After meeting resistance throughout the BCH ecosystem, Roger Ver-owned Bitcoin.com has backtracked on its earlier support for autocratically enacting a tax on miners to fund the development of the BCH fork. In the post on read.cash, the team acknowledged the initial plan deserved more conversation but stressed the need for some process and funding mechanism to finance the development of the decentralized currency.
There was a widespread outcry after the problematic plan was announced, with some fearing the chain might split. It was clear that Jiang’s proposal, in its current incarnation, did not have enough community support after a group of miners from North America and Europe wrote a detailed post outlining why the proposal was a mistake. Bitcoin mining operator TAAL has come out against the plan as well. Beyond the PR nightmare, even broader concerns have now been thrust into the spotlight for the BCH dev community.
If we take the motivation of the original plan’s authors at face value, the BCH dev community is suffering from a lack of direction, coordination, and funding. Bitcoin Unlimited is the second most prominent BCH protocol development team, and its Chief Scientist, Peter Rizun, has opposed the plan. No one is sure what the next steps should be with many uncertain how much is needed for development or what development is needed. Due to the lack of a public development roadmap, the Bitcoin.com post asks BCH developers (Amaury) to explain to the BCH community what they need funding for and provide the budgets and timelines they have for their work.
If the plan is successful, Mr. Rizun warned it might place BCH directly into the category of unregistered security with the Hong Kong entity acting as a marketer paying developers whose efforts were intended to increase the BCH’s value. He wrote, introducing the plan may cause BCH to pass the U.S. Supreme Court’s “Howey Test” that determines whether or not an asset is an “investment contract” (and thus falls under securities regulations). The lack of visibility into the centralized H.K. entity’s selection process opens the BCH community to corruption.
The plan also showcased the risk of centralized collusion by cartels on the BCH blockchain. Some are asking how BCH can claim to create a peer-to-peer cash system when transactions can be delayed or orphaned by the whims of a select few authoritarian miners. Placing the fate of BCH development and subsequent funds into a corporate entity regulated in Hong Kong has left many with unease due to China’s adversarial stance to cryptocurrencies.
Beyond collusion, the plan also included the potential for the self-serving consolidation of BCH mining into the hands of a select few monopolies. Penalizing miners who paid for the hardware, storage, and electricity would push some miners off of the BCH chain. Under the proposal, a percentage of BCH miners would switch to mine on a more lucrative SHA-256 blockchain. The decreased miner competition and lowered hashing on BCH would enable the plan’s authors to garner a higher share of the BCH block reward just after the halving occurs in early May.
With so much uncertainty swirling around the BCH community, it is hard to see how businesses could feel confident building on top of the BCH blockchain. The lack of organization or coherent strategy is a stark contrast to other, more focused, and better-funded teams like we see on Bitcoin SV. The only thing clear is leaders within the BCH community have no plan on how to achieve Satoshi’s vision of a transaction based economy, and many in the ecosystem are willing to diverge from the vision Satoshi outlined in his whitepaper. Total chaos and uncertainty is expect to continue on the BCH protocol for some time, that will limit adoption to a minimum right at the same time that the original Bitcoin starts its steady ascension higher on BSV. Who won the Hash War again?
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