ABC vs BSV Hash War (Part I) — Why we need Hash Vote？

Translation Weibo Article
Source: 《【天下大义，当混为一】（上）谈Hash Vote》

Part 0: When Should Bitcoin Be Forked?

Should Bitcoin be forked or not? This depends on the cause of the disagreement behind the fork.

Part 0.1: If the goals are different, then it should be forked. Let the market choose which one is right.

Whilst competing on the scaling problem, Bitcoin Core believes that Bitcoin’s goal is to become the digital gold. Bitcoin Cash, on the other hand, believes that Bitcoin’s goal is to become a global currency, and the differences in goals are irreconcilable. So, a competing, independent fork emerged leaving the market the choice to decide which one will be the best.

The forks with different goals would occupy different markets and form different products. However, 2 forks will be unified in the future because their utility as store of value relies heavily on the demand and daily usage of all these by-product of the forks.

Bitcoin will only become a store of value, when you have a sufficient amount of people willing to buy from you (ie demand), but all these ‘buyers’ will not fall out of the sky. The number of users, popularity of the fork coin, and intellectual property rights are all very important aspects of this business. The important factors in creating them are frequent usage and high user traffic.

What is being used frequently? That’s right, it’s — cash. Cash does not just mean that you can use it to buy coffee every day but it means a high frequency of use and industry exposure.

For the same product that contains 21 million unit of a currency, would the user choose the more frequently used product A to use as store of value or the unfamiliar product B? The most typical example is real estate. Although properties in the first-tier cities are more suitable as store of value, the residents of the 2nd, 3rd, 4th and 5th cities are almost always buying local real estates, rarely do they buy outside their home. They only do so because of one sole reason — familiarity.

Part 0.2: If the objectives are the same, but the means to achieve the goals are different, then it is best to resolve the differences through an arbitration mechanism.

Excessive forking will inevitably have detrimental effect to any product because for the product to survive, we will need economies of scale. Although there are disagreements within the BCH community, they both have the same vision — which is to let BCH become a global currency that is being used by 5 billion people. That is only achievable when there are economies of scale.

Forks that occur too frequently can impede the adoption of BCH. For example, when using the message field of the transaction (OP_RETUEN) to write the memo of Weibo, it is not possible to store every Weibo message on both chains after the split. What would happen if the message is being stored on one of the chains but the chain dies thereafter?

Therefore without an effective arbitration mechanism to prevent unnecessary splitting of the BCH chain, it will impede adoption, which implies a reduction of users. This conflicts with the ideology of ​high-frequency use for a cash system.

However, in order to resolve differences, the arbitration mechanism must first ensure consensus among internal actors, such as voting by a committee. This kind of arbitration mechanism is not good, because even the voting committee might have disagreements. So, what is an effective arbitration mechanism then?

Prior to Bitcoin, there was no arbitration mechanism. During the scaling debate, amongst the five core members of the development team who were given code submission rights, Gavin Andresen and Jeff Garzik supported the block expansion and were kicked out of the Bitcoin Core team. Bitcoin then split: Bitcoin Core and Bitcoin Cash.

Bitcoin Core still has no arbitration mechanism within itself, so it is expected that Bitcoin Core will undergo further split in the future. ETH relies on its founder Vitalik Buterin to temporarily avoid this problem at the cost of having a PoV (Proof of Vitalik), which is not decentralized. However, Bitcoin Cash is ahead of all coins as regards to forming an effective arbitration mechanism.

Part 1: Decision by one rule

What is ‘decision by one rule’? It can be best explained by the example below:

China has 5000 years of history, and out of it, 3600 years are well documented. Through years of reigns and evolution of history, we observe that there is one seemingly unreasonable principle that governs the selection of the ruler:

Elect by seniority, not capability

Many might disagree with this principle — why do they not let the young and capable royal off spring to inherit the throne for we know he can rule the country well but instead they select the old and experienced one?

Part 2: Elect by seniority, not capability

This brings back to the fundamental question: how do the emperors identify the most capable person inherit the throne?

After all, age cannot be debated —Who is the first born prince , this is a fact and cannot be altered. However, if we are selecting the candidate based on their capabilities, it is very subjective and highly debatable. One can argue that he has the best moral principles, another can claim that he has the best leadership skills. If selection of the ruler is based on capabilities only, candidates of the throne can keep debating about who is the most suitable to inherit the throne as they have their own metrics assessing the qualities of the ideal candidate.

As the debate and argument regarding the ideal candidate to inherit the throne continues, this alters the incentives of the other officials working under the current emperor’s reign. Why is this so? In ancient times, favoritism from the emperor supersedes any noble accomplishments the official had done for the country. Therefore, in the eyes of the officials, assisting the royal candidate to inherit the throne is more important than managing the county well. This distorted the priorities of the government, and instead of coming together to manage the country well, officials split themselves into different camps, each supporting different potential candidates of the throne in hoping that they will inherit the throne eventually and quickly rise to power.

When the current emperor dies and a new reign begins, the debate as to who should inherit the throne worsen and in worst case scenario, it leads to a divide within the empire and possibly warfare between different counties.

Part 3: An unanimous decision-making process

Over reigns of different emperors, rulers of the following dynasties had learnt from lessons and decided that the principle that shall govern the selection of the ruler will be to appoint the eldest, rather than the ones with the best capability. Although the eldest candidate might not be the most capable, but he can receive guidance from wise mentors and elect the most eligible officials to assist him in ruling the country. The idea here is that, the eldest candidate is unlikely to differ much from the most capable candidate in actually managing the country. Appointment based on seniority is affirmative and undebatable (we cannot debate age) and it eliminates many arguments that arise in the previous reigns — this is the second best alternative.

Issues that are much debated by the government officials of ancient times (such as deciding the throne), usually do not end up differing so much in their results. Option A might be the best solution to a certain issue, but option B might not be a bad idea as well. The most important thing is for the emperor to be the final decision maker based on his own metrics, regardless whether the decision made is the best or not. Most of the time, a decision just needs to be made and it has to be final and unrefuted — to stop the endless unnecessary debate.

The same principle applies presidential election in current times too. Do you agree that Donald Trump is the best candidate to be elected as the president of United States? Frankly, it does not matter at all. No matter how strongly opposers of Trump feel, he did go through a rigorous election process and won by the number of delegates he received. The outcome is final and unrefuted and all voters have to accept this outcome. Voters who oppose the outcome have another chance to vote again in four years and not wage a war against supporters of Trump — simply because the outcome is final and there is no room for debate or resistance. Even though the outcome that Trump was elected as president might not be the most ideal situation for the United States, the downside is still smaller than if we allow room for debate of the outcome and resulting in internal conflict within United States — as seen in previous reigns of the Chinese empire.

This is the essence and beauty of: Decision by one rule.

Part 4: What is the ‘one unanimous rule’ in Bitcoin?

First of all, we have to understand what is Bitcoin, which is a type of ‘electronic cash’ designed by Satoshi Nakamoto. The voting consensus designed in Bitcoin is very similar to how we elect the president — ‘one CPU one vote’ and ‘Proof of Work’. Below is an abstract from the Bitcoin whitepaper:

《Bitcoin: A Peer-to-Peer Electronic Cash System》

The proof-of-work also solves the problem of determining representation in majority decision making. If the majority were based on one-IP-address-one-vote, it could be subverted by anyone able to allocate many IPs. Proof-of-work is essentially one-CPU-one-vote. The majority decision is represented by the longest chain, which has the greatest proof-of-work effort invested in it.

From a technical perspective, ‘one CPU one vote’ is essentially ‘one Hash one vote’. The higher the accumulated hashing power, the longer the chain. In the code, calculation of the longest chain is not dependent of the number of blocks but rather the hash difficulty.

Therefore, hash vote is the ‘one unanimous rule’ in Bitcoin.

Part 5: Why hash vote is considered the ‘one unanimous rule’ in Bitcoin?

part 5.1: Like the principle ‘elect by seniority, not capabilities’, the outcome decided by hash voting is final and irrefutable.

Other voting mechanism will allow room for debate and this is undesirable as shown in examples of previous reigns of Chinese empire discussed above. An example would be ‘proof of stake’ where parties with large number of tokens have a higher weightage in voting. What if voters with the most tokens do not participate in voting? This might result in a misrepresentation of all voters in the system and debates and conflicts will follow.

part 5.2: Hashrate determines the amount of resources a participant input to maintain the network and generates blocks.

Most alteration to the Bitcoin network needs to be implemented by hash voting and it is impossible to arrive at an unanimous decision without hash voting.

part 5.3: Hash vote is not the same as miner vote

As long as you are able to contribute resources to maintain the network, you will be assigned voting rights, for example:

a. Token holders:

For instance, I am a Bitcoin holder before the Bitcoin scaling debate. I only possess Bitcoin itself, but no hashing power. To protect my Bitcoins, I started mining in 2016 and created the BTC.TOP mining pool. If you are a Bitcoin holder and you wish to have a say in the Bitcoin network, then you have to start mining (like what I did).

b. Enterprises:

Like Bitcoin holders, essentially there are operators of mining pool who also run other businesses within the industry. On the contrary, companies like BTC.TOP whose sole business is only mining pool are the minorities.

c. Developer and KOLs:

Not all miners are interested in studying protocol development and vote the best protocol design to propel the system forward. Voting rights are signs of power to some but burden to others. They are trusted with the power to maintain and improve the ecosystem and yet they might not have the capability and time resources to do so. Therefore what they can do is to vote based on the opinions of their trusted circles (similar to trusted government officials who assist the emperor in decision making as discussed above). If you are a developer or KOL who have spent years studying the Bitcoin blockchain and have proven that you have the ability to improve protocols, you can garner holders of voting rights to support your ideology.

Therefore, hash voting is not a segmentation based on power, but rather it assumes the role of a jury which reflects the opinion of all participants in the system. The community has the right to signal their preference using all sorts of methods to affect voting.

​part 5.4: There is no monopoly, approval required or inheritance in hash voting

Therefore anyone who can contribute significant mining resources has the right to vote.

part 5.5: As there is significant sunk cost associated with investing in mining resources

Such as setting up mining factories, buying mining machines and providing electricity. This keeps miners vested in maintaining the Bitcoin ecosystem and hence they will have the best interest for the community.

part 5.6. Hash voting rights eventually goes to mining pools

a. Mining pools are still for-profit enterprises and therefore their decision making process is still driven by profits and market sentiments. They will not agree with certain suggestions that developers came up with that does not sync in with market sentiments (for instance they will not allow transaction fees to go up to $1,000)

b. Mining pools are also enterprises with deep technical domains as they are run by experienced developers who know the Bitcoin protocol well, so they are able to understand problems associated with protocol development and hence are better tasked to make decisions for the community.

part 6: Summary:

1. Decision by one rule. Sometimes, abiding by one rule is better than unable to make decisions and end up in vicious cycle of endless debates and internal conflicts.

2. ‘Elect by seniority, not capability’ principle adopted by many reigns of the Chinese empire as well as government election process showed as the essence of the unanimous decision-making process: having the second best option is better than sacrificing peace and order within a system for the best option.

3. Bitcoin is a type of electronic currency designed by Satoshi Nakamoto and its whitepaper defined what ‘one CPU one vote’ is, which Is essentially hash voting.

4. Hash vote is not the same as miner vote, but rather acts like a jury to reflect opinions of everyone in the community.