Recently, the BCH civil war and hard fork set off heatwave in this winter, and the entire blockchain society is having heated discussion. The inside story was very complicated, and it was an unprecedented war. I published a long article with the title War and Evolution of BCH in October to analyze on few main points, which I think are still relevant. But after the war erupted, misunderstandings still spread widely, which may worsen the already complicated situation. Here, I wish to sort out and clarify few things and this can be used as supplementary reading of the article mentioned above.
Given that the current situation has become clear, ABC version has obviously dominated every aspect, and the other developed version is now compatible with ABC version, except BSV. Therefore, in the following writing, BCH refers to blockchain that belongs to ABC and all other compatible version, whereas BSV refers to BSV blockchain.
1) “All forks will create two different coins.” False, only forks caused by the split of consensus will create two different coins
“Fork” can be explained in 3 levels:
1) Blockchain creates orphan blocks.
Cryptocurrency is able to record transactions normally but due to technical problem such as network delays, there will be cases where 2 blocks contain different data at the same block height. When one of the blocks has more new blocks being added to it, it becomes a longer chain. The other block together with its following blocks or chains will be treated as orphan blocks and become abandoned. This is the principle of “following the longest chain”
2) Hard fork upgrades.
During software upgrades, if a new version and old version blockchain are compatible with each other, it is “soft fork”; if both are not compatible then it is “hard fork”. For example, new version of Microsoft Word is not compatible and does not recognize Word 97. Hard fork upgrades required everyone to install and run a new version, and those who continue to run old version will produce new blocks that are not compatible with others. Then, the chain split will happen and “follow longest chain” principle will no longer be valid. New blocks produced by miners using old version normally do not support exchanges and then block mining reward has no value. When no new blocks are being added to their chain, they will start to look for a reason, which will then lead them to install and run new available versions. Eventually, the older chain will die off after all the miners upgraded to the new version.
3) Split in terms of blockchain, coin, and community.
When two versions do not co-exist accidentally, but as a result of two groups of people each supporting certain characteristics of one version but disagree with the other version, the two version will then be able to survive and run on different chains simultaneously under the support of their supporters. Due to characteristic differences, two different blockchains will available permanently with two types of coin being recorded on the chain. The community will also split into two.
Case (1) and (2) will not create new coin, only case (3) will. At first, the fork on November 15 was a planned to hard fork upgrade, but due to sudden request from CSW to use his own BSV version instead of ABC version which had already been running smoothly for quite some time, a serious split of opinion happened within the community. This led to bigger a consensus split and turned into the situation described in case (3).
In short, only when a consensus split occurrs, both versions are mutually incompatible and causes the blockchain to fork permanently, and then new coins will be created.
2) “Bitmain and team ABC resisting block size scaling.” False, block size scaling is a common developing measure for both parties.
The most common misunderstanding is that ABC and Bitmain refused the idea of block size scaling, while CSW’s BSV version proposed otherwise. In fact, team ABC and Bitmain constantly advocated to keep improving block size scaling according to market demand. That is why BCH was born. What team ABC and Bitmain objected to was the increase in the block size to 128M on the upgrade on November 15. Here are the reasons:
Currently, actual usage capacity of each BCH block lies within 200k, and the current 32M block size maximum limit is 160 times more than the actual usage capacity. There was obviously no market demand for block size scaling because we are in the middle of bear market now.
BSV’s 128M expansion is not mature enough and has a lack of reliable test data. In the Bangkok meeting, when asked by technical personnel on whether nChain carried out any 128M capacity test on BSV and whether they can provide any test data, nChain answered “not yet”.
BCH recently ran a lot of pressure tests on the system. They created a large volume of small transactions to test whether it can produce and broadcast new blocks normally. During the process, new blocks with 21M and 32M usage capacity were successfully produced but at the same time caused many nodes to become offline, and some small-scale miners were forced to give up on mining BCH due to this.
Thus, lack of market demand as well as reliable and complete test, they carried out expansion to 128M rashly on November 15, but the upgrade was unnecessary and risky.
After the Bangkok meeting, team ABC, Jihan Wu, and Roger Ver agreed to start carrying out 128M expansion test after the upgrade was completed on November 15. If the test results passed, it could be implemented in May 2019 upgrade. But CSW insisted 128M BSV must go online on November 15 and started to attack team ABC and Bitmain in public, claiming that they were resisting block size scaling. This misleading statement worked well until someone referred to the BCH civil war as the “new” block size war.
In fact, team ABC and Bitmain really paid attention to the issue of block size scaling. Team ABC’s roadmap illustrates “Scaling” as main route shows that they intended to make BCH a world currency through scaling. The CTOR transaction ordering function incorporated the current 0.18.2 version upgrade that was planned to increase efficiency of block synchronization on the network by sorting transactions in memory pool according to ordering rule. This is to prepare for bigger block size implementation in the future.
In short, both parties supported block size scaling. Team ABC and Bitmain recommended scaling under secure circumstances and after they carried out full complete test while CSW insisted on immediate block size expansion.
3) “BSV was determined to become the world currency while ABC was determined to become basis public chain.” False, both BSV and ABC are committed to become a “world currency + basis public chain”.
The common viewpoint regarding the BCH civil war was to think that CSW’s BSV wishes to develop BCH into world currency while the team ABC and Bitmain want to make BCH as a basis public chain, which allows all kinds of Dapp to run on it. In fact, both wanted to develop BCH into a world currency plus a basis public chain. The only difference is the implementation approaches.
CSW published a long article before to demonstrate that the script provided in Bitcoin version 0.1 was “Turing-complete” ready. However, its potential functions were restricted after many opcodes were disabled. Therefore, he wanted to restore there opcodes gradually. The latest BSV version restored four disabled opcodes and removed the restriction which stated that only 201 opcodes were allowed for each script.
In the early years, the Bitcoin community commonly thought that Bitcoin script was not “Turing-complete” and it is better to keep it that way. “Turing-complete” script means that it can work like any other programming language and can be used to code various complicated programs and create more functions. The cost of this is that serious loophole such as system infinity loop will become common. In order to be used as currency, security and stability should be a priority. A non “Turing-complete” system script limits its complexity thus is more secure. This was the purpose of having “maximum 201 opcodes for each script” restriction. This was also why Bitcoin’s system developer earlier stopped Vitalik from developing a smart contract on Bitcoin. Vitalik then created his own “Turing-complete” smart contract platform, known as Ethereum.
In other words, CSW claimed that Bitcoin was originally “Turing-complete”, BSV restored four disabled opcodes (OP_MUL、OP_LSHIFT、OP_RSHIFT、OP_INVERT), and cancelled the “maximum 201 opcodes each script” restriction. The purpose is to enable the possibility of writing more robust and more complex scripts on BCH transactions, thereby, allowing smart contracts to run on BCH’s main chain. CSW also asserted that his BSV will surpass Ethereum. Releasing token is a popular example of smart contract, and nChain once suggested launching token on BCH and invested on at least two BCH token launching program. All these indicated that BSV is actively trying to reach the “world currency + basis public chain” goal.
Compared to BSV, team ABC and Bitmain took a rather conservative approach on developing smart contract. The latest ABC version 0.18.2 upgrade only added OP_CheckDataSig and OP_CheckDataSigVerify, two new opcodes, which were used on data signature and verification. The functions of these two opcodes can be achieved also by using the original script but with these two new opcodes, the job can be done in more concise way.
Bitmain’s solution plan to incorporate the smart contract capability on BCH is make use of the layer-2 protocol. With the help of OP_Return ability to write a small amount of information to blockchain during transactions to piggyback smart contract information, using the piggyback wormhole node on BCH node to read, and writing and running smart contract. The advantage of this solution is that it is easy to stop or abandon once the protocol failed and it will not have any impact on the blockchain security. CSW’s smart contract was to implement on BCH directly through “Turing-complete” transaction script.
Therefore, both wanted to develop BCH not only to become world currency but also to become the basis public chain which can run smart contracts. Compared to team ABC and Bitmain, CSW’s approach is much more radical and riskier.
4) “Wormhole would destroy BCH.” False, this is malicious rumor was created by CSW. Instead, Wormhole was an important asset which will increase BCH’s value.
It is a bit unexpected that Wormhole became the focus point of the conflict between the two parties because when Wormhole first launched in Hong Kong at a meeting on August 01, CSW was there but he did not raise any objection at all, and everyone got along well. But in mid-August, after CSW started to attack ABC and Bitmain, Wormhole became the main target of CSW and his supporters’ attacks. There are three main logical ideas:
Burn coin will destroy BCH. Wormhole token, WHC, can be created with 1:100 ratio by burning BCH. CSW thought that the development of Wormhole will burn out all BCH in the end and only WHC will remain, which was Bitmain’s plan to annex BCH with Wormhole.
BCH burned on Wormhole’s address so it could be retrieved. Wormhole’s team used the address 1111111111111111115KMYP7R278 to burn BCH. CSW claimed that BCH on this address can be retrieved after burn process, and implied that Wormhole team will steal these BCH.
Wormhole indicated that Bitmain chose the basis public chain path. This was not from CSW himself but from his supporters, as an extension statement that was used to support and spread the previous misunderstanding that BSV was working towards a world currency and ABC was focusing on a basis public chain.
CSW supporters and those who disliked Bitmain purposely spread this viewpoint widely to attack Bitmain and ABC. This was a huge misunderstanding because:
Wormhole increases BCH intrinsic value.If Wormhole was successfully implemented, it would generate a large volume of transactions. The demand on BCH would become higher as a result of more BCH and would be needed to produce WHC token. Besides, better WHC circulation would bring a great amount of BCH transaction fees. Thereby, would increase BCH intrinsic value.
Burning BCH would not destroy the whole BCH system. Burning BCH would have the same effect as losing private key, the coin would be totally gone. Satoshi Nakamoto explained this kind of doubt before. As a result of burning, BCH total volume would decrease, and available BCH would have greater value. Therefore, there would not be a risk of all BCH being burnt out. WHC would become incredibly expensive before it burnt out.
As an open source layer-2 protocol, Wormhole would not harm BCH blockchain. If there was any possible harm, as layer-2 protocol, it could be abandoned whenever consensus was reached. As open source system, Wormhole’s code could be changed to deploy a new non-burn protocol if there was any problem with the burn process.
If Wormhole could destroy BCH, then the grand design of Satoshi Nakamoto would be a failure. Wormhole was created based on Bitcoin’s Omni protocol. USDT is also a token launched and ran on BTC using the same Omni protocol. If Wormhole as layer-2 protocol could destroy BCH, Wormhole and cryptocurrencies are all open source, and then with large deployment of similar protocol would be able to kill Bitcoin and other altcoins.
No one could dominate Wormhole’s address. Based on BCH’s new address format, Wormhole’s burn address was “qqqqqqqqqqqqqqqqqqqqqqqqqqqqqu08dsyxz98whc”, where “q” is a non-checksum digit. This was due to the address already being occupied for other purposes, and the Wormhole team then pickled a special address with checksum digits that can generate suffix of “whc” as black hole address. It is impossible to try to crack its private key even using the whole solar system’s energy as resources. CSW claimed BCH on this address could be transfered out elsewhere but 2700+ BCH that had burned so far were still there on the address. This was another CSW’s famous boast.
The fact that Bitmain held large amount of account positions on BCH is adequate to respond any rumors. Currently, the hold position declared by Bitmain is more than 1 million BCH. To their interest, they would certainly want BCH to be secure and stable rather than destroyed. Whereas CSW’s BCH hold position remained unclear. In addition, WHC is not a token released by Bitmain, but anyone could produce and possess WHC by burning BCH. Thus, using WHC to annex BCH would not benefit Bitmain.
Attacking Wormhole was CSW’s excuse to attack Bitmain and ABC. CSW publicized BCH’s token plan long time ago, but why did he attacked Wormhole’s plan aggressively? The answer can be found from CSW and Calvin Ayre’s posts on their Weibo social accounts after August. They depicted those who they wanted to attack in BCH ecosystem as Bitmain’s accomplices. For example, they said ABC’s technical upgrade was designed for Wormhole not for BCH, Coinex supported Wormhole’s token because Coinex and Bitmain wanted to replace BCH with WHC, and so on. They treated Wormhole as SegWit (SW) and Lightning Network during the block size war in 2017 and BSV as the BCH which was born because of rejecting SW.
In short, Wormhole is layer 2 smart contract solution plan on BCH, it will benefit BCH but because of war, CSW used it as rumor material.
5) “BCH is Bitmain’s ‘company coin’.” False, the decentralized degree of BCH is far beyond BTC and BSV.
This misunderstanding was the core point used to attack BCH, especially by those in BTC ecosystem. Mainly because during the later stages of the block size war, Bitmain first sought support from teams other than Core, such as Bitcoin Unlimited (BU), to work on new a scaling version after they thought it was impossible for Core to support block size scaling. After BU failed and then ABC managed to do so, ViaBTC’s exchange and mining pool invested by Bitmain started to go online with BCH trading and mining. Then, Jiang Zhuoer, who is close to Jihan Wu, allocated enough hash power to stabilize BCH block time since the birth of BCH until DAA was implemented to achieve market-oriented stable operation. Therefore, Jihan Wu, Haipo Yang, and Jiang Zhuoer played important roles during the early stages of BCH.
However, BCH’s birth was also contributed by other BTC community members who supported block size scaling but were not involved directly in hash war. Take myself as example, I have been supporting scaling and advocating necessary forks since 2016, and I then got involved in BCH forking and modifying Difficulty Adjustment Algorithm (DAA) in the process of promoting BCH. I did not know Jihan Wu, Jiang Zhuoer, and Haipo Yang previously, and only started to get along gradually after we were working towards same goal.
Most of the BCH proponents also share similar experiences. They did not know each other earlier but because of believing in “Bitcoin needs to implement block size scaling to fulfill the market demand in order to become world currency” consensus, they came together. Because of this consensus, BCH had its initial market demand, then started to grow after joined by more and more newcomers such as promoters, developers, commercial partners, and users. Without a decentralized community consensus like this, only hash rate and developers, there would not be any differences between BCH and other altcoins.
Undeniably, at the early stages of BCH, Bitmain and Jihan Wu had great contributions and influences, but in the following year, Bitmain and Jihan Wu’s influences dropped rapidly. In the meantime, Roger, Gavin, CSW, and others started to join BCH, and this not only expanded the BCH community but also dispersed influences. Bitmain and Jihan Wu’s low profile and avoidance of any publicity have brought about a further decreasing of their influence. This is considered as to decentralized consciously. Jihan Wu’s proposals to decrease block time, to impose miners’ tax in order to encourage developers, and so on was rejected by community. CSW would create such huge conflict within community at this time also due to BCH’s decentralization characteristic. ABC supporters chose to encourage CSW to fork and not attack him also because they were accepting the consequences of decentralization, practicing the process of decentralization.
From the aspect of internal mechanism, BCH mainly changed the block size capacity from 1M to 8M while retaining Bitcoin’s original technology architecture and interest game pattern. From the aspect of technology characteristics, BCH’s decentralized degree is still identical to BTC. BTC’s decentralized development in scaling debates also remains in BCH, although currently not as good as BTC. There are seven teams working on BCH development, and ABC’s nodes will not have overwhelming advantage as BU’s nodes also have big proportions.
In the Bangkok meeting, team ABC’s main appeal was hoping that miners could appoint someone with technological literacy to participate in the development discussions. This would strengthen communication between developers and miners, so that they could concentrate on development rather than get caught in any complicated political conflicts. In respond to CSW and nChain’s various accusations, team ABC was trying hard to explain each and every detail, and then finally received acknowledgement and support from all major development teams except BSV itself.
Currently, those who support ABC version are not merely from one party but multiple forces, not only Bitmain and Roger Ver but also 77%-98% of companies or businesses from within the ecosystem, plus at least six development teams such as BU, Bitprim, BitcoinXT, Parity, Bcash, bchd, Copernicus project, and others. All their software versions are compatible with upgraded ABC versions but develop independently, with each of them is it is possible to become a primary development team especially BU.
In the Bangkok meeting and during hash war, all these forces had their own independent standpoint. Jihan Wu and I realized earlier that we could not compromise with CSW. In early stages, all forces including Roger Ver tried to patch up the disagreement but as the war erupted, most of them decided to support ABC and became part of the BCH community. Obviously, the decentralization of this community is higher than most other public chains including BTC. While the BSV community closely surrounds the community of interest of CSW, Calvin Ayre, nChain, and Coingeek, they also are seriously deifying CSW. Therefore, BSV is highly centralized.
Briefly, BCH has gone through a rapid decentralization process since it was born and now its level of decentralization is leading to BTC and a highly centralized BSV.
6) “70% hash rate supported CSW before the hash war?” False, ABC had 10
times more hash rate than CSW.
This was another misunderstanding created deliberately by CSW, Coingeek, and nChain because most people do not understand the concept of mining in detail. They thought that hash rate proportion displayed on the BCH block explorer and the actual hash rate proportion supported BCH are the same. However, they are very different.
Due to BTC and BCH using the SHA256 hash algorithm in mining, their hash rates are the same. Under normal circumstances, BTC and BCH’s relative price change will lead to the changes in their relative revenue and mining pool, which can switch between BTC and BCH to earn maximum profit.
The basic rule is the prices decide the hash rate proportion. For example, BTC’s price is 40 thousand, and BCH price is 4 thousand, then 90% of total the hash rate from both BTC and BCH network will be used to mine BTC and 10% to mine BCH. If 20% used to mine BCH, then BCH’s difficulty will increase and profit will decrease, so the switch to mine BTC will be more profitable.
Due to companies and individuals who supported BCH controlled on a large scale hash rate, including Bitmain’s Antpool and btc.com, Roger Ver’s Bitcoin.com, JiangZhuoer’s Btc.top, and Haipo Yang’s Viabtc, as well as Coingeek, Svpool, Bmgpool, and others from CSW faction. Their hash rate consists of more than 60% of the total hash rate from the two networks, and BCH produced only 7% of BTC daily value. If all of them were to mine BCH, they would all be broke. So, only 7% of total hash rate would be used to mine BCH in most cases.
Due to the existence of the “machine gun” pool, most mining pool do not need to switch back and forth frequently. For example, Jiang Zhuoer’s BTC.top is a famous “machine gun” pool, which can switch between BTC and BCH rapidly, not only gaining profit himself but it also helps to stabilize mining revenue on BTC and BCH, which allows other hash rate to earn more stable profit without them switching frequently.
Under normal situations, miner and mining pool’s primary intention is to mine for profit, so it does not matter which one to mine, BTC or BCH. Even the BCH strong supporters can mine BTC to exchange for BCH. Only during hash war, for the purpose either to initiate hash rate attack or use hash rate as protection, they are required to give up on profit and continuously mine on one blockchain.
Due to the fact most people do not understand this, they only refer to hash rate proportion on blockchain explorers, allowing CSW to take this advantage and exaggerate his support. His supporting mining pool only mined BCH, which caused BCH mining reward to constantly stay at around 5% lower than BTC, and most of the other hash rates had to switch to mine BTC, and BTC’s hash rate proportion continued to rise until it reached the peak of 70% before war. In the meantime, CSW kept using the name of “most BCH hash rate” to release all kinds of information (please refer to Coingeek’s website, as well as CSW’s and Calvin’s social account posts), to create false impressions that he had more than enough hash rate to determine the future of BCH.
In fact, CSW only managed to draw merely below 6% of the entire hash rate from both networks. It was not until the war erupted that everyone knew the truth. Bitcoin.com, BTC.com, Antpool, Viabtc, Btc.top, and a few others only switched small part of their hash rate to protect BCH blockchain, but even this small part already far more than BSV’s hash rate, and the current accumulated hash rate was more than 40% (from coin.dance). There was still a lot of hash rate remaining in BTC, ready to protect BCH any time.
What confused me was I thought CSW would not dare to go any further into this hash war because his lies were broken in the beginning. Unexpectedly, those who thought CSW had a hash rate advantage still believed in him. They said, “Let us see, CSW is rich and more hash rates are on their way, and we will have the final victory”.
CSW’s supporters only hope was that CSW prepared lots of money to engage in attrition war. Due to hash war, BTC’s mining reward was two times more than BCH, and mining BCH was not profitable. Engaging in this enduring war depends a lot on which side has more money. The two chains already split, and BCH’s price was four times of BSV’s price (November 23). In the case where both have same hash rate, BSV will loss four times more than BCH. BCH is currently maintaining a high hash rate in order to prevent a reorganization attack from CSW, and an ABC 0.18.5 version added reorganization protection to ensure transactions after 10 confirmations are immutable. This safeguards the security of the user’s data after 10 confirmations. Then, BCH proponents can slowly withdraw their protection hash rate and go back to normal mining. As for CSW, if BSV’s protection hash rate does not lower to one quarter of the BCH hash rate, they will continue to face huge losses (possible millions per day). This is a war, and it is self-destruction.
On November 23, CSW’s investor, Calvin, announced that he would accept “BSV” and stop fighting with ABC supporters for “BCH” under the condition that ABC needed to incorporated replay protection in its version. Later, CSW agreed and supported Calvin’s decision. They stressed that BSV’s goal is to prove they are the real Bitcoin (BTC), not Bitcoin Cash (BCH). After that, BCH and BSV’s hash rates started to drop and the money burning hash war had almost come to an end.
In short, the key of a hash war depends on which side controls more hash rate from the total hash rate of both the BTC and BCH network, not BCH’s hash rate alone. CSW’s supporters claimed they had 70% of the hash rate support was just publicity trick.
7) “Implementing replay protection would lead to a fork.” False, a fork will occur whenever two blockchains with consensus differences containing incompatible contents.
“Replay protection” was implemented to protect against a “replay attack”. An early exchange called Yunbiwang (云币网) was once the victim of a replay attack, which suffered in great losses.
During that time, Ether was forked into ETH and ETC, and Yunbiwang first opened trading for ETC. Users withdrew ETC from the exchange, the exchange used a private key to apply signature unlock to the ETC, then broadcasted on ETC network and completed the withdrawal. After receival, the user would use the same signature data unlocked by private keys and broadcasted on ETH network again, and then same amount of ETH which belongs to Yunbiwang transferred from exchange to the same user’s ETH address. This had cost Yunbiwang great losses. Hence, when BCH forked on August 01, 2017, team ABC added replay protection in its software to differentiate BCH and BTC transactions. Their transaction signature would not be accepted on the other network, thus preventing a replay attack which was beneficial both to BTC and BCH.
In this BCH civil war, as claimed by CSW, BSV did not add replay protection. He and his supporters claimed that if BSV does not implement replay protection, BCH would not fork. Two versions of blockchain only split temporary and it is still competition on the same chain, so at the end of the day one of the chains would give up and it would back to one single chain again.
As I explained “fork” before, if each of two versions have characteristics that are mutually incompatible, when these characteristics show in transactions or blocks, they will become two incompatible blocks. It will not follow the “longest chain rule” to dump to the shorter chain, but the two chains will remain. As long as these two chains have strong supporters insisting to operate and mine to record transactions, these chains will exist a long time and the two coins will be split permanently. Incompatible transaction data appeared in the 556,767th BCH block, and ABC and BSV each produced two different blocks, which led to two different chains.
Some exchanges introduced future trading contracts for ABC and BSV coins, and many others continue to open spot trading successively after the fork. With BCH and BSV trading transaction existing, transactions and balances recorded in each of the ledgers had become different, so there is no way to merge again. In other words, if two chains and coins already separated permanently it is irreversible. The only possible way to go back as one chain is or one of the coins to have no value and no one is mining on that chain. But if consensus exists and someone still mining, this chain will continue to survive. For instance, many altcoins earlier are still surviving even though not many of them are known.
After the fork, if one coin has a bigger influence, it will be accepted by more parties in the ecosystem and the confusing situation will end early. Coin with bigger influence will carry on with its original name, while the less influencal coin will be treated as new coin. Due to the fact a new coin is created from original account according to a one to one ratio, it is called releasing free “sweets”. Currently, BCH continue to be used by ABC version and new BSV version’s coin, so BSV is considered as “sweets”.
Without replay protection, these two types of coins would face replay attack easily. A system solution plan is for at least one of them to implement replay protection to differentiate their transactions. While personal solutions are made by “polluting” our own coin, that is, making ABC version’s transaction to our own old address, then making another transaction from the old address to our new address. By this, the coin in a new address and will appear on BCH blockchain, while the coin on BSV blockchain will remain on the old address. Some wallets and websites have started to provide users with applications or software that has coin splitting capability. Exchanges will also become a important hub to split coins.
In short, the problem of replay attacks can be prevented and resolved and having no replay protection will not prevent two chains from splitting.
8) “ABC supporters wish to kill BSV chain.” False, ABC supporters hope
BSV practice its route.
Normally, the purpose of starting war a is to destroy or conquer its opponent. In the BCH civil war, CSW supporters firmly proposed to kill the ABC version’s chain and make Bitmain go bankrupt. Hence, many people think that, on the other side of the war, ABC and Bitmain will want to kill BSV’s chain as well. However, most of ABC’s supporters hope that the BSV chain can survive, letting those who support CSW’s idea to practice this idea firmly.
In War and Evolution of BCH, I analyzed this asymmetry situation, which came from the idea differences from both sides. Most ABC supporters are evolutionists, they agree that under the intense competition condition BCH should continuously adjust and evolve based on situations. When encountered great disagreement, there is no absolute confidence on which is the correct route or path. So, it should fork to keep exploring. Therefore, ABC can tolerate and encourage BSV to keep exploring on a different path.
However, CSW’s idea is rationalist, thinking that Satoshi Nakamoto and whitepaper provide a confirmed direction and achievable path, only needing to get back to Satoshi Nakamoto and eliminate the block size limit, which will target to serve 5 billion people and will be achieved easily. Most of his followers supported him due to this clear and concise idea. This kind of idea does not allow others to amend and evolve according to market developments. Therefore, killing ABC’s chain is certainly what rationalist ideas would suggest.
Reviewing the path of thefork, BCH forked from BTC, then BSV forked from BCH, now there are BTC, BCH and BSV and are three paths. Among them, BTC goes through the limit block capacity and pledges anti-censorship capabilities on its main chain; BCH chose the path where they are allow to expand block capacity and constantly evolve; BSV is on the path that eliminate the block capacity limit and regress to Satoshi Nakamoto’s early version. Now, Bitcoin actually is moving in three directions and it has a higher possibility to succeed than on one path. It is also possible that three paths each successfully suit different fields. Is this not the same as the biological evolution process?
Now, the CSW faction never stops their attacks and threats on BCH. Therefore, BCH updated to ABC 0.18.5 version with added reorganization protection. According to the “follow longest chain” principle, nodes need to abandon shorter chains when longer chain are available, but reorganization protection allows nodes to continue with the previous chain even though it is shorter. This will prevent CSW’s from taking advantage of this rule to launch 51% attack on BCH chain. Normally, orphan blocks will not exceed two blocks, and those that exceeded 10 blocks are definitely 51% attacks. This update enhanced BCH’s ten confirmation transactions security to be almost absolutely secure, thus pledging its normal operation. This will substantially reduce CSW’s intention of launching an attack and hopefully allow BSV to regain its rationality.
In contrast, it is easier if ABC supporters were to attack BSV. The reasons are: 1) BSV claimed that they are authentic and are not willing to change their protocol including changes to prevent attacks; 2) BSV has a much lower supporting hash rate, and a 51% attack will succeed easily; 3) BSV supports 128M big block, a higher risk in facing a big block attack. For example, by creating a BSV specific, 128M big block transaction consists of lots of small amount transactions, and it will be accepted by BSV network and will cause network congestion. Also, this is a low-cost attack.
Judging from the recent situation, ABC supporters were only trying to defend itself the whole time even they had a huge hash rate advantage, and they did not launch 51% attack on BSV, not even the low-cost big block attack. On the contrary, CSW faction packaged a 64M block in order to create block size scaling publicity which caused many BSV nodes unable to be in sync for as long as 30 minutes. This was like launching a big block attack to its own network and then declaring that they received great achievement in scaling up to 64M. It was meaningless and boastful.
Although most BSV and BTC supporters hope to see ABC chains die but ABC supporters mostly think the other way around, they hope that BSV and BTC can survive and keep exploring.
9) “The longest chain or the biggest accumulated difficulty wins.” False, winning or losing depends on whether the purpose of war was achieved.
After the war erupted, everyone wanted to know which side exactly won. Many judged based on “longest chain” principle, whichever chain had the longer chain won. The Huobi exchange also announced longer chain will be listed as BCH.
After two chains split, ABC version’s length constantly staying ahead of BSV, thus, Huobi believed ABC had longer chain and listed it as BCH. On 19th, BSV’s length took over but its accumulated difficulty was still fall behind, about 40%. Hence, some BSV supporters suggested “longest chain” principle used to determine winner, but more people who know cryptocurrency very well stressed that accumulated difficulty should be used to determine winner.
Judging based on these two standards were both wrong. The longest chain principle and biggest accumulated difficulty principle are written to judge objectively by system on one chain but is not a subjective standard to evaluate or compare the two chains in terms of win or lose, better or worse. These two principles only apply to one chain, but not two.
In the previous explanation regarding the fork, I mentioned the longest chain principle is on a single chain. When a fork is caused by a technical reason such as network delay, each node will retain the longer chain and abandon shorter one once they encountered two different blocks at the same block height.
Due to Bitcoin’s difficulty adjustment occurring once every two weeks, the two chains caused by a temporary fork will normally have the same difficulty. So, the longer chain should also have a bigger accumulated difficulty. The “longest chain” and “biggest accumulated difficulty” principles are equivalent.
When BCH was born, the difficulty adjustment in two weeks caused BTC and BCH’s mining difficulty and did not manage to adjust according their relative income. When BCH was more profitable, all the hash rate switched to BCH, and if difficulty did not change, block time would be shortened. When BTC was more profitable, all hash rate switched back to BTC, and BCH then had a substantially longer block time. Under this situation, both BTC and BCH’s block time deviated 10 minutes. The fluctuation was obvious, especially when BCH’s price was low.
To resolve this, BCH’s hard fork upgrade on November 01, 2017 modified the difficulty adjustment rule, changing it allow to each block to adjust its difficulty based on previous day average block time (DAA). Block time deviation caused by relative revenue could be adjusted faster. After this modification, BTC and BCH had a more stable block time, and the fluctuation impact caused by the switch mining was not significant after that.
However, after implementing each block difficulty adjustment, the “longest chain” and “biggest accumulated difficulty chain” are not unanimous. This is because although a chain with lower hash rate has slower block time and is shorter, its mining difficulty will drop faster, which will then lead to a faster block time. Due to this, BCH had 6,500 more blocks than BTC, but BCH had lower mining difficulty, thus its accumulated difficulty was a lot lower than BTC.
So, based on DAA, if on a same chain the accumulated difficulty principle is used as the decision maker to carry out a fork by system code. When there are two chains, consideration should be based on which chain has a bigger accumulated difficulty instead of which chain is longer, and then accept this chain and abandon the other one. This is completed automatically by the software.
The “biggest accumulated difficulty” principle only applies on one chain. The ABC version and BSV version had incompatible transaction data in the 556,767th block and already split into two different chains. Even both did not implement replay protection, they would treat the other as an illegal transaction when neither one of them received blocks from the other version, thus rejecting the other chain. In other words, both versions would not recognize each other regardless of their length and accumulated difficulty. Therefore, the “longest chain” and “bigger accumulated difficulty” principle became meaningless. BCH could not consider itself winning even though it is longer than BTC.
Same as other blockchain related misunderstandings, the “longest chain” principle and “biggest accumulated difficulty” principle are widely used as standards to judge the winner or loser of two different chains, and this is not because that these principles have the functions to do so, but because people commonly accept this misunderstanding.
Actually, the longest chain, the biggest accumulated difficulty, the price, no. of members within community, the scale of market value, the daily trading volume, the scale of developers, the active addresses, and so on can only use one of the aspects to reflect a chain’s data condition, health level, level of market acceptance, or the possible development future. But it cannot use it to judge the winner or loser of two different chains. To grow, a chain should always learn its strengths from others and reduce its own weaknesses. Being extremely conceited and belittling others is not a successful path for new creation.
When at war, the standard to judge a winner or loser should be whether the targets or purposes of declaring a war by both parties have been achieved.
CSW’s intentions of starting war was: 1) Stopping ABC from upgrading to version 0.18.2; 2) Team ABC no longer leading BCH development; 3) BSV’s version become dominant version; 4) BCH would not split into two chains, and if it does, stopping the ABC version from mining.
ABC and Bitmain’s targets were: 1) BCH upgradinf to ABC version 0.18.2; 2) If BSV is not compatible with the new version, they are welcome to fork; 3) BCH’s blockchain and coin continuing to run and be led by ABC and its compatible version.
Now it seems that all four of CSW’s targets had failed. BCH split, all other versions except BSV are compatible with ABC version, and it is not compatible with BSV version. Most businesses in the ecosystem continue to upgrade to be ABC version 0.18.2 compatible or higher, and some exchanges and wallets already accept the ABC version as BCH. Some others consider themselves neutral, but none of them considered BSV as BCH and team ABC are still leading force in development.
However, ABC and Bitmain’s targets were basically achieved. “Basically” means that, theoretically, it is still possible the CSW faction to persuade other developers, exchanges, and wallets to recognize the BSV version as BCH. They can even spend more money to constantly attack and destroy the blockchain which runs the ABC version, but the possibility is very small.
Some of CSW’s supporters were trying to avoid when asked about the standards of determining a winner or loser. They keep changing among standards such as longest chain, biggest accumulated difficulty, gave up mining, took initiative to add replay protection, modify mining algorithm and so on. They tried to drag on the war to regain the BCH codename. In fact, this is impossible ever since BSV did not succeed at first, and most of the parties in ecosystem now already accepted ABC and its compatible version as BCH blockchain. This is because it will cause a lot of confusion to the users, and with exchanges and businesses they are not willing to do so, and the decentralized community also does not allow this to be done.
Therefore, judging from the above aspects, CSW faction had failed. Rationally, they should concentrate on building back up BSV and attract more users until its users will surpass BCH and BTC. This more meaningful than trying to regain BCH or BTC codename and it is more achievable.
10) “The BCH civil war gave advantages to BTC.” False, CSW was attacking the entire decentralized cryptocurrency ecosystem rather than BCH itself.
At first, all thought the BCH hash war was just civil war, unexpectedly, it caught attention of the entire blockchain community, even China’s CCTV2. The BTC community was also among the earliest to pay attention to this. Some Core supporters very much welcomed this war until the extent of willing to put aside their own prejudice on the “fake Satoshi Nakamoto” CSW, and they even cheered for him. BTC supporters’ logics was “agreeing to fork is sign of attack”, “what goes around comes around”, and “the enemy of your enemy is your friend”, which that is why they supported CSW to declare war. In terms of interest, BTC and BCH’s relative prices have always been the focus of it all, and if BCH were at war, its relative price would drop and BTC would benefit from this.
To our surprise, the BCH civil war erupted and brought about a slump to the entire cryptocurrency market led by BTC. The source of this was a huge bubble accumulated since last year’s bull market still bursting, and BCH was not the source but it was certainly the straw that broke the camel’s back. Another reason the BCH civil caused cryptocurrency market to drop substantially was that war will consume a lot of money, and under the scarce situation, the effects were especially significant causing prices to drop. For example, CSW mentioned in his twitter post that he traded BTC to pay his mining electricity bill.
Another main reason of the slump was that CSW’s attack challenged the decentralized cryptocurrency economic model and the entire decentralized crypto ecosystem built by Satoshi Nakamoto. This was why when the steep fall in prices led by BTC occurred after the war erupted, and the more centralized Ripple (XRP) and Stellar (XLM) continue to stay firm and even rose. The XRP market value once took over ETH’s second place.
Why did the BCH civil war have impact on the decentralized cryptocurrency assets? Because even though CSW claimed he is royal to Satoshi Nakamoto’s primary intention, his ideas and actions, as well as methods and consequences of war was highly centralized.
1. The idea of CSW declaring war was centralized
The main reason CSW declared war was the he thought team ABC and Bitmain’s direction to adapt market changes and evolve was wrong. Satoshi Nakamoto already confirmed in the whitepaper that the framework provided can successfully achieve a world currency target used by 5 billion people, it only needs to regress to 0.1 version and scale up the capacity to do so. He also attacked those who did not agree with him. According to rationalist’s ideas, community members only need to obey CSW’s opinion and explanation regarding Satoshi Nakamoto and the whitepaper, firmly thinking that CSW is Satoshi and follow his guidance, then the target of becoming world currency can be achieved. This is a highly centralized idea, very popular among those who are poor in reflection and cannot think independently, especially those who are radical and eager to succeed and are able to gain believers in short time. However, this would cause serious damage to the decentralized community, its impact will be same as cultural revolution. From history, innovative ideas were not destroyed as a result of competition but destroyed because of idea’s rigidity or even worse, deification. This is what CSW is doing to Satoshi Nakamoto’s idea.
2. The action of CSW declaring war was centralized
The process of how CSW’s faction was organized and launched the attack was highly centralized. Its core decision makers are CSW and his investor, Calvin. Main, and forces are businesses invested by Calvin including nChain, CoinGeek, BMG, SVPool, and few other businesses and mining pool. This attack was secretly engineered since May, after ABC release in November 15 of the hard fork upgrade progress in early August. They suddenly launched the attack on ABC, Bitmain, and others. The attack strategies were highly consistent, and they worked closely. First, they raised BCH’s hash rate and publicized hash rate proportions, then held a miners meeting, frequently attended discussion within the Chinese community, showed “proof” to those who have influence within the community, constantly created false information of Bitmain, started patenting threats, legal proceedings threats, and so on. Previous misunderstandings (misunderstanding no. 2 to 7 and 9) were created and emphasized by CSW’s faction. This attack was highly centralized in terms of power organization, publicity, and political strategies.
3. CSW burning money was a kind of mining challenged by Satoshi Nakamoto’s Proof-of-work (POW) economics model
Most surprisingly, the CSW faction not only mines with the income rate 5% lower than BTC before the war, but they continued their money burning mining with roughly 2 to 3 times that of ABC’s losses when the war started. Currently, ABC implemented reorganization protection, greatly reduced the risk of being attacked, and BSV still insisted to mine with great loss. This behavior is not conforming with the POW mechanism which suggested miners driven by profit. If attacker can launch a hash rate attack with relatively low cost and gain more profit from other ways, then it challenges POW’s economic model.
4. The consequences of CSW declaring war was centralized
CSW declared war on the BCH community, which is in a rapid decentralization process, which greatly weakens the scale of community and consensus. It also made both sides became more centralized, just like any other war. On ABC’s side, Bitmain, team ABC, and Roger’s influence became stronger, but overall the decentralized pattern and direction had not changed. While CSW’s side became a highly centralized community, mining hash rate mainly came from Calvin’s investees and most of the ideas came from CSW, and other supporters showed high recognition on CSW, even worshiping him. Satoshi Nakamoto himself did not even get such worship before his retirement because the core spirit of Bitcoin is decentralization.
Decentralization and centralization are two different models of human social organization. There is no a priority on good or bad. But through Bitcoin, Satoshi Nakamoto initiated the core function of the cryptocurrency consensus mechanism, with reference to cryptography and distributed consensus, which organizes a great scale of economic activities in the way of decentralization. Without decentralization, this series of technological combinations will be meaningless.
CSW launching a civil war seems to preach the ideas of Satoshi Nakamoto and the whitepaper. In fact, it was an attack on a decentralized cryptocurrency community with highly organized centralized method. This directly challenged the POW decentralized reward model stated in the whitepaper. It also created a highly centralized cryptocurrency community and proclaimed that it is the real Bitcoin. With this, it brought critical hit to the decentralized crypto ecosystem during the time of bear market.
Since 2016, I advocated that a fork is the only way for a decentralized community to evolve naturally. In Scaling Debate and Bitcoin’s Future on Political and Economic, I emphasized both parties involved in this debate should each explore their own path. I analyzed in War and Evolution of BCH that this time it was not a necessary evolutionary fork process. Now it seems now that it was centralized forces attacking on a decentralized community.
BCH’s birth was a typical evolutionary fork process. Although the BCH community thinks that they conform with Satoshi Nakamoto’s peer-to-peer electronic cash system or world currency, they overall still respect BTC community’s decision, and took measures to avoid hurting each other by: 1) Implementing replay protection during the fork to avoid users’ losses; 2) Modifing the address format to prevent users confused with the BTC address; 3) Adjusting difficulty rules to reduce the damage on both BTC and BCH caused by fluctuations from the hash rate switching; 4) BCH supporters had more than 50% of the total hash rate from both network, never launching any hash war. All these measures are righteous and match the mutual interest. However, in recent wars, CSW’s side obviously rejected replay protection and threatening to declare hash war on ABC was a crazy provocation to decentralized idea.
Fortunately, the BCH civil war has come to an end, and CSW’s side built up a close BSV ecosystem and decided to give up on BCH. But the war of protecting decentralized ecosystem is not complete yet as their new target now is now BTC. Hopefully, more people can clear the misunderstandings, really understand the truth and together we can protect the ten years achievement of decentralized ecosystem since this is the true faith.