- Bitcoin Cash is set for a network upgrade on November 15, 2020.
- A BCHN version of the upgrade includes a novel and uncontroversial mining system.
- The Bitcoin ABC development team has proposed an alternative upgrade that also redirects 8% of mining rewards.
The proposed upgrade, at least for the BCHN version, introduces a novel mining algorithm and is widely accepted. Yet proponents of the coin, which ranks fifth globally, were surprised when the Bitcoin ABC developer team proposed an alternative upgrade that added a further element that would divert 8% of the block rewards away from Bitcoin Cash miners.
The ABC team’s proposal, termed “Bitcoin ABC,” would put the money in the hands of its own development team. The idea is nothing new; privacy coin Zcash has had a similar fund for many years. However, those in the Bitcoin Cash community saw this as a money grab and felt it ran counter to the coin’s decentralized ethos.
“Diverting part of the #BitcoinCash block reward to pay a single development team is a Soviet style central planner’s dream come true. Please stop,” said Ver, in a tweet this August.
Simple Ledger Protocol, a protocol that allows the issuance of secure tokens on the Bitcoin Cash blockchain, sung a similar tune. “We do not consider a protocol that redirects coinbase rewards, to be Bitcoin Cash (BCH), especially when such a rule was announced unilaterally,” said a spokesperson for the protocol, in a blog post.
The network upgrade is set for November 15 and the most likely scenario is that the majority of miners will support the BCHN version, as opposed to the ABC team’s version, with the ABC’s version becoming a minority chain. This is a concept known as “splitting” when a blockchain upgrade proves divisive and the blockchain becomes two separate chains, each with their own value.
For the past few months, Bitcoin Cash miners have been signalling which way they plan to go when the fork happens. They do this by writing messages in newly mined blocks, such as “PoweredbyBCHN,” which signals that they plan to adopt the BCHN version of the upgrade.
So far, 82% of miners have reportedly expressed opposition to the ABC team’s proposal. Either way, the upgrade is coming, and with it a new algorithm will go live on November 15. The ABC implementation of the upgrade will also add the controversial coinbase rule of 8%—for as much of the blockchain it can hang on to.
Exchanges have said that they plan to support the network upgrade—but that, if the blockchain does split, they will stick to the chain with the majority hash power (the one with more Bitcoin Cash miners).
For example, crypto exchange Crypto.com stated that it will support the network upgrade. But it added that, “should a competing chain be created, Crypto.com plans to only support the chain with more hash power.”
Huobi has similarly supported Bitcoin Cash’s changes. However, the crypto exchange’s support came with a disclaimer. “Since there are still many uncertainties in the current fork, if one of the two parties decides to abandon the fork, HuobiGlobal will respect the opinions of the community and name the final winner BCH,” it said.
What does the upgrade contain?
There are three changes on offer. According to Bitcoin Cash’s website, the network upgrade will make changes to the Difficulty Adjustment Algorithm (DAA), the Coinbase Rule, and Automatic Replay Protection.
First off, the DAA is going to be replaced, regardless of which version of the upgrade is concerned. A new algorithm—ASERT— is set to take its place. According to the upgrade’s GitHub page, the primary motivation for this replacement algorithm is to put an end to variations in Bitcoin Cash’s difficulty and hash rate.
In addition, the replacement algorithm seeks to equalize profit between steady miners, and miners that shift between different blockchains. This update will also aim to maintain block intervals to as close to 10 minutes as possible. Lastly, it is hoped that ASERT will also bring the average transaction confirmation time closer to target time.
The second part—only a feature of the ABC version of the upgrade—, the Coinbase Rule, is the cause of all the controversy (no relation to the exchange, “coinbase” refers to a specific part of a newly mined block). It will require 8% of all block rewards to be sent to a specific Bitcoin Cash address. One controlled by Bitcoin ABC developers, of course.
Lastly, the upgrade will include Replay Protection. This is designed to cause full validating nodes that do not upgrade to separate themselves from the main network after the next upgrade happens on 15 May, 2021. So, make sure not to get left behind.