TL;DR: Influential mining pool operators from BTC.TOP, Antpool, ViaBTC, and Bitcoin.com announced their intention to provide protocol infrastructure funding for Bitcoin Cash (BCH) implementations. Beginning May 15th of this year, they’ve agreed to redirect 12.5% of BCH coinbase rewards for a six month period. Developers from BCH teams such as Bitcoin ABC, Bitcoin Unlimited, BCHD, and CashFusion are weighing-in, and the general mood appears to be cautiously optimistic.

Bitcoin Cash Developers React to Infrastructure Fund Announcement

BTC.TOP founder Jiang Zhuoer hadn’t tweeted or blogged on Medium for over a year. That kind of radio silence can be powerful when the influential China-based mining pool operator finally does communicate. This was certainly that. Signed off by cryptocurrency titans such as Jihan Wu, Haipo Yang, and Roger Ver, it isn’t too exaggerated to characterize Zhuoer’s Infrastructure Funding Plan for Bitcoin Cash as having rocked the peer-to-peer electronic cash system community.

CoinSpice immediately reached out to Bitcoin ABC lead developer Amaury Séchet who described his own reaction as, “cautiously optimistic.” The notoriously blunt and at times acerbic Frenchman has been waging a nearly one-man public crusade for months, pleading with the Bitcoin Cash community to pay more attention to infrastructure funding. Doing so put him often at odds with allies who found his increasing insistence on the matter to be unproductive or even divisive.

Asked if he was involved formally in the Zhuoer-led announcement, Séchet punted a bit in answering, telling CoinSpice “they’ve also told us to do it many times in private. But the answer was always from outside that they would have to be the one going for it because it would not be very ethical for us to do it. It seems like they decided to pull the trigger.” The they is presuably the Chinese mining community, and the it appears to be the funding mechanism detail of agreeing to siphon off 12.5% of the BCH coinbase reward.

The Bear Market Likely Pushed People Into Taking Action to Reduce Freeriding

When pressed about why now or, more exactly, why May 15th, 2020 for such a decision to be tried, Séchet again demurred a tad. “You would have to ask them to know exactly, but here is what I think are the major factors: the lower the BCH/BTC ratio is, and the more advantageous it is for them to do something like this,” he guessed. “There was strong opposition to this kind of measure from the BSV crowd, but now they have gone their own way. The bear market likely has pushed people into taking action to reduce freeriding.”

Prominent Bitcoin Cash developer and thought leader Jonald Fyookball, more recently of buzz-worthy privacy projects like CashFusion, told CoinSpice in reaction, “I think it’s a positive development. The community has been grappling with the problem of how to fund infrastructure for a long time and this could help in a huge way. The devil is in the details, so we’ll have to see how it plays out, but I’m optimistic. My favorite part is that the entire SHA-256 ecosystem (including BTC miners) pays for BCH infrastructure.”

At the time of publication, BCHD developer Josh Ellithorpe, a principal lead on the popular CashShuffle tool, told CoinSpice he was still reading the initiative’s finer points. Within the public Telegram group, BCH Gang, however, Ellithorpe’s early reaction read, “I love the idea of miners providing infra funding at this level, however, I am not sure how 1/3rd of the hashpower can enforce the orphaning of blocks… unless ‘unknown’ is mainly consisting of those miners,” referring to the increasing specter of an unknown mining pool routinely hitting above 50% of BCH hashpower over recent weeks.

Avoiding Tragedy of the Commons

As Bitcoiners are prone, Zhuoer’s Infrastructure Funding Plan for Bitcoin Cash set off a storm of early debate. Proponents and haters grappled with the initiative’s potential implications. Bitcoin Unlimited Chief Scientist Peter Rizun appeared to take a neutral stance on the coinbase reward allocation toward infrastructure, echoing some, albeit differently, of Ellithorpe’s initial hesitancy.

“I’m not arguing for or against the proposal,” Rizun debated in a thread on a popular subreddit, “just trying to be descriptive.” He described the proposal as something of a “tax in the sense that any miner who mines on BCH has to pay it (while the plan is active). But it is not really a tax in the sense that it does not come directly out of the miners’ profits, but rather out of the revenue of the larger pool of SHA256 hash power. And miners who are ideologically opposed to this can mine something else (although they still end up paying, effectively).”

Much of the early discussion centered around semantics and whether what was proposed is something akin to a tax, a contribution, or a fee. For Bitcoiners, many steeped in Austrian economics and classical libertarian theory of non-aggression, words like tax and thoughts of anything like coercion are an anathema. And so when Infrastructure Funding Plan for Bitcoin Cash detailed how, in point number 5, to “ensure participation and include subsidization from the whole pool of SHA-256 mining, miners will orphan BCH blocks that do not follow the plan,” philosophical eyebrows were raised. “This is needed to avoid a tragedy of the commons,” Zhuoer and his collaborators insisted.

Still others described the idea in Game Theory terms, a commitment strategy of sorts. If miners make a credible commitment to orphan blocks, then that incentivizes other groups to follow the same rules, including all nodes and exchanges, as well as miners. More proponents of the idea found funding parallels in projects like Zcash and its Electric Coin Company as encouraging at least in the short term. That relatively small Zcash development team is often credited with delivering as promised, along with moving cryptocurrency innovation along with implementing zero-knowledge proofs (zk-SNARKs).

Antony Zegers of Bitcoin ABC told CoinSpice, “I think this is great news. This shows that the miners are interested in the success of Bitcoin Cash, and are taking actions to support it. To me, this is the most important aspect of this announcement. This is a very good sign for the future of Bitcoin Cash. Also, having stable funding for BCH infrastructure should allow the developers to embark on longer-term improvements to the software. This will enable them to build a solid base of software for the ‘commons’ of Bitcoin Cash that all the other application devs build in top of.”

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DISCLOSURE: The author holds cryptocurrency as part of his financial portfolio, including BCH.