The planned upgrade of the Bitcoin Cash network, scheduled for November 15th, 2020, will include two primary improvements to the Bitcoin ABC full node software implementation. The first improvement is a change to the Difficulty Adjustment Algorithm. In an effort to provide developers in the ecosystem with the most efficient path to implementing this much needed improvement, Bitcoin ABC will be implementing the aserti3–2d (ASERT) algorithm proposed by Jonathan Toomin and Mark Lundeberg and supported by a number of Bitcoin Cash full node implementations. The second improvement is the addition of a new Coinbase Rule.
Sustaining a permissionless, censorship resistant network requires that those charged with maintaining crucial functionality have their incentives fully aligned with the security of the network. Satoshi Nakamoto explicitly designed Bitcoin to be a system secured primarily by the incentives of participants. In the Incentives section of the Bitcoin white paper, Satoshi states that the Bitcoin security model requires that a participant who undermines the system will also destroy the validity of his own wealth. By this principle, the system which ensures maximum sustainable security of the network is one in which developers of mining node implementations gain their income directly from block rewards mined by the software those developers build and maintain. Such an arrangement ensures that those developers risk the immediate loss of their own wealth should they make decisions that harm the overall value and validity of the network. In contrast, such developers are rewarded for decisions that increase the overall value of the network. The November upgrade of Bitcoin ABC software will have a Coinbase Rule that fully aligns the incentives of Bitcoin ABC with the sustainability and security of the network.
The addition of this new rule represents a significant step. This step is not being taken lightly. Less significant alternatives have been attempted for years. Node implementations, as a result of those alternatives, have developed a financial reliance on powerful interests such as mining corporations, venture capital funds, and angel investors. Such financial reliance represents a threat to the long-term security of the network. This threat manifests as a misalignment of the incentives of developers, putting the current incentives of those developers in conflict with future generations of Bitcoiners, who will need a free and open network.
Bitcoin is the foundation for a voluntary, free market. When Satoshi Nakamoto, in the white paper, stressed that “nodes can leave and rejoin the network at will,” he identified Bitcoin as a system based on voluntary action. Competition and consumer choice are key to accomplishing the end goal of a global peer-to-peer, censorship-resistant network. Bitcoin Cash, for most of its existence, lacked any alternative to Bitcoin ABC that was a viable mining implementation. In recent months such an alternative has been developed. This allows Bitcoin ABC to make this much needed improvement while miners who may prefer other rules are free to choose a viable, alternate implementation.
While some may prefer that Bitcoin ABC did not implement this improvement, this announcement is not an invitation for debate. The decision has been made and will be activated at the November upgrade. Code will be made public before the code freeze date. As always, we welcome contributions of code improvements and bug fixes from the developer community.
The Coinbase Rule improvement is as follows: All newly mined blocks must contain an output assigning 8% of the newly mined coins to a specified address.