Miners VS Bitcoin Core, Who Wins?
Last week, the main signatories of SegWit2X announced a halt to the hard fork in mid-month due to a lack of community consensus on the program. Bitcoin Cash (BCH) prices skyrocketed from $ 995 to nearly $ 2,000, and a 100% increase generated much suspicion.
Bitcoin’s price staged a roller coaster market again in Oct. from the lowest point of 16,661 yuan to a 40,000 mark, only a month’s time. And this was even just after ICO in China had been called off in September with major Bitcoin platform announced the suspension of RMB trading business. At the same time, global regulatory authorities had increased the concern of Bitcoin with a tightening stance.
And the fork that had been expected to be ushered in November was the most important reason for pushing up this round of price increases.
However, it is important to understand that the fork in November was not unexpected, but planned and predictable. The fork-related controversy has been around for a long time since the birth of bitcoin. The need for bitcoin technology upgrade is also the result of a dispute over interest among Bitcoin stakeholders.
Bitcoin was initially set to a size of 1M per block, a new block is generated an average of every ten minutes. Bitcoin networks theoretically can process up to seven transactions per second. As bitcoin holders and blockchain transactions continue to grow, the original 1M block size is not enough to support the growing volume of transactions, network congestion, transaction delays and other issues become increasingly serious. In order to solve these problems, the Bitcoin community has explored various options, mainly including “SegWit + Lightning Network” and code modification to the Bitcoin blockchain with a view to breaking the 1M block limit, namely Bitcoin scaling.
Various stakeholders of Bitcoin have proposed a variety of scaling plans. The current consensus is the New York Consensus, which involves deploying SegWit on the parent chain of Bitcoin followed by a further 1M to 2M block scaling in November to ease the congestion of Bitcoin.
But the program was not recognized by Bitcoin core development community. No Bitcoin core developers were involved in the New York consensus. The core team had threatened that if the scaling was to be implemented, the team would resort to fork again before November, insisting on 1M block size. The expected fork in Nov. is based on this background.
What does fork mean for bitcoin?
The main reason is the different understanding of the concept of Bitcoin and the disputes of interests behind. If only SegWit is deployed, the miner’s reward for verifying the transactions will be reduced. Bitcoin core opposes using the “SegWit+ lightning network” to solve the problem of congestion in the Bitcoin block chain. Because, on the one hand, small blocks can better ensure the security of the block chain and on the other hand, it can prevent the excessive rights of the miners leading to the centralization of bitcoin.
Bitcoin core believes that the purpose of Nakamoto’s initial creation of Bitcoin was to provide people with a decentralized and safe transaction network. Its essence is security, irreversibility and independence. In the event of a hard fork, the block size expands from 1M to 2M, and as time goes by, when the 2M is unable to meet the demand, the block size continues to expand until at last, an ordinary private computer can not run the entire blockchain, and all calculations are concentrated onto the miners. In this way, the miners can rely on the power in their hands to undermine the safe mode of the joint maintenance of the entire nodes that the block chain originally relies on, resulting in a centralized block network.
This concern is not unfounded. In fact, a similar “fork” has already taken place as early as the end of July this year. Before that, bitcoin price also had about 25% decline. But it showed an upward trend due to the dissipation of uncertainty after the fork, with prices rallying throughout the month and hit record highs.
BCC VS BTC
Another “significant benefit” brought by the fork at the end of July was the birth of the new currency BCC. BCC copied the pre-forking bitcoin blockchain and the forked to expand to 8M. After which the currency was listed on a number of trading platforms with the maximum price once reached nearly 6,000 yuan.
It‘s worth noting how BCC is obtained. The original BCC was not purchased, but granted for free to bitcoin owners on a 1: 1 ratio.
It is based on the experience of the fork at the end of July – the rise in the price of the currency and the introduction of the new currency, investors are generally optimistic about the expected fork in November. Besides, psychology of obtaining new currency free of charge had driven the transaction volume and transaction price up in Oct.
For bitcoin, although forking can bring about technical upgrade but also to some extent the dispersion of the power. It may also lead to the controversy of “Which one is the real bitcoin” in the end, or even weakened the “total 2100 Million “credibility.
Charlie Lee said he is happy to see the emergence of another chain of large blocks that will reduce controversy to a certain extent. However, he also stressed that in the short run, irrational behavior may appear on the market. Short-term price fluctuations meant trivial for him. He believes there will be only one “winner” between BCC and BTC in the long run, and the other will eventually be zero. He is more bullish on the BTC, so he thinks the BCC will disappear.