On November 15, Bitcoin Cash braces for the “hash wars,” essentially an expensive, sustained 51% attack aimed at taking over the coin.
Bitcoin Cash (BCH) is facing a watershed moment given that the first Bitcoin (BTC) hard fork has left the community and miners split over the future direction of the network. This time, however, the attempt to steer the course of the coin would take the form of a 51% attack, testing the understanding for network consensus.
A 51% attack is often viewed as disastrous for the credibility of a coin, allowing miners to alter the distributed ledger, double-spend, or perform other actions on the network. The way the Bitcoin Cash SV version would be implemented is precisely this: sustained mining of an alternative chain. However, the version of Graig Wright will have only 182 nodes to run against 1,103 ABC nodes.
Taking Bitcoin’s history as an example, the nodes signaling their allegiance is a form of consensus. At least in the case of the SegWit2X wars for influence, it was not hashrate but nodes that defined the dominance of one version over the other.
But the attempt to take over Bitcoin Cash is hostile. Here are the possibilities following the switch of 72% of the Bitcoin Cash hashrate to the SV version.
Bitcoin Cash dies: BCH becomes a coin with two separate ledgers, under a constant 51% attack. No one is certain which version would survive. With no replay protection, siding with one version could mean a total loss. Chaos on exchanges ensues. No one can tell how long the hash wars may continue, but, in effect, the supporting sides would mine blocks and receive rewards of an asset that may not exist.
One of the versions capitulates: The hash wars could end if one of the chains raises the white flag. However, it is unknown who would be the arbiter of the winning chain, and both may try to produce “the longer chain.” Exchanges may become arbiters as some are ready to accept one version over the other. There is no timeframe for deciding which chain would be longer, but even one block could suffice. Nodes, however, are not enough to define a version’s dominance in the final analysis. Based on the Bitcoin white paper, the principle of deciding on the version of the blockchain entails both nodes and miners. As it says there, “The system is secure as long as honest nodes collectively control more CPU power than any cooperating group of attacker nodes.”
Wright has promised a never-ending attack:
Both versions split off: It is possible that two versions of Bitcoin Cash survive. There are different scenarios for this. The supporters of Bitcoin Cash SV seem more adamant about taking over the ticker and posing as “the original Bitcoin Cash.” At the same time, the other version may not admit defeat and may proceed to create a new digital asset. This would be a best-case scenario since holders of BCH could end up owning two types of digital assets, both with a chance to show up on exchanges. It is impossible to predict which version would be deemed more valuable, and the market would decide which the dominant one is.
Bitcoin Cash ABC changes PoW: In case the attack becomes too long and too expensive, the impossibility to save the ABC version by brute force mining may lead to an emergency upgrade. Talks of a possible proof-of-work (PoW) change, in essence making the chain independent, may leave the SV version free to mine the old type of blocks while having no way to take over the ABC version.
Litecoin’s Charlie Lee was skeptical of this scenario:
The SV version gets defeated: Defeat for the Satoshi’s Vision version may come by way of emergency mining from Bitmain. Recently, Roger Ver suggested he may redirect hashing power from the Bitcoin.com mining pooldespite users’ wishes to defend the ABC version. There are also expectations that Bitmain will step up to ensure the stability and continuation of a BCH version. Protecting a stash of one billion coins may be incentive enough for Bitmain to burn money on mining and defend the version of a blockchain.
Hours before the fork, BCHSV, the pre-fork asset, fell toward $167 hours after briefly “flippening” the ABC version. BCHABC trades at above $278. BCH prices plunged to $427 before recovering to $445.88.
The hard fork for the ABC version is expected at 4:40 UTC on November 15, which is also the potential hour for the launch of the “hash wars.”
Author: Christine Masters