Coexistence or Downfall of Bitcoin Cash? Yujin Kwon* , Hyoungshick - - PowerPoint PPT Presentation

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Coexistence or Downfall of Bitcoin Cash? Yujin Kwon* , Hyoungshick - - PowerPoint PPT Presentation

Sep 29, 2023 102 likes •608 views

Bitcoin vs. Bitcoin Cash: Coexistence or Downfall of Bitcoin Cash? Yujin Kwon* , Hyoungshick Kim , Jinwoo Shin*, Yongdae Kim* *KAIST, Sungkyunkwan University 1 Government conflict 2 Governance conflict How did they resolve this crisis?

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Bitcoin vs. Bitcoin Cash: Coexistence or Downfall of Bitcoin Cash?

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Yujin Kwon*, Hyoungshick Kim°, Jinwoo Shin*, Yongdae Kim*

*KAIST, ° Sungkyunkwan University

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Government conflict

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Governance conflict

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How did they resolve this crisis?

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Governance conflict

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Eventually, Ethereum was split into ETH and ETC.

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Governance conflict

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The number of Bitcoin transaction per month

Bad scalability

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Governance conflict

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The number of Bitcoin transaction per month

Bad scalability

Several solutions were proposed.

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Governance conflict

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The number of Bitcoin transaction per month

Bad scalability

Due to political conflict, Bitcoin was also split into BTC and BCH.

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BTC vs. BCH

 Simple idea: Increase a block size

– BTC: 1 MB/ BCH: 8MB

 They have a compatible mining algorithm

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How can miners behave?

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Fickle mining

 Depending on profitability of coin mining, miners can dynamically switch the coin to be mined.

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Bitcoin (BTC) Bitcoin Cash (BCH)

When it is more profitable to conduct BTC mining

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Fickle mining

 Depending on profitability of coin mining, miners can dynamically switch the coin to be mined.

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Bitcoin (BTC) Bitcoin Cash (BCH)

When it is more profitable to conduct BCH mining

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Fickle mining

 Even though the coin mining profitability depends on both the coin price and mining difficulty…

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It is hard to predict the coin price. Oh! I think I can predict when the mining difficulty changes.

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Fickle mining

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 When the BCH mining difficulty becomes easy, large hash power moves from BTC to BCH.

When BCH mining is easy

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Fickle mining

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 The following strategy is referred to as fickle mining.

– A miner chooses his coin as the easier one between two coins

  • nly when the coin mining difficulty changes.
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Which equilibrium? What change of hash rate?

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 What does a game consist of?

– Players: They act for a higher payoff (i.e., rationality). – Strategy: Any of the options which he or she chooses in a setting where the outcome depends not only on their own actions but on the actions of others. – Payoff: Depending on strategy of each player, they earn certain payoff.

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Game analysis

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 What does a game consist of?

– Players: Many miners with infinitesimal hash power Political BCH factions – Strategy: Fickle mining, only-BTC mining, only-BCH mining – Payoff:

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Game analysis

if the player chooses fickle mining if the player chooses only BTC-mining if the player chooses only BCH-mining

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Game analysis

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Game analysis

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 𝑎𝑝𝑜𝑓1: It is most profitable to conduct only-BTC mining.  𝑎𝑝𝑜𝑓2: It is most profitable to conduct only-BCH mining.  𝑎𝑝𝑜𝑓3: It is most profitable to conduct fickle mining.

𝑙 = $BCH $BTC

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Game analysis

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 𝑎𝑝𝑜𝑓1: It is most profitable to conduct only-BTC mining.  𝑎𝑝𝑜𝑓2: It is most profitable to conduct only-BCH mining.  𝑎𝑝𝑜𝑓3: It is most profitable to conduct fickle mining. In each zone, a point moves along the corresponding arrow.

𝑙 = $BCH $BTC

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Game analysis

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 There are two Nash equilibria: Coexistence and the lack of BCH loyal miners.  If hash power sticking to BCH is large, there is only

  • ne Nash equilibria, the lack
  • f BCH loyal miners.

 If hash power sticking to BCH is zero, the lack of BCH loyal miners is equal to the complete downfall of BCH.

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What happened in practice?

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08/01/2017: Game start

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 The status point is initially in 𝑎𝑝𝑜𝑓1, and then it moves to 𝑎𝑝𝑜𝑓2.

Hash rate history

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Before 11/13/2017

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Hash rate history

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Before 11/13/2017

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Hash rate history

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Before 11/13/2017

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Hash rate history

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Hash rate history

Before 11/13/2017

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Before 11/13/2017

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Hash rate history

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Before 11/13/2017

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Hash rate history

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Before 11/13/2017

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Hash rate history

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The lack of BCH loyal miners

 The BCH transaction process speed periodically became low, and it even took about four hours to generate one block in some cases.  From Oct. 2 to Oct. 4, Only two accounts generated about 70 % of blocks and there were only five miners who conducted BCH mining.  BCH before Nov. 13, 2017 was susceptible to double spending attacks with only 1∼2% of the total computational power in the Bitcoin system.

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The lack of BCH loyal miners

 The BCH transaction process speed periodically became low, and it even took about four hours to generate one block in some cases.  From Oct. 2 to Oct. 4, Only two accounts generated about 70 % of blocks and there were only five miners who conducted BCH mining.  BCH before Nov. 13, 2017 was susceptible to double spending attacks with only 1∼2% of the total computational power in the Bitcoin system. Both Scalability, Decentralization, and Security are undermined!

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On 11/13/2017: Hard fork

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 BCH updates its mining difficulty adjustment algorithm.  This change affected the game as an external factor.

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After 11/13/2017

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Hash rate history

 The status point gradually became close to the coexistence.

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Now BCH is safe?

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Automatic mining

 Miners can automatically choose the most profitable coin.

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Automatic mining

 Miners can automatically choose the most profitable coin.

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Automatic mining

 Miners can automatically choose the most profitable coin.  They switch their coin almost simultaneously both when the coin price changes and when the coin mining difficulty changes.  This can be considered to be automatically choosing the most profitable one among three strategies, (fickle mining, only- BTC mining, only-BCH mining) in real time.

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Automatic mining

 When a fraction 𝑙 of the total mining power is involved in the automatic fickle mining, the state moves towards a lack

  • f BCH-loyal miners.

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𝑙 = $BCH $BTC

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Automatic mining

 When a fraction 𝑙 of the total mining power is involved in the automatic fickle mining, the state moves towards a lack

  • f BCH-loyal miners.

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𝑙 = $BCH $BTC

As a result, BCH is still not safe.

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Bitcoin ABC vs. Bitcoin SV: Hash war

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Bitcoin ABC vs. Bitcoin SV

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Bitcoin ABC vs. Bitcoin SV

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Bitcoin ABC vs. Bitcoin SV

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Hash war

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 Bitcoin ABC hash rate distribution

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Hash war

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 Bitcoin SV hash rate distribution

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Hash war

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Conclusion

 Fickle mining leads to a lack of loyal miners.

– There are two Nash equilibria: Coexistence and downfall of BCH.

 Automatic mining is also dangerous.

– When a fraction 𝑙 of the total mining power is involved in the automatic fickle mining, the state moves towards a lack of BCH- loyal miners.

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Thank you!

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