Bitcoin Cash’s difficulty looks volatile before the November 15 Hard Fork
A hard fork planned in Bitcoin Cash (BCH) will impose relatively simple technical changes to its consensus mechanism that will not divide the chain, despite some turbulent underground currents in the currency community regarding issues that have recently become difficult to ignore. Disloyalty and perhaps manipulation among the miners, or simply the possibility of such a fact has redirected the conversation before the deadline of November 15.
These issues have not addressed the “planned hard fork” that comes this November 15, a term that has been politicized to represent community struggles and divisions in the chains – but in this case, it is quite benign.
Minor updates are compatible with all miners and should improve basic functionality for users throughout the chain, something that is hard to disagree with. The only echo of dissent is heard by those who believe that recent anomalies indicate that BCH needs more serious repair.
Problems in the Bitcoin (BTC) or Bitcoin Cash communities remain intertwined, years after their separation. The similarity of BCH and BTC Blockchains for mining and the ease with which miners change from one to another are two of the biggest problems affecting both chains in terms of offering the best payment terms.
This issue is still present, even when the BCH itself is prepared for a new iteration called Bitcoin ABC. It could be said that the community continues to neglect a Potentially Difficulty Adjustment Algorithm (DAA), updated in a proposal widely criticized by influential people in the world of BCH two years ago, which could be indicating to the Miners that the control they have enjoyed so far is not yet to be limited.
The story so far
Bitcoin Cash has had a long history despite its relatively short life. On August 1, 2017, it separated from BTC through a fork, one of the main reasons being a disagreement on how to adjust the difficulty of mining, how to scale better, and other fundamental ideas.
Both cryptocurrencies use proof of work (PoW) to sign new transaction blocks, and to keep their networks working correctly, each of them aims at a block generation time of just 10 minutes on average, or 144 blocks per day.
This is the reason why the latest DAA iteration adjusts the mining difficulty after each BCH block, based on a moving window of the last 144 BCH blocks. Bitcoin, on the other hand, continues to use the same algorithm that adjusts the difficulty every 2016 blocks.
The objective of the different BCH algorithm is that conditions remain stable and predictable despite an unpredictable amount of available hashing power. However, only two years is like a century for the Blockchain. The Bitcoin Cash algorithm may have been idealistic in the way it assumed an equitable and fully decentralized ecosystem in 2017, supported by individual users rather than by the large mining groups and ASIC miners of today 11/15/2019.
Some curious trends in the BCH hashrate and the long gaps between blocks seem to illustrate that large miners have smelled blood in the water and may now be playing with the imperfect method of the algorithm to periodically adjust their difficulty.
One explanation is that large and unknown mining pools that have concentrated hashing power can supposedly involve the network at measured intervals to maintain the difficulty of the relatively static BCH, while displacing its weight elsewhere. The strategy involves a rapid production of 144 blocks, followed by a rapid elimination of its collective capacity to undermine BTC, for example, before the algorithm reacts and increases the difficulty.
These stealth miners can earn up to 8% more by taking advantage of this theoretical technique, at the expense of the “honorable” miners who adhere to a network regardless of their profitability.
Economic problems are irreproachable in cryptocurrencies
For now, this phenomenon is considered as unconfirmed, and as some point out, discrepancies may simply be an effect of the next Bitcoin Cash halving in the year 2020. A collaborator noted that those with hash power are more likely to be diversifying at this time and directing their machines to BCH from BTC in anticipation of the event.
Other questions have been raised about the legitimacy behind fears about this type of manipulation. Wouldn’t any migration of hash power from BTC to BCH look like this in some graphs, regardless of whether their intentions were good or bad? Can intentions even be considered “bad” if personal economic incentives are a deliberate variable in the operation of any decentralized Blockchain?
Any miner who uses an algorithm of exchange between Blockchain networks that is more sophisticated than the algorithm used to adjust the difficulty of an important Blockchain such as that of BCH should be praised, according to the opinion of some. When many different currencies are extracted using the same hardware, it is logical that miners extract the most profitable currency at any given time, since their electricity and hardware costs require them to be opportunistic whenever possible.
Given the unpredictable price fluctuations in the cryptocurrency market, there is no guarantee that these miners will not lose in the long term, so who is really losing? However, another potential problem is that many unknown addresses are responsible for the recent trend, and some have warned that it may be the result of a 51% attack.
However, halving is just an explanation of why the incoming hashrate is natural and not malicious. Miners intentionally use a different Coinbase text in transactions, inflating the relative amount of hashrate attributed to different unknown entities, and they have been reaching the BTC and BCH networks predictably since 2018.
The cybersecurity expert and founder of the HyperSphere decentralized cloud solution, Evgen Verzun, agrees with this sentiment and minimized fears of an attack. He wrote it down in a conversation with Cointelegraph:
“The hash rates of the entire system that suffer drastically from a coordinated attack are no longer considered decentralized and that implies that they have always been vulnerable to a 51% attack. These attacks are directed at pools, computers or nodes, and their objective is to create profitable network conditions, but no culprit in this case has earned income. “
ABC neglects a major problem in BCH
The problem is not that miners are behaving rationally when changing chains, that they are planning some kind of attack, or that the algorithm is mistakenly taking into account external factors – it could simply be that the two Blockchains have never truly discouraged Miners exchange between them.
A software change that requires a change in hardware (such as establishing a specific miner for BCH) may be a hard solution that would drown out the power of the hash for BCH, but it could also work better than trying to usurp the Bitcoin mining throne .
Coexistence is a burden for both cryptocurrencies. Therefore, although there is no relevant change scheduled for the next ABC update, the two networks could – and perhaps should – continue to exist in a kind of tandem. Verzun, however, told Cointelegraph that the two cryptocurrencies are not in the same terms in this relationship: “Compared to the stable but slow consensus model used by Bitcoin, the security of Bitcoin Cash seems very doubtful at this time.”
Verzun went on to say that due to the Blockchain rules, the network is controlled by the majority miners, but they cannot remain anonymous forever. Therefore, if the identity of the miner is really unknown, then it will no longer be possible to change the rules that regulate the mining difficulty or establish the time of block generation, since it would be difficult to start a conversation or reach a consensus. Verzun concluded: “In this case, BCH ABC should increase the hash rate of its miners so that the decision power returns to the network or to reach an agreement with the large mining companies.”
Disclaimer: This press release is for informational purposes information does not constitute investment advice or an offer to invest. The views expressed in this article are those of the author and do not necessarily represent the views of infocoin, and should not be attributed to, Infocoin.