TL;DR: Noted Bitcoin mining veteran and longtime developer Jonathan Toomim recently proposed a change in the difficulty adjustment algorithm (DAA) for Bitcoin Cash (BCH). It, in turn, spawned new rounds of debate about DAA, the culture of BCH, and how best to move the project forward. And, at least one faction is set to hold a developers meeting this week in hopes of fleshing out the issues involved.
Bitcoin Cash Difficulty Adjustment Algorithm Debate Heats Up
CoinSpice profiled a recent discussion of the BCH DAA in our Worth the Click column. The beginning of July 2020 was off to a rousing start for the P2P electronic cash community, as Collin Enstad’s new show, BCH Coffeehouse, hosted a developers livestream with Jacob Elisosoff, Tom Harding, Scott Roberts, and Jonathan Toomim. It was Toomim, a mining veteran in his own right, who would go on to make the boldest proposal to date on the DAA issue just a few days later.
#BitcoinCash Difficulty Adjustment Algorithm Developers Meeting to take place Thursday July 16th at 15:00 UTC.
— Bitcoin Cash (@BitcoinCash) July 14, 2020
His BCH upgrade proposal: Use ASERT as the new DAA argues for “a specific type of EMA [(exponential moving average)], called ASERT, for BCH to be activated in the November 2020 scheduled protocol upgrade.” As it stands now, the BCH DAA “allows for a switch miner to extract a large amount of profit from constant-hashrate miners,” Toomim stressed. “This strongly discourages constant-hashrate mining and encourages switch mining, and causes oscillations in difficulty and hashrate. In my test simulation, the stolen profit is on the order of 6% lost revenue by constant hashrate miners for the current DAA, but only about 0.35% to 0.65% for the EMA family of DAAs.”
Toomim puts on a clinic of clarity and math-i-ness (including outlining a dozen properties for a “good DAA”), ultimately concluding, “The current DAA, cw-144, is causing a lot of problems for BCH. We should fix it. Switching to an EMA or LWMA algorithm would fix those problems. The aserti3-2d algorithm appears to be far superior to cw-144 overall, and I believe it to be the best option we have.”
Pushback and Survey of Chinese Community
Developer Shammah Chancellor soon weighed-in on Toomim’s arguments. Review of the ASERT DAA proposal applauds Toomim’s “effort and thorough analysis of the DAA’s choice,” however, Chancellor stressed, “changing the DAA should be considered carefully before a change is made.”
He outlines a few steps to be taken before any potentially rash decision is made, which include: “Simulations performed under constant price ratio, so that miner behavior can be better seen. Add select timestamps based on the probability distribution, so that short term profitability variations show up more often due to random chance. Faster switching of rational miners. Pools can change chains very quickly, the cost to do so is miniscule. Very small price fluctuations due to solve-times can dramatically impact profitability. Better tests for various rational miner behavior.”
Chancellor insisted Toomim’s “proposal does not consider any alternatives which would fix issues with difficulty adjustment algorithms entirely.” It’s important to note Chancellor is simply giving constructive criticism, as he’s no longer on the Bitcoin Cash reference node implementation team, Bitcoin ABC. And speaking of which, ABC lead dev Amaury Séchet gave among his first public comments on the matter in a Twitter thread. Séchet posted how Toomim’s “proposal has been turned into a political circus. Positive outcomes are now unlikely. If [Toomim] wants to get things moving, he can come talk to us, address our concerns and convince us. He has refused to do so so far.”
Meanwhile, Bitcoin Cash Node (BCHN) commissioned an opinion poll of “the Chinese Bitcoin Cash community (big mining pools, exchanges, key persons and holders) on the question of whether they support a change of Difficulty Adjustment Algorithm (DAA) in November.
The question was ‘Do you think DAA should be resolved in the November upgrade?'” BCHN Survey of Chinese Ecosystem about DAA Change in November found 3 out of 5 influential mining pools polled (Antpool, ViaBTC, BTC.top, BTC.com, and Huobi) agreed to a DAA modification, while 2 abstained from comment. Exchanges Huobi, Binance, Gate.io, and CoinEX returned a 3 out of 4 confidence vote (1 neutral) in changing the DAA. So-called “key persons,” who apparently are anonymous, returned with “1 out of 3 in agreement to modify, 1 neutral, 1 no reply,” the survey claimed. Of the category titled, “BCH holders” (defined as “from [the] ‘100 bch club’ in [the] Chinese BCH community),” apparently “29 out of 30 respondents (96.7%) were in agreement to modify for November,” the BCHN survey revealed.
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DISCLOSURE: The author holds cryptocurrency as part of his financial portfolio, including BCH.