TL;DR: On the infrastructure funding plan for Bitcoin Cash is the network’s reference implementation lead developer’s first fully fleshed-out views on an ambitious proposal put forward by influential mining pool operators. The initiative calls for a 12.5% redirecting of the BCH coinbase reward for a six month trial in hopes of providing sustained, meaningful funding for protocol development especially. Bitcoin ABC’s Amaury Séchet characterized it as sound game theory and dismissed critics’ charges of it being a tax.
Amaury Séchet on Bitcoin Cash 12.5% Coinbase Fund
“This is great news,” Séchet cheered in his opening paragraph, responding to Jiang Zhuoer’s, Infrastructure Funding Plan for Bitcoin Cash, posted just a day ago and signed by noted cryptocurrency influencers such as Jihan Wu, Haipo Yang, and Roger Ver. “This may sound to some like the proposal fell from the sky, but it has actually been a long time coming. The Chinese mining community has been attempting for years to do something similar to what is currently being proposed.”
Amaury Séchet has been warning the broader Bitcoin Cash community for months about the need for infrastructure funding, and Zhuoer’s proposal appears to be at least part of an answer. “They asked myself several times to implement such a measure in Bitcoin ABC directly,” he explained, “to which I responded every time that such an initiative needed to come from the miners as there is obvious conflict of interest if devs decide to take away money from miners and pay themselves with it. Some lines are best not crossed,” echoing earlier remarks he made to CoinSpice.
In particular, Séchet lauded the proposal “from a game theory perspective. Bitcoin, all flavors, have suffered from a problem funding the commons as popularized by [British economist William Forster Lloyd]. The commons are public goods that benefit the ecosystem as a whole,” he continued, “whether each participant pays for it or not. This often leads to the tragedy of the commons, where everybody expects everybody else to fund the commons, and nobody does, or only do so to an extent that is not sufficient for the whole ecosystem to thrive.”
Control of the Key to Those Who Have Proven They Work in the Best Interest of Bitcoin Cash
Séchet chalked up the need for something like Zhuoer’s initiative as a consequence of Bitcoin Cash becoming a larger, more complex network system. “As the system grows, economic specialization took place and this is forcing us to think about the incentives that these specialized groups have to cooperate with each other. And they are not good. The people who care most about the system will voluntarily fund commons, while people who decide to be parasitic and use the commons without funding them will not,” he insisted, stressing such a scenario “creates an ecosystem in which those who care about the system are disincentivized and parasites are incentivized.”
A miner lead effort in this regard, in the way Zhuoer, Wu, Yang, and Ver have outlined “demonstrates support and commitment to the project.” He argued further that those using the word “tax” to describe the Infrastructure Funding Plan for Bitcoin Cash are confusing compulsion with cooperation. “When a miner mines of top of another miner’s block,” Séchet stressed, “they effectively choose to cooperate with this other miner. They usually do so because it is in their best interest to, but nobody is ever entitled to anyone else’s cooperation. What this group of miners is saying, is that they do not wish to cooperate with other miners that do not wish to fund the commons.”
No one is being forced to do anything, Séchet demanded. He was also keen to address concerns about a cartel and its implications for BCH. Distinguishing between government-imposed cartels and competitors cooperating is important, he argued further. Voluntary cartel participants in the instance proposed “all have an incentive to defect from the cartel. A cartel can hold for as long as all of its participants see a benefit in the actions of the cartel. And it seems that they all see a benefit by making sure that the infrastructure on top of which their business is built is robust, and remains so going forward.”
Understanding the Game Theory and trust aspects of the initiative, Séchet asked control of the Infrastructure Funding Plan for Bitcoin Cash key be placed “in the hands of people who have proven they work in the best interest of Bitcoin Cash, even during rough times, have a commitment to infrastructure and a proven track record, such as Jonald Fyookball, Mengerian and myself. This would effectively give 2 people in this group a veto power over spending, and, obviously, miners would also have veto power as they can decide to discontinue the plan,” also naming “a group of trusted community members, such as Vin Armani, Josh Ellithorpe, Chris Pacia or Mike Malley [(co-founder of CoinSpice)] who can advise on ways to spend the funds, as well as blow the whistle in case something fishy is going on. A group of 7 to 12 miners, developers, and businessmen in total would ensure that various sides of the ecosystem have their say without bogging down the whole thing with unnecessary bureaucracy,” Amaury Séchet urged.
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