On 19th September, Calvin Ayre, a major loyal proponent of the much controversial cryptocurrency, Bitcoin Cash [BCH], released a CoinGeek post on Twitter, wherein he has endorsed a viewpoint that Bitmain might reach bankruptcy soon. In his tweet, he wrote:
“#Bitmain will kill the IPO and try to regroup. Problem is their tech does not work anymore and they are failing on their reckless untested wormhole forking plans.”
The history of Bitmain and Bitcoin Cash are tied together as Jiwan Wu, the Founder of the mining giant has been a prominent figure in the BCH ecosystem. The accusations at Bitmain operating as a reserve for the cryptocurrency have been going around the space for a long time.
A research found that Bitmain was in a good financial spot in the first quarter of 2018. Coingeek mentioned Bitmain as having earned a profit of $1.1 billion in Q1 against an old player in the tech industry, Nvidia, whose earnings were recorded to be worth $1.2 billion in the same time frame. During the first quarter, Bitmain also planned to expand its territory by announcing the establishment of a new office in Silicon Valley, California as well as a new data center in Texas.
However, post the success of the company, research centers such as BitMEX and others conducted studies on the financial status of Bitmain and concluded that Bitmain might be in losses after all. In its post, CoinGeek also stated that the mining firm underwent losses due to the stagnancy in the production of new products.
Bitmain also planned to conduct an Initial Public Offering [IPO] recently. This saw bad publicity as well, after the pre-IPO investment deck of the company was alleged to fake its financial accounts, falsely claiming to have received funds from several big investors. As of now, the Ayre owned online portal implied that Bitmain may be facing problems as the firm has been quiet on the IPO front, of late. It also predicted a bankruptcy scenario for Bitmain.
A follower of the blockchain and cryptocurrency environment, David M Lee stated:
“This crypto bear market is testing the solvency of all miners. Bitmain isn’t the only mega-miner who tripped-up and/or are over-extended with mining hardware. MGT (McAfee’s mining co.) is unprofitable and bleeding money. Mining is risky & competitive. Why proof-of-work is best.”
Kroliczyy, another cryptocurrency enthusiast in a comment mentioned:
“what is this? imagine one day CSW says “Coingeek is going to be bankrupt”. I’m more than 100% sure this will happen. Do not trust eachother guys. You are destroying BCH community. You will be fighting with eachother in the future same as you are now fighting with Jihan. Idealists”
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BSV STN is mining 1.4-gigabyte blocks; Is this a scaling solution or a journey towards centralization?
Bitcoin SV, the fork of Bitcoin Cash, has set up an STN [Scaling Test Network], specifically intended to test on-chain scaling for large blocks, which also acts as a standard network in the latest update of Bitcoin SV. It was noted that the STN was mining blocks that were more than 1 GB in block size, a development that was celebrated in the BSV camp after a Twitter user, @two2wheel2life, tweeted,
So the #BSV test network mined 6 blocks over 1GB 👀
Two of them were 1.4GB & one of these contained 359,793 transactions! Check out https://t.co/tArDkAwpFR
Just wait until this is happening on main net! 🙂
Are you paying attention yet??#BSV is #Bitcoin #CraigisSatoshi
— Conor McGee – $two2wheel2life (@two2wheel2life) May 22, 2019
BSV has a total of four such networks defined, i.e., Mainnet, testnet, regtest, and STN. According to the website, STN was implemented to reduce the impact of scalability testing on testnet and to preserve testnet as a network for testing of applications built on top of Bitcoin SV, without requiring testnet users to make significant hardware available.
Block 11891 on the STN was 0.95 GB in size and processed a total of 9530 transactions in the block. Block 11901 was 1 GB in size, and block 11902 was 1.4 GB in size, which could possibly be the biggest block mined on the STN.
Is Bigger Better?
The question of bigger block sizes has sparked quite a few debates, be it Bitcoin, Bitcoin Cash, or Bitcoin SV. It was one of the reasons why Bitcoin Cash forked from Bitcoin and why Bitcoin SV forked from Bitcoin Cash.
However, does massive block size really solve the scaling problem without any drawbacks? The Operations Manager of STN, Brad Kristensen, had some interesting things to say to AMBCrypto about the recent achievements of the STN.
“We’re very pleased with the results, and I think it’s a strong signal of what is to come from Bitcoin SV on mainnet as we continue to increase adoption. The STN is running the same public release available right now (0.2.0). Anyone can join the STN to test their applications /services.”
According to BSV’s roadmap, the first upgrade for the project will be ‘Quasar,’ which is proposed for July 24, 2019, and will concentrate on scaling by increasing the default block size hard cap.
Centralization or scaling?
Andreas Antonopoulos, a prominent Bitcoin advocate, had a different opinion on the rise in block size for Bitcoin SV. When AMBCrypto reached out to him, he commented,
“Large blocks have a centralizing effect on mining and node operators. It is unlikely that the main BTC chain will increase the blocksize as it has taken a different path for scaling, via layer-2 payment channels (Lightning Network) and on-chain optimizations (Segwit, Schnorr etc.).”
As stated by Antonopoulos at the ‘Bitcoins in Bali’ meetup on June 27, 2017, if the block size is increased in orders of magnitude at a rate that is proportional to the increase in user base, a difficult problem will emerge wherein Bitcoin transitions from a decentralized to a centralized system.
Additionally, Antonopoulos said,
“If my block takes 11 minutes to validate, then i’m off the blockchain, which means fewer people can validate independently, which means the system becomes centralized. With which one of these increases, fewer people can participate in the validation process, fewer people can participate in storing the data, and fewer people can participate in being independent actors. We go from a system that is decentralized to a system that gradually gets more and more centralized.”
The above gives a clear idea of what could happen if the block size increases. However, Craig Wright announced in one of his Medium articles of his plans to increase the block size, giving his opinion on the same,
“The reality is that scaling on-chain is much simpler than anyone likes to admit. There is nothing special to be done in order to achieve this, it is just allowing commercial systems to compete and to remove the false idea that home use and hobby nodes need to be subsidized”
So, how will BSV fare? Will it still be successful after implementing larger blocksize or will it accept the centralization that comes with increased block sizes? Only time will tell.
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