The BCH network is expected to undergo a hard fork on November 15, 2020. On October 28th, OKEx announced the Bitcoin Cash (BCH) fork asset processing plan: OKEx will take a snapshot of the original BCH account from 21:00-21:05 (HKT) on November 15 and select the price after the fork is completed The higher chain inherits the naming of BCH, and the tokens of the other chain will be airdropped to the user’s fund account at a 1:1 ratio. After the announcement, BCH rose accordingly.
In order to improve the system, BCH undergoes a hard fork upgrade every six months. Since its birth in August 2017, BCH has undergone several hard fork upgrades since its birth in August 2017. On November 16, 2018, BCH officially hard forks. The forks are BCHABC and BCHSV. On November 15th, it will face a split into two again. So, what are the reasons for its forks?
1. The beginning and end of the birth of BTC, BCH and BSV
In 2008, Satoshi Nakamoto published a white paper “Bitcoin: A Peer-to-Peer Electronic Cash System”, stating his new vision for electronic money-Bitcoin was born. In the white paper, a decentralized electronic cash system based on P2P network transmission is constructed. Through this system, we can realize global instant electronic cash transfer and solve the problem of generating, storing and transmitting exchange value on the Internet. On January 3, 2009, the Bitcoin genesis block was born. Bitcoin was initially only popular among geeks. After several years of development, Bitcoin has gradually entered the public eye. The user community has continued to expand and the price of the currency has risen.
However, starting from the second half of 2013, many users reported that their transactions were delayed for a long time before being executed. After observation, it was found that this was caused by Bitcoin’s inability to process network-related information in a timely manner. The Bitcoin system adds a block to the blockchain every 10 minutes. However, under the limit of 1MB block size, the transactions that can be stored in each block are very limited, which limits the throughput of the entire transaction. The Bitcoin network has begun to experience congestion, excessively high handling fees, and transactions that cannot be packaged for a long time. At that time, Bitcoin can process about 4-7 transactions per second. If you compare it with the global payment networks Visa, American Express or PayPal, Visa needs to process 4.7 transactions per second during the Christmas season of 2013. Obviously, the transaction efficiency of BTC at that time could not afford the cash payment function.
In 2015, there was a voice of expansion in the Bitcoin community. Miners supported the expansion of Bitcoin blocks to increase transaction capacity, while small blockers represented by the core developer Core believed that this could not solve the problem fundamentally. Use Segregated Witness and Lightning Network to alleviate Bitcoin’s congestion problem. The game between miners, development teams, and users is relatively chaotic. The Bitcoin community has been arguing about expansion for three years. The conflicts in the community are gradually unable to be reconciled, and the sound of hard forks has intensified.
Finally, on August 1, 2017, the miners executed a hard fork at block height 478558. Six hours later, the ViaBTC mining pool successfully dug the first BitcoinCash block (nr 478559), the Bitcoin community Since then it has been divided into two. Bitcoin Cash took over the transaction data of Bitcoin, but deleted Segregated Witness, upgraded the block limit to 8M (later upgraded to 32M), and is committed to solving block congestion and high handling fees in the Bitcoin system through on-chain expansion Question, then distribute BCH to Bitcoin holders at a ratio of 1:1 Bitcoin. In order to improve the system, BCH conducts a hard fork every six months. Since then, BCH has undergone several upgrades, and the system has gradually stabilized, and its market value has entered the top ten of encrypted assets.
In April 2018, the BCH community released a mid-term development roadmap, indicating that BCH will be technically upgraded and improved. It mainly includes two aspects: one is to expand the block size to 32MB (completed in May); the other is to add or reactivate several Bitcoin script operation codes (op codes) to allow the BCH network to have and The application of smart contracts like Ethereum can expand BCH’s more applications.
However, CW, an Australian scientist who claims to be Satoshi Nakamoto, clearly opposed the plan. He believes that Bitcoin has established a solid cornerstone in version 0.1. All BCH needs to do is: 1) expand the capacity; 2) lock the agreement and declare that it will be “completely” Lock the underlying Bitcoin protocol and expand the capacity to 128MB”. To this end, a project called Nchain was established and the BSV node client was created on August 16, 2018. It was threatened to implement a fork coin named Bitcoin Satoshi Vision (BSV) on the BCH protocol, with the goal of restoring Bitcoin Original agreement.
After several rounds of confrontation between the two major camps, the contradiction reached its extreme again and it was impossible to coordinate. On November 16, 2018, BCH officially hard forks into BCHABC and BCHSV. This fork led to a split in consensus, and mainstream currencies plummeted. Since then, BSV conducted a “hard fork” on July 24, 2019, increasing the block size from 128MB to 2GB, which is higher than any other blockchain project. And in the few days after the upgrade, a 256MB block was successfully mined on the BSV chain, setting the world record for the largest block mined by the public chain.
(BCH bifurcation timeline diagram)
At this point, the Bitcoin camp has formed a triumphant trend.
2. Mechanism design and strategic vision of BTC, BCH and BSV
The dispute between the hard and the soft forks is just the appearance, and is essentially a dispute over routes.
BTC:
Core adheres to the 1M block size to ensure a low full node threshold. Even an ordinary computer can run a full node, which is more decentralized. Advocating the use of Segregated Witness and Lightning Network to alleviate Bitcoin’s congestion problem. Both Segregated Witness and Lightning Network belong to the content of the blockchain expansion plan. In simple terms, Segregated Witness refers to splitting the information of a transaction and recording only part of the important information in the blockchain to reduce each transaction. The size of the transaction increases the number of transactions processed in each block. The Lightning Network uses part of the transaction to be processed off-chain. The transactions of both parties within a period of time are only recorded by both parties. After a period of time, the final transaction results are broadcast to other nodes and recorded in the blockchain. Such multiple transactions actually only need to be recorded once, which is suitable for frequent and small transactions.
In August 2017, Core-led BTC officially activated the Segregated Witness function for expansion. In December 2017, the Lightning Network was also successfully deployed on the Bitcoin mainnet.
According to statistics from 1ml.com, as of November 14, the carrying capacity of the Bitcoin Lightning Network is 1038.63 BTC; the number of nodes is 14574, which has increased by 2.91% in the past 30 days; there are 35288 channels, which have declined in the past 30 days By 2.2%. Compared with the data on April 19, 2019, the carrying capacity of the Bitcoin Lightning Network at that time was 1063.42 BTC, the number of nodes was 8065, and the number of channels was 38637. Over the past year, the number of Bitcoin Lightning Network nodes has increased by 80%, but the number of channels and the BTC carried by the network have not risen but fallen, and development is weak.
(BTC Lightning Network data, the picture comes from 1ml.com)
BTC still can’t get rid of the problems of congestion and high handling fees, and can hardly take on the most important function of cash “payment” and embark on the path of “electronic gold” storage.
BCH:
The block size of BCH expansion 1M is 32M, and the expansion route on the chain is adhered to. And re-enable a batch of OP-codes, which will allow the creation of different types of metadata, such as representative tokens and the execution of smart contracts. Users can create some complex applications on it and explore the integration of payment and applications. As one road. However, the dissolution of Wormhole and the development team of Copernicus announced a temporary failure and an end to the direction of smart contracts. Judging from the recent development route of BCH, there is another intention to return to pure “electronic cash”.
(Encrypted pass ATM histogram, the picture comes from coinatmradar)
ATM machines can provide users with services including encrypted token exchange and withdrawal, encrypted token purchase and cash transfer. As of April 8, 2020, there are 11,1963 encrypted ATMs worldwide. At present, there are 3,821 ATMs that provide BCH withdrawal or deposit and withdrawal services in the world, accounting for about 32% of all cryptocurrency ATMs, ranking fourth in the total number of all cryptocurrency ATMs. There are 11,953 ATMs that provide BTC withdrawal or deposit and withdrawal services, accounting for about 99.9% of all cryptocurrency ATMs. BCH is still far lower than BTC in terms of payment consensus.
BSV:
BSV conducted a “hard fork” on July 24, 2019, increasing the block size from 128MB to 2GB. In the creation upgrade, it completely removed the concept of hard online, so Bsv is also called unlimited expansion. In theory, bsv can generate super large blocks. After lifting the block limit, Bsv has laid the foundation for large-scale storage, and can store more things on the Metanet network faster. BSv’s vision is to create a global open data ledger blockchain that can be used by enterprise applications, and wants to attract companies and applications that want to develop in a standardized and friendly environment. Its development route is the global ledger, and the underlying public chains such as ETH, Cosmos, and EOS are the targets. At the same time, BSV claims to embrace supervision and take a compliance route.
However, the price of BSV is called a demon coin because of its “demon rise” several times and serious control. CSW, a community leader who claims to be Satoshi Nakamoto, is also mired in negative reviews.
Forking is the light of freedom in community governance. Different factions adhere to their respective routes through forks, and BTC, BCH, and BSV are also exploring on their own paths.
Three, BCH forks again
Since the official hard fork of BCH into BCHABC and BCHSV on November 16, 2018, BCH has undergone 3 hard fork upgrades. On November 15th, it will usher in the 7th hard fork, but unlike the usual security transition and upgrade of the community united front, BCH will face the situation of dividing the blockchain into two after this hard fork.
Unlike the previous BCH expansion divergence and the BSV route divergence, the previous two forks were both a consensus dispute, but this time BCH was a conflict of interests. The reason for the conflict in the community is that the main development team of BCH, BCH ABC, insisted on introducing the “Infrastructure Financing Plan” (IFP) in the November upgrade. It was initiated by some large miners, mainly to solve the funding problems faced by the development team. 8% of the BCH block reward will be allocated to the Infrastructure Development Fund as the key development funds for BCH.
The source of developer income is a common problem in blockchain projects. Miners are clear participants and protectors in the blockchain ecology, and they can obtain system token rewards. Developers have undertaken the upgrade and improvement of the entire public chain, but they cannot get income directly from the system. Currently, developers generally get paid through community donations or commercial investments.
In the business investment model, there is a risk that shareholders obtain the right to speak through shares to control the development team. In order to maintain independence, the BCHABC team rejected the method of commercial investment, but the amount of funds obtained through community donations is limited, and the problem of development funds remains It is a difficult problem shrouded in the development of BCH.
On January 22 this year, the founder of Lebit Mining Pool, Jiang Zhuoer, proposed the “Infrastructure Financing Plan for Bitcoin Cash”, proposing to donate 12.5% of the block rewards in the major mining pools over a period of six months. A fund specially set up to support the BCH infrastructure to provide sufficient funds for protocol developers
Although this plan was out of consideration for the long-term sound development of the project, it touched the core interests of the miners. Soon after it was proposed, it was opposed by all members of the community, and ultimately failed. On the other hand, the BCH ABC team insisted on advancing the donation plan, and announced on February 18 that the relevant code had been added to the ABC version 0.21.0 client. This move further intensified the conflicts in the community. Freetrader, the early developer of BCH, took the lead in creating a full node called BCH Node (hereinafter referred to as BCHN) and removed the donation plan in this version. At this point, the BCH community has been split into the core development teams BCHABC and BCHN. BCH will also face a hard fork after block 1605441600.
Just as the two camps competed for the orthodox name of BCH last time, which chain will inherit the name of BCH this time?
If measured from the perspective of the percentage of computing power, from the BCH block production data in the last 7 days, 84.2% of the blocks were mined by the BCHN community, and 0% were mined by BCHA. Unlike the previous battle between BCH and BSV in computing power, the battle was fierce. The strength of the two sides is extremely different this time, and BCHN seems to have a chance to win.
(BCH block data in the last 7 days, the picture comes from cash.coin)
If BCHN wins, for project development, short-term benefits give way to long-term development, but the development team funding problem that plagues community development still exists, and the conflict of interests may lead to continued forks in the future chain. Of course, these are just speculations. It remains to be seen on November 15 where the specific BCH will go.
Fourth, the impact of forks
For token holders, on the one hand, according to the BCH bifurcation rules, holding a certain amount of BCH before the snapshot will obtain a corresponding number of new chain tokens with a certain value at a ratio of 1:1 after the new chain is generated.
On the other hand, you should also pay attention to avoid transfers during the fork, because replay attacks may lead to loss of coins. After the BCH hard fork, the new chain and the original chain have the same transaction data, address, private key, and transaction method. One currency before the hard fork will become two types due to the fork. You only need to download the wallet corresponding to the new chain and import the wallet private key of the original chain to get the same amount of new chain coins. Before solving the replay attack problem, if you transfer a BCH before the fork to an address A in your wallet, the corresponding new chain coin in the new chain wallet will also be transferred to address A. Because the coins before the fork are automatically recognized as legal by the two chains after the fork. As long as one transaction is initiated, the other will be synchronized to the blockchain network, and then packaged and processed by the miners, and the transaction will take effect.
For miners, the proof-of-work algorithms used by BCH, BSV and BTC are all SHA256. The algorithms of the three currencies are common, and the mining machines are common. The computing power is flowing between the three cryptocurrency networks, and the miners are pursuing higher The profit motivation makes BTC, BCH, and BSV have similar daily mining returns.
Comparing the currency price trends of previous forks, the token price may still fluctuate drastically in this fork. The fluctuation of currency prices can change the direction of the flow of computing power. If the sum of the forked currency prices after the fork is higher than the price of BCH itself, it will attract more computing power inflow. If the sum of the price of the two forked coins after the fork is lower than the price of BCH itself, it will increase the outflow of computing power.
On the other hand, the computing power of the original BCH is split between the two chains, which will reduce the computing power of the forked chain, and correspondingly will reduce the cost of 51% attacks. At this time, the security risk of the blockchain network will also increase.
