Opinion: All eyes have turned to the upcoming Bitcoin Cash [BCH] hard fork, with the battle between Coingeek and Bitmain continuing to escalate. At last count, Bitcoin SV, the implementation being pushed by Craig Wright and Calvin Ayre, remains as the leader in terms of hashrate on the BCH chain, while Bitmain-powered Bitcoin ABC suspiciously lags behind.
Bitcoin SV has recently gained support from 66% of miners on the BCH network, with ABC only being supported by 32% of the hashrate. This seems uncharacteristic for a company that produces the very tools required to mine cryptocurrency and controls 80% of the miner market, leading many to believe that underhanded practices are set to come into play.
To understand how Bitmain could potentially win the hash war through redistribution of existing resources, we must first look at the statistics for the blocks being mined on the BCH chain. As SV has a dedicated pool known as SVPool, along with the backing of Coingeek-sponsored hashpower, it has carved out its place as being the chain with the most work done on it.
Supporters of Craig ‘Faketoshi’ Wright quote this as being the criteria for the majority chain, while others state that it is nothing but a glorified 51% attack on the chain. However, most exchanges thus far have stated that they will be extending support for Bitcoin ABC as continuing the BCH ticker symbol. Pre-fork trading has also been initiated on exchanges such as Poloniex and HitBTC, where the value of the ABC coin is more than that of the SV coin, representing public sentiment regarding the fork.
Coingeek is pushing the SV implementation, likening it to the idea that “cryptocurrency needs to be seen as currency”, painting Bitcoin ABC as “driven to completely alter the work” that has been done so far. They also claim that the reactivation of the OP_CHECKDATASIG opcode on the chain will lead to the criminalization of the BCH blockchain. Coingeek claims that this would introduce anonymity to the BCH chain, which they claim is not what digital currencies should include.
The politics aside, Bitmain’s position seems precarious at this point, considering that they hold a lot of their assets in Bitcoin Cash. This is due to their active participation in the development of the coin, which presents a potential conflict of interest. It is also due to the fact that they very actively participate in the mining process for Bitcoin [BTC] and Bitcoin Cash [BCH], even to the point of causing centralization due to the concentration of mining hashpower.
This is presented in its ownership of three of the biggest mining pools in Bitcoin, namely AntPool, BTC.com, and ViaBTC. These three factors find about 40% of the new blocks on the Bitcoin network currently, representing a serious issue of centralization. These issues aside, the hashrate of the Bitcoin blockchain comes up to around 52 Exahash/s, 40% of which is approximately 20.8 Exahash/s. The hashrate of the Bitcoin Cash blockchain is at 5 Exahash/s, with 3.3 Exahash controlled by Coingeek.
This presents an interesting situation, wherein Bitmain could switch over the hashrate from Bitcoin to Bitcoin Cash, as both of the coins utilize the same SHA256 hashing algorithm. This would come at a 25% loss, as it is that much less profitable to mine BCH due to its low price and transaction fees, along with potential issues with distributed hardware across the pool.
Bitcoin hashrate distribution | Source: BlockchainTo make matters more complicated, Bitmain has claimed that they only control around 2.3 Exahash/s on the BTC chain, presenting their position as a smaller player in the market. There have also been multiple allegations against Jihan Wu, the CEO of Bitmain, which state that the company secretly mines coins with their new products until they are ready for mass production, giving them an edge against their competition.
Whether Bitmain would switch over their mining power or not is yet to be seen, but it is very clear that they could if they so wished. This would also work in their favor, as they hold upwards of 1 million BCH, and would profit greatly if they could control the chain.
This provides a recipe for disaster, and the cauldron seems to brew as the hard fork looms on the horizon. Whether this a protracted hash war or just another chain split is yet to be seen. However, without the implementation of replay protection, it is almost positive that this coin might as well tarnish the BCH name.
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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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