Friday, August 7th, 2020
Let's say I'm a miner who wanted a big block version of Bitcoin. For years, I worked with various developer teams to make this happen, but each time it failed due to incompetence. Finally, I get lucky and find a developer who is capable and shares the same vision as I do, and with the help of a handful of others, we manage to launch a successful fork of Bitcoin with an increased block size, no segwit, and no RBF.
After the launch, others see the value in this new chain and a community begins to form. A community of users, miners, developers, and investors/entrepreneurs.
Though the launch of the coin is a success, there's still plenty of work to be done. Because the goal wasn't to have a chain that can handle 100 txs/second but 5,000,000 txs/second, all while keeping fees low and making 0-conf transactions as secure as possible.
So how do we get to the finish line?
First, we need a roadmap, and then we must execute on that roadmap.
Fortunately, through the vision of the Bitcoin ABC team, we have had a solid roadmap in place for the past several years, and while some progress has been made, it is still far from being completed.
In order to get the job done we need contributions from people who are experts in cryptography and computer science, some of whom can easily command salaries in excess of $300,000 or more.
I salute those who have contributed to the Bitcoin Cash project voluntarily over the past three years, but I think we can all agree that this work cannot be completed in any reasonable time frame through volunteers alone. Otherwise why would we have had all those flipstarter campaigns to raise funds for each of the node teams? And despite some calling those campaigns a success, the numbers speak for themselves. The total amount of money raised was in the vicinity of ~$500,000 across 4 or 5 teams. Compare that to the AVAX team who recently raised $42,000,000 for one team.
Now imagine I'm the miner who has been supporting the efforts of Bitcoin ABC for the last three years, donating something like $1,000,000 a year to them out of my own pocket while the rest of the community has contributed almost zero. Meanwhile, other miners and businesses are benefiting from the same software improvements that were made possible through my donations. These are the same miners who are busy signing joint declarations against ABC's latest proposal. Why would they want anything to change when they've been getting a free ride and benefiting from my donations? In order to fix this problem, either I need to stop donating, or we try a new strategy.
The IFP is that strategy.
I can already hear the arguments:
The IFP is destroying the foundations of Bitcoin.
We need more adoption before worrying about advancing the protocol.
We need profit-making businesses to donate to protocol developers to make their businesses even more profitable.
The IFP is destroying the foundations of Bitcoin.
At the conclusion of the whitepaper it says:
Any needed rules and incentives can be enforced with this consensus mechanism.
To me, the IFP falls under the category of "any needed rules and incentives".
I also don't think the IFP is a tax. Here's the definition of a tax:
A compulsory contribution to state revenue, levied by the government on workers' income and business profits, or added to the cost of some goods, services, and transactions.
Is BCH a government? Is the 8% contributing to a state? No, so it's not a tax. Even if you think it looks like a tax, the fact is that the taxes you are required to pay to your government is nothing like what is being asked for in the IFP. To avoid paying taxes in whatever country you live in, you'd have to renounce your citizenship, find another country to live in that doesn't force you to pay taxes, and uproot your entire life and move to that country.
But anyone who mines BCH is free to mine whatever network they choose. You can easily do so since the same sha256 algorithm is used by each of the major Bitcoin forks. This means you can mine another network and expect to earn the equivalent amount of profit no matter which chain you mine (and even use those profits to buy BCH rather than mine it if you so choose). What this also means is that for those who continue to mine BCH using the ABC implementation, your expected profitability isn't lowered by 8% due to the new fund, but more in the range of 0.2% since BTC mining makes up 97% of all Sha256 hash. (If you continue mining BCH, the 8% reduction of the coinbase reward will mean 8% less hash on the BCH network relative to profitability, so the odds of any BCH miner finding a block will have gone up by about the equivalent amount. This is why the IFP will almost be entirely paid for by BTC miners.)
We need more adoption before worrying about advancing the protocol.
We've had 3 years to grow adoption, and though some progress has been made, I think we can all agree that it isn't nearly enough. Do you think continuing the same way for another year, or five, is going to change that? To me that's the definition of insanity, doing the same thing over and over again and expecting different results. I am all for onboarding new users and merchants, but why can't we do that and also execute on the roadmap at the same time?
We need more profit-making businesses that will in turn contribute to the protocol developers to make their businesses even more profitable.
When it comes to profit-making businesses in BCH, perhaps the only business that makes a profit outside of exchanges (which are not BCH focused), are miners and Satoshidice. But has Satoshidice made a single donation to the Bitcoin ABC team? And of all the miners that recently signed the joint statement in opposition to ABC, how much have they contributed in funding to ABC? The bottom line is we don't have many profitable businesses using BCH, and the ones we have aren't funding protocol development in any meaningful way.
Conclusion
Let me conclude by saying that though I can understand those who are angry and frustrated by this situation, I think the source of your anger is directed in the wrong place and ask you to look at the situation from a different perspective.
With the IFP, 8% of each coinbase reward is sent to a wallet address that will be managed by a foundation. At today's prices, this is roughly $8,000,000 a year that can be spent on infrastructure funding. Imagine the talent we can attract with that money to help us reach our goal?
I honestly don't see why people are so against the IFP. If anything, this will mean that ABC will no longer have anymore excuses if they receive adequate funding and still cannot deliver. It's our chance to finally run this version of the experiment.
I choose to be optimistic that ABC is the right team to deliver. I choose to continue supporting BCH and fighting to keep this community together. What I don't choose is to force my ideas upon anyone or threaten people with violence simply because they don't agree with me.
Thanks for reading.
Great article!