j"19HxigV4QyBv3tHpQVcUEQyq1pzZVdoAutMThe interesting thing about the BCH proposal is that it fundamentally plays games with the difficulty algorithm's affect on the Bitcoin incentive model.
The short version is that a 12.5% "tax" on all miners, enforced by orphaning non-compliant miner's blocks, does far more than merely reduce miner's revenues by 12.5%.
There are several scenarios to consider here. Let's start with the case where all miners comply with the proposal, with the result of no orphaned blocks due to violation of the proposal.
Under this scenario, the immediate result is that all miners lose 12.5% of their revenue. As a percentage of profit, this is an overwhelming figure. The only viable option is to reduce hash power applied to the BCH chain, thus lowering costs to match the reduction in hash power.
This is the core of the reasoning that BTC miners will pay ~95% of the cost of the fund, as they posit that the rebalancing of hash power as a result of this proposal will increase difficulty, therefore increasing costs, on BTC.
But the problem is, this is the most naive scenario under which to analyze the proposal. Let's examine a more likely scenario; that some miners do not comply with the proposal and any blocks they mine are orphaned from the chain.
Suppose for a moment that 25% of current hash power refuses to comply with the proposal. Under this scenario, it is not 12.5% of hash power that drops from the BCH network, but 25%.
In this scenario, the reduction in hash power reduces difficulty by 25%, which corresponds with a 25% reduction in costs, even as total miner revenues are only reduced by 12.5% across the network.
Here's the thing, though: The distribution of hash power has changed. A miner who currently manages roughly 10% of BCH hash power such as BTC.top will, with the same amount of hash power applied, take 13.3% of hash power/total network revenue.
After this proposal takes effect, given a loss of 25% of miners as a share of hash power, a currently 10% by hash power and revenue miner will become a 11.7% by revenue, 13.3% by hash power miner.
All it takes is a little bit of regulatory capture, and you've increased profits by 17% without changing costs.
The truly interesting thing, though, is that a 5% miner would receive the same relative boost to their profits, but only half the absolute increase. In other words, this proposal artificially aids larger percentage miners on BCH more than smaller miners on BCH.
This proposal is not a simple "51% coordination" as some have suggested, but a deliberate attempt to alter the fundamental incentive structure of the Bitcoin-like system they operate upon to simultaneously solve a social problem, and to inflate their own profit margins.
And all of this comes at the cost of miner hash power distribution on the BCH network.
For those who are curious, the break-even point is ~11.1% miner drop out for remaining miners to see increased profits through this proposal. This implies that any miner not dropping their hash rate will, by virtue of others capitulating to the reduced profits under the proposal, see increased profits by mining on BCH under the proposal with the same costs at the new equilibrium difficulty.
In other words, even under the naive scenario we analyzed above, if a miner decides not to reduce their hash power, they will force other miners out in a way analagous to the second, more realistic scenario, even if no blocks are orphaned.
This proposal is a form of regulatory capture above and beyond acting as a "maybe it is, maybe it isn't" tax on miners.
I suggest that this proposal is deliberately designed not to achieve the stated purpose of creating a "developer fund" for Amaury and his gang, rather, it is designed to push competition out of the BCH mining market, enriching BCH dedicated miners at the expense of the entire rest of the SHA256d ecosystem, including miners who are not playing by the rigged rules of the BCH miner's game.
This is a continuation of the BCH pattern of central planning of their entire chain, this time including a further consolidation of power into the hands of the corrupt members of their "governance" groups.
Previously it was a 10 block checkpoint enforced by exchanges. Now it is an underhanded attempt to reduce competition in mining on their chain.
This is why the protocol must be set in stone, outside of the influence of a few individuals. Further, this is why it is essential that the SHA256d mining market settles on a single chain with a long term sustainable future, as games such as this cannot be successfully employed when there is not a significant hash power sink to play against, such as the BTC chain at this time.
The power structures in BCH are corrupted, criminal, and deliberately manipulative of the wider ecosystem. And for what? Short term profits at everyone else's expense.
What an utter shame...
text/markdownUTF-84TANSTAAFL: Or, How BCH Central Planners Rig the Game| Çã$&zرÌ?èÚlØQ:ó-Æò[@â´9·ðbitpastembtip[email protected]
https://whatsonchain.com/tx/e2590e40b4f8b60a22bc607ff48f255345d5b4934bc25e93fd61cec3aebeeac1