BCH hard fork: a community division with disparity in strength

On November 16, 2018, the computing power battle between the two sides of the BCH fork was still fresh in everyone's memory. Unexpectedly, after only two years, BCH will fork again.

A few days later, on November 15th, BitcoinCash (BCH) will undergo a semi-annual hard fork upgrade according to the previous system settings. This time is not an ordinary upgrade. Like two years ago, this is a hard fork due to disagreements in the community. The focus of the disagreement lies in a plan called IFP.

But this time, the strength of the two sides is very different.

What is the IFP program?

The IFP plan, known as the "Infrastructure Financing Plan", is a funding development initiated by some large miners and supported by the BitcoinABC (hereinafter referred to as ABC) team The team's plan. The purpose of this plan is mainly to solve the funding problem faced by the development team. This plan is also called "miner's tax" by the BCH community.

The core developer of ABC, Amaury Séchet, has repeatedly expressed his dissatisfaction with the status quo of BCH developers in overseas communities. To briefly summarize his complaint, "BCH developers have no money."

Different from mainstream currencies such as BTC and ETH, the development team of BCH has been a voluntary development model so far, without fixed and stable funds to support the development work of team members , developers have to bear a lot of life pressure for this. If they are full-time developers, it means that they may not have a stable income, and part-time developers will not be able to devote themselves to development.

In order to maintain independence, the team rejected some commercial investments. Although there have been several fundraisings before, relying on community donations to help maintain the team's development process, compared to Bitcoin's annual development funds of 10 million US dollars and Ethereum's annual development funds of 30 million US dollars, the funds donated by BCH are only Less than a million dollars.

The IFP program is a solution for team thinking.

In this plan, the 6-month BCH block reward will be withdrawn according to a certain proportion (the current proportion is about 8%) for investment BCH software and utility construction. In other words, this plan would force all BCH miners to donate to developers.

Unsurprisingly, this proposal was strongly opposed by overseas communities.

Miner defection

In fact, the dispute over BCH development funds has existed since last year. In November 2019, members of the BitcoinCash community published articles and discussed how to solve the problem of team development funds and strengthen BCH's decision-making ability. In the live broadcast at that time, Bitcoin ABC developer and ViaBTC founder Yang Haipo discussed the idea of establishing a BCH foundation, including a voting committee to resolve BCH disputes.

In January of this year, LeBit Mining Pool Jiang Zhuoer also published an article titled "BCH Infrastructure Financing Plan", declaring that it would A proposal was added in the May upgrade. In this proposal, supported by Bitcoin Jesus R0ger Ver, Yang Haipo and other bigwigs, 12.5% of BCH's block rewards in the next 6 months will be donated to developers. Uncooperative BCH mining pools, you are alone! ". Jiang Zhuoer is obviously very confident in this proposal.

But this proposal was not implemented.

Most miners and the community are strongly opposed, and many people in the industry, such as the founder of Ethereum, Vitalik Buterin, and Li Qiwei, the founder of Litecoin, are very concerned about its transparency and Decentralization questioned, even with the support of the bigwigs with half of BCH's computing power, IFP failed to activate as scheduled according to their assumptions, and was delayed until November 15th.

Interestingly, after half a year, Jiang Zhuoer no longer supported his previous proposal, and chose the Bitcoin Cash Node camp, which is the hard point Fork the BCHN camp that is about to be split.

With the support of big miners, the computing power of the BCHN camp has almost crushed BCHABC.

Among the nearly 300 blocks, 241 blocks are being mined using BCHN nodes, accounting for more than 80%, while almost no one in the ABC camp has dug out piece.

A bit more extreme, after the hard fork ends on the 15th, the ABC chain may never be used again.

BCHN New Team

Before looking at the BCHN team again, let’s first understand the development of BCH Team composition.

Before this year, BCH had two groups of development teams, Bitcoin ABC and Bitcoin Unlimited (hereinafter referred to as BU). 98%.

ABC is an old BCH development team, and it is relatively well-known to the public. They advocated the main development team to fork BCH from BTC in 2017. The core developer Amaury Séchet is very powerful. If you have the impression, this ABC supporter named "Deadalnix" on Twitter claimed to be Satoshi Nakamoto early last year.

Because of the emergence of IFP, the new team Bitcoin Cash Node was born in February this year, which is a team mainly composed of Bitcoin Unlimited and Electron Cash. The initiator is Freetrader, an early developer of BCH, who was a member of ABC when BCH was forked in 2017.

Although the team has just been established, the support rate of BCHN is much higher than that of ABC. On the BCH Reddit discussion post, there was a post saying that 60% of miners had chosen to support BCHN, and the BCHN team also revealed that Chinese miners had chosen to support them. This statement has also been confirmed by some domestic mining pools. BTC.com’s solemnity told Rhythm that BCHN has been selected as the node solution after the fork. At the same time, Coinbase, BTC.TOP and other mining pools also successively announced their choice to support BCHN nodes.

The miners seem to have determined their choice, but for investors, how should they deal with the hard fork in a few days?

The impact of the fork on investors

The hard fork two years ago can be used as a Relatively valid reference.

On November 17, 2018, when BCH was divided into BCHABC and BSV, the price of BCH dropped from $505 to $100 in just a few weeks. 80% drop.

It is foreseeable that tokens may still occur in this fork Prices fluctuate wildly. At present, many trading platforms including OKEx, Huobi, and Binance have issued announcements, starting from November 11, BCH deposits, withdrawals, and contract transactions will be suspended. PayPal Finance also shared their views on the price trend of tokens after this hard fork. They believe that the hoarding effect starts from the fork, and the fork is equivalent to distributing candy at the beginning, so there may be a certain premium in BCH futures. At this time, the basis will be negative. After the fork is complete, the price may fall back. At the same time, PayPal Finance also pointed out that "liquidity will provide support for both ends of the fork." That is to say, traders who hold BCH will receive the same amount and equivalent value of new coins in terms of liquidity (1:1 ratio ). The emergence of new coins is likely to cause the price to rise first and then fall. In the short term, the liquidity will improve and the transaction activity will be high. But in extreme cases, price changes will reduce transactions, BCH futures prices will collapse and BCH will be delisted, which will level liquidity.

Rhythm BlockBeats recommends investors:

· If your trading platform has not released an announcement to support For BCH fork, you should try to store BCH in the full node wallet, because the platform may swallow the user's "candy";

·  Avoid transferring money during the fork, there may be coin loss;

·  Invest cautiously, the price changes before and after the BCH fork may be very drastic.

On November 6, the ABC team unexpectedly chose to compromise. They announced that they will support the two chains of BCHN and BCHA after the fork, which means that ABC will Launched a node client that supports BCHN.

Besides the reason mentioned in the announcement, "Enterprises who trust the reliability of the Bitcoin ABC client, including major sponsors, have asked us to create a In addition to the software version compatible with the chain”, the ABC team must also have certain concerns about the sustainability of its new chain after the hard fork. After all, continuing to develop for BCH is a prerequisite for the team to realize its ultimate vision.

The foreseeable situation in the short term in the future is that after BCH is halved, the income will decrease. And because the algorithms of BTC and BCH are the same, the income of BTC miners is currently rising, and the profit-seeking situation of miners may cause BCH's short-term computing power to be insufficient. In the later period, if a large computing power enters the BCH network, the computing power may be weakly centralized.

At present, the BCHN camp has a high probability of getting the token name "BCH". But the future development still depends on the development ability of the team. If the BCHN team cannot maintain network development for a long time, then the ABC team with strong development capabilities is still likely to regain the market and miners' attention. And the mandatory donation of miners' income to BCH developers does not seem to mean an absolute reduction in miners' income.

BCH community enthusiast "Railway Tracker" believes that BCH block rewards donate 8% to developers, and miners' income will decrease, so some BCH miners will count Forced to switch to other currencies that use the SHA256 algorithm, resulting in an increase in the difficulty of other currencies and a decrease in the revenue of those currencies. However, BCH adjusts the difficulty due to the decrease in computing power, and the miners who stay on BCH have higher income. In other words, the computing power lost by BCH due to "tax" stimulates the "difficulty" of other protocols, and the losses of BCH miners are averaged by the entire SHA256 algorithm.

Of course, the above are just speculations, we will wait and see where BCH will go.

Reference materials:

《What should I do if the BCH development funds are insufficient? ViaBTC Founder Proposes Establishment of "Bitcoin Cash Foundation""

《The behind-the-scenes team of the encryption project (four): Bitcoin ABC and Bitcoin Unlimited development team comparison》

《Empirical insights on BCHN》

《Dark secrets of the Grasberg DAA》

《The cost of maintaining decentralized development - what are BCH developers complaining about? 》  

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