BY CNA team - November 13, 2018
After the hard fork
There are three possible scenarios for the upcoming contentious hard fork, that is network update, of bitcoin cash, on Nov 15, a report from Cumberland, a major crypto trader, says.
The competing factions are Bitcoin ABC and Bitcoin SV, with crypto startup nChain and its chief scientist Craig Wright backing Bitcoin SV seemingly having the upper hand in terms of hash power over those backing Bitcoin ABC, which includes mining rig producer Bitmain and Roger Ver.
Analysts from Cumberland say that after the split, Bitcoin SV intends to allow miners to vote with their hash power which implementation they want to support.
They say that the longest chain, those with the most accumulated blocks, should claim the bitcoin cash ticker at the end, and the minority chain will die.
“This version of blockchain’s survival-of-the-fittest is deemed Nakamoto Consensus,” they noted.
The Cumberland analysts say that major exchanges and the investing community largely regard the Bitcoin ABC faction as the more legitimate implementation and the market base remains Bitcoin ABC will claim the longest chain since it is backed by powerful bitcoin miners like Bitmain that can point their hash power to mining Bitcoin ABC.
However, around two-thirds of the hash power is in Bitcoin SV’s favour.
They also say that even if Bitcoin ABC were to lose the hash war, there are questions over whether the exchanges will choose to grant Bitcoin SV the bitcoin cash ticker.
In the second scenario, there are two possible paths.
They pointed out that if Bitcoin SV loses the hash war, the faction under Wright may still be able to survive as the largest bitcoin cash miner, CoinGeek, has thrown its support to Bitcoin SV.
“Any minority chain can exist so long as there are miners willing to temporarily mine the new coin at a loss in the hope it will eventually gain traction,” the analysts say.
And whether or not major exchanges Bitcoin SV’s coin will depend on how secure their clients are and on market demand.
Should Bitcoin ABC lose, the faction will not support the Bitcoin SV implementation as the rifts between the two factions have widened in recent months.
The third scenario revolves around transactions with the analysts noting that there are numerous reports on the possibility that Bitcoin SV might divert hash power from its own chain and attack the upgraded Bitcoin ABC chain.
The analysts say that this would require a lot of hash power that the market doubts the Bitcoin SV faction possesses.
They say that should Bitcoin SV achieve at least 51% hash power on both chains, it can set the mempools to reject every single transaction from Bitcoin ABC and intentionally orphan valid blocks.
Bitcoin SV would add empty/close-to-empty blocks to the Bitcoin ABC chain.
“Since dropping all Bitcoin ABC-specific transactions after the upgrade ensures both chains mirror each other, Bitcoin SV could then hardfork the new Bitcoin ABC chain and merge it to the old Bitcoin SV chain,” they say, adding that the reverse situation can also apply.
At press time, bitcoin cash price was trading at US$510.12, down 0.96% over a 24-hour period, according to CoinMarketCap data.