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Bitcoin ABC's 8% Play for Bitcoin Cash

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Written by   90
2 months ago

Dominant implementation for Bitcoin Cash (BCH), Bitcoin ABC, announced it will incorporate Jonathan Toomim's fix for a change to the long-believed problematic difficulty adjustment algorithm (DAA), accepting his aserti3–2d (ASERT). It's a seemingly major concession to growing criticism of ABC, until placed against the announcement's most controversial reveal: "All newly mined blocks must contain an output assigning 8% of the newly mined coins to a specified address."

Prominent Bitcoin Cash Node (BCHN) supporter John Nieri (emergent_reasons) told Coin Fugazi in response to the ABC announcement, "The Bitcoin Cash (BCH) ecosystem has made it clear that it requires rational, well evidenced, well reviewed proposals. The only change that has met that bar for November 2020 is the aserti3-2d DAA algorithm. No other proposals have enough time to be considered. Pools and Exchanges are advised that the entire infrastructure of BCH will only support one chain in November, and that chain will have aserti3-2d DAA algorithm with no other major changes."

Those not intimately familiar with daily BCH community debates can be forgiven for not completely understanding what the fuss is all about. In a way, it's a complicated, tech-driven story. Zooming out a bit, it becomes clear there is nothing less than a dramatic struggle for the future of Bitcoin's most successful fork and the peer-to-peer electronic cash meme.

Howard Roark or Un-Ironic Dictator

Lead developer for Bitcoin ABC, Amaury Séchet, is at the drama's head. In recent weeks, he's taken a reactionary posture as most of the BCH developer community and influencers in the West/English-speaking segment moved to lessen his influence and to usurp/dethrone ABC's dominance.

Without rehashing years of squabbles, personality conflicts, intrigue, and friend-of-my-friend-is-my-enemy political arrangements, the current philosophical rift is between Séchet and what amounts to the broader English-speaking community. And as such, Amaury Séchet is either a Howard Roarkian heroic figure or a un-ironic dictator. There appears to be no middle interpretation.

Séchet was instrumental in bringing Bitcoin Cash into existence back in 2017, and for the next three years, in one form or another, he sounded alarms about longer-term protocol development funding. Protocol is the terribly unsexy crypto work involving code debt, tech rot, general maintenance, and a twice-yearly upgrade schedule, for what amounts to a multi-billion dollar (by market cap) open source project hoping to be money for the world.

Bitcoin Cat

In the background is a mining cartel made up of hardware manufacturer Bitmain and pools such as ViaBTC and BTC.TOP, among others. Bitmain at present is involved in its own internal power struggle, prompted by co-founders grappling for legal control after a brutal 2018-2019 bear market. It does seem Bitmain's once very public support for BCH has been shelved for the time being, and so approaching the globe's largest mining company to relieve Bitcoin Cash infrastructure funding issues might be out of the question.

That leaves mining pools, distinct businesses from miners and arguably more powerful by critical Proof-of-Work (PoW) hash, ViaBTC or BTC.TOP. Haipo Yang, CEO of ViaBTC, a once fervent Bitcoin Cash supporter, appears to be focusing on his own BCH fork of late, committing to something he's calling, Bitcoin Cat. In fact, Yang has gone so far as to proclaim in response to Séchet's August 6, 2o20 proclamation, "Bitcoin Cat will not follow Bitcoin Cash new hard fork and keep the origin chain on November 15th." Yang is also founder of cryptocurrency exchange CoinEx: incentives around speculation perhaps do not always align with otherwise considered tribal coin concerns.

BTC.TOP's CEO Jiang Zhuoer's last public substantive comments about protocol funding to the English-speaking Bitcoin Cash community, however, were back in mid-May. During a livestream on the very issue, Zhuoer participated relatively briefly but managed to affirm his belief in and support for some kind of sustainable funding mechanism for BCH protocol development.

The IFP Returns

He riffed in that May livestream about a Nobel Prize-like funding approach, expanding his remarks to include, "I think decentralization is a tool, not a result. What we want to achieve is to survive.” The most important aspect of decentralization, Zhuoer explained back in May, is “censorship resistance, especially censorship from the government,” and hinted at node diversity being “important.” However, when it came to development, “decentralization is not the goal,” he insisted.

In fact, both men, Yang and Zhuoer, philosophically backed something on the order of a Bitcoin Cash Foundation arrangement during that May livestream, complete with a board and mechanisms for transparency and quality control. Though neither committed to funding such a proposal, they agreed with its basic spirit and import.

Again, Yang seems to be signalling less support for ABC going forward (details are slim), while Zhuoer, as of publication, hasn't made his current thoughts known on the August 6, 2020 8% ABC coinbase rule change proclamation. Zhuoer is especially significant because he was the principal author of the Infrastructure Funding Plan (IFP).

Lingering Tensions

Back in late January, introduction of the IFP by Zhuoer was perceived in the West as a cataclysmic change for Bitcoin Cash. It proposed a 12.5% block reward redirection to a Hong Kong corporation, to be distributed in an undetermined way. Séchet and ABC and IFP supporters argued it perfectly aligned incentives between those who mine protocol software and profit from it with those who produce that software.

In attempt to gain more community support in the West (outrage was reaching a real boiling point on social media), the IFP then went through at least 3 iterations and amendments, lowering percentages, zapping the vague corporation idea, and even adding a whitelist and trusted panel of gatekeepers. By March, the English-speaking BCH community was in full battle mode against the IFP, and Zhuoer officially gave up on the idea. That led to the May livestream with he and Yang, and talk of something like an IFP without a coinbase rule change (no redirection of BCH block rewards).

Reaction to the IFP set in motion several new alliances within Bitcoin Cash. Developers once close to ABC left in protest, and those already publicly at odds with Séchet and ABC regrouped to form what can loosely be called the Bitcoin Cash Node (BCHN) faction. In the West, BCHN now comprises by nearly any metric what can be considered most of the Bitcoin Cash development community.

Considerable Muscle

Between the IFP going down in defeat and the ABC August 6, 2020 coinbase rule proclamation, developers on both sides, ABC and BCHN, took to fundraising models based upon crowd-sourcing donations. Campaigns showed varying degrees of success, but fell far short of what ABC deemed necessary for attracting and maintaining market rate developer talent. That tension lingered in the background as another controversy took center stage, the DAA.

Grasberg versus ASERT was less about the given DAA's technical merits and more about personality conflicts and governance models, as Coin Fugazi explained. Instead, it solidified and brought to full public view all the sores and disagreements leftover from the IFP. The DAA debate morphed into a confidence display, with the BCHN faction referring to itself as "the BCH community" and flexing considerable muscle in recent days.

BCHN counts as its supporters what only months ago was the Bitcoin Cash dev contingent. Major wallets. Web designers. Key upgrade developers. What it doesn't have is hash and a ticker. Those remain with ABC and Séchet, as far as anyone can tell. Miners are not signalling for BCHN at the moment, and major exchanges have been all but silent regarding the ongoing protocol debates between ABC and BCHN (again, a loose framing of the two sides).

Market Shrugs

Going forward, is it enough? That's the question. Is the Western community's outrage enough to sway miners and mining pools to switch over from ABC to BCHN? Or, is the BCHN, as some ABC and Séchet supporters label it, a paper tiger, a toothless protest movement? They have the numbers (pro-ABC would call them "the mob"), but do they have the actual juice that really counts?

ABC and Séchet have a track record, relationships with exchanges and mining pools that effectively give it its power. Sentiment among ABC supporters is that both look only for reliability and competence, tending to ignore politics or ideological squabbles. ABC supporters would further argue BCHN is too new to garner confidence from major exchanges which value stability above nearly all else.

For its part, speculative markets do not seem to care. As of publication, BCH is up more than 9% in 24 hour trading and yet down about $42 since the IFP was announced back in January. During the intervening months between January 22, 2020 and August 6, 2020, Bitcoin Cash has pretty much followed broader market patterns. One can easily see both ABC and BCHN spinning price action in their favor, of course. But, so far, the market seems unconcerned with any of it.

Séchet and ABC head into the features freeze portion ahead of the November 15, 2020 upgrade. By August 15, 2020, then, code for the new rule will be available for public review and appraisal (there is often an earlier period as well). But that leaves three months worth of jockeying and debate before Bitcoin Cash takes a bold step involving some combination of forks, an entirely new way to fund an open source crypto project, and a monumental battle for the coveted exchange ticker.

_____

  • C. Edward Kelso is CEO of Coin Fugazi

  • CONTACT: cedwardkelso@gmail.com

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Comments

Nice article.It is very enlightening.It just summarized the situations and present things

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1 month ago

Good summary of the situation.

$ 0.00
2 months ago

This is exactly what I needed. Great analysis & always love the color commentary. Feel like a got a a map of the landscape now. Looking forward to CoinFugazi this is a hot start

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2 months ago

Bitcoin cash is millions away

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1 month ago