations, the small computing power branch chain may modify the algorithm. Use the CPU or graphics card directly to mine. This will form a large computing power SHA256 branch chain and a small computing power branch chain with other algorithms. This is the method proposed by developers such as Luke-jr to modify the PoW algorithm to fire miners.

From the split results: the two chains can be divided into two chains with the same algorithm (both SHA256) and different characteristics (different block size settings, whether to support segregated witness, different difficulty values, etc.). The two chains can also be divided into two chains with different algorithms (one SHA256, one X11, etc.) and different characteristics.

Chapter 2 Challenges faced by small computing power branches in order to survive

For the first case, it is basically difficult for a small computing power branch chain to survive the difficulty adjustment by itself, because the cost of the small computing power to survive the difficulty adjustment is too high. As long as the proportion of large computing power is high, such as reaching 90%, the small computing power has almost no chance of survival. There is no need to kill it, it will die on its own.

For the second case, a hard fork that modifies the difficulty is used to skip the small computing power branch chain that is mining with high difficulty, because its algorithm is the same as the large algorithm branch. Let’s not talk about the level of consideration of the miners on the large computing power side, let alone the moral level, but only the possibility of action. A miner with superior computing power on the large computing power side may cut into the small computing power chain at any time, and only mine on this chain, but not package any transactions. It is even possible to use the superior computing power to directly isolate the blocks mined by the small computing power. It is even possible to directly launch a 51% attack and destroy this chain.

For the third case, because the branch chain with small computing power uses a different algorithm, it can avoid the possibility of being attacked by large computing power in the previous paragraph. However, it still has to face the attack of new computing power on small computing power in the market. We will not discuss factors such as morality and motivation again, but only talk about the possibility of action. For example, the branch chain with small computing power uses the X11 algorithm and uses graphics cards for mining. Because of the small computing power, it is possible that someone will organize a higher graphics card computing power to attack this branch chain as described in the previous paragraph, and eventually invalidate this chain.

The latter two challenges are actually logically valid, but it is hard to say whether they will actually happen. There are also uncertain risks such as ethics, law, and interests. It is indeed a question whether these two attack scenarios will definitely happen. For example, ETC, which was split from ETH, has never been attacked.

Chapter 3: Challenge the rationality of the survival of small computing power chains

First of all, we need to make a judgment on whether the emergence of a small computing power branch chain is "correct". The "correct" here is in quotation marks because there is no more suitable word to describe it. It refers to a value judgment, including whether the creation of a small computing power branch chain is fair to the Bitcoin ecosystem, in line with morality, in line with the law, and related to power... etc.

This kind of value judgment is really a matter of opinion. Some people think that everyone has the right to create a small computing power branch chain through hard fork; some people think that creating a copycat coin will disrupt the Bitcoin economic ecology, and orthodox Bitcoin stakeholders have the power to kill the small computing power branch chain. It is also difficult for me to clearly say which value is better.

I mainly focus on the ownership of the naming rights of "Bitcoin", "Bitcoin", "BTC", etc. Which token on the chain can be named with this name? This is the key point of the dispute. At present, it is better to arrange the ownership according to the description in Satoshi Nakamoto's white paper.

“The majority decision is expressed as the longest chain, because the longest chain contains the most work,” and thus “nodes…use the longest proof-of-work chain as proof of transactions that occurred while the node was offline.”

It can be simply considered that the ownership of the naming rights is determined by computing power voting.

If the small computing power branch chain does not compete with the large computing power for the naming rights of "Bitcoin", I personally think that any computing power attack on it is "incorrect". Just like ETC, the name has been changed, so there is no need to attack others.

But what if it is the other way around? If a branch chain with small computing power insists on competing with a branch chain with large computing power for the naming rights of "Bitcoin", then it deserves to be attacked. But will anyone really attack? I think it is difficult.

Chapter 4: Analyzing the possibility of challenging small computing power chains

Regarding the latter two situations mentioned in Chapter 2, when it comes to who will attack, I think it is actually very difficult to happen.

First of all, they will face moral and legal pressure, especially the pressure from public opinion. At present, there is no authoritative organization that can rule to eliminate this kind of pressure, like a court. Those who have the ability to launch such attacks are often people with great wealth and high status. Such people are unlikely to take such unknown risks. And those who can withstand this kind of pressure are not capable of launching such attacks. If they form an organization, it will be even more troublesome and it will be more difficult for the organization to form cohesion.

The second issue is the probability of success. This type of attack is not easy. There are too many unknowns, including the cost and duration. The strength of the opponent is not a static value, and you cannot estimate how much cost and time you need to invest. It is difficult to define when it will end and when it is considered a kill. This kind of thing is easy to start but difficult to end, and getting caught in it may be difficult to get out. No one likes this kind of uncertainty.

The third is that the interests behind this are unclear. For the stakeholders with large computing power, there may be an interest driving force to maintain market unity, but there is no immediate interest, only a speculative long-term interest. For retail investors, this is a completely thankless task.

Finally, there is another question. Strictly speaking, preventing small computing power branch chains from packaging transactions does not prevent the tokens of small computing power branch chains from having prices on exchanges. They can be traded at any time on exchanges, even if they cannot be withdrawn or recharged. But because they are hard-forked tokens, they naturally exist on exchanges. They are just a string of numbers and do not need to be packaged and confirmed on the chain. As long as the price is hyped up on the exchange, the computing power can survive.

The best way is to let the price decide the outcome.

Chapter 5 Price is the key to the survival of branch chains

The premise for the existence of a small computing power branch chain is that its token has a price. If there is no price, there will be no miners to mine, and it will be dead. The same is true for a large computing power branch chain. The lower the price, the smaller the corresponding computing power will be, and its influence will tend to be smaller.

The price directly reflects the market acceptance, which is the result of the game of the free market. So let the price decide the outcome.

After the split into two chains, because it is the result of a hard fork, all coin holders before the fork naturally hold two coins. The stakeholders on each chain should prepare their coins and smash the other chain to zero to win.

If you have a small computing power and cannot produce blocks, and if the exchange still wants to list tokens, just print the private key on paper and send it to the exchange via SF Express instead of recharging. Of course, remember to transfer the coins first on the branch chain that can produce blocks.

Chapter 6 Conclusion

I hope there will be no division.