Recently, Jiang Zuoher from btc.top indicated that he and a group of miners want to create a fund for Bitcoin Cash's infrastructure . This is great news. 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.

Earlier attempts failed for various reasons, but mainly because it is difficult for a set of actors who are otherwise competitors to agree on something for an extended period of time. A group of competitors in an industry setting aside their differences to partake in actions for the benefit of the industry is called a cartel, and cartels tend to be unstable. They asked myself several times to implement such a measure in Bitcoin ABC directly, 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.

The proposal is very interesting from a game theory perspective. Bitcoin, all flavors, have suffered from a problem funding the commons as popularized by Lloyd . The commons are public goods that benefit the ecosystem as a whole, 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.

In the early days, developers, miners and users were essentially the same people, so this was fairly simple. 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. This creates an ecosystem in which those who care about the system are disincentivized and parasites are incentivized. Such an ecosystem is bound to attract a lot of bad actors, and, as a matter of fact, we can verify that it indeed does.

Any ecosystem that is unwilling to look this reality in the face is bound to either fall into irrelevance or be co-opted by parasites.

A group of miners is proposing to try something different that does not have this drawback. Moreover, they decide to do it using Bitcoin Cash, which demonstrates support and commitment to the project.

However, while the game theory is sound, several people have voiced concern with this plan.

A tax is a compulsory contribution to state revenue. Let's ignore the state part of the definition, as miners are clearly are not a state, but this is not really the crux of the argument. What people calling it a tax have a problem with the compulsory contribution. So, is it a compulsory contribution?

I would argue that it is not.

When a miner mines of top of another miner's block, 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.

They are not forcing anyone to do anything. Other miners can mine another chain such as BTC, or even decide to mine a chain that will not fund the commons. What they cannot do is force Jiang to accept their block if they do so, or to force the market to value these blocks at a certain price, if at all. Jiang does not have this power either.

Some people are concerned that, while funding infrastructure is good, forming a cartel to do so is not. I think these people are used to government created cartels, such as what happened when the government creates licensing laws. In a free market, cartels tend to be fairly unstable.

It is important to keep in mind that cartel participants are otherwise competitors. They therefore 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.

So what about other measures? Could transactions sent to wikileaks be censored for instance? I will argue that it is not credible that all participants in the cartel see this as a beneficial development, and the most likely outcome of such a proposal would be the dissolution of the cartel.

When accepting money, you always give up some power. It can be explicit like in the case of an investment firm providing money to a company in exchange for partial ownership. But even when no such things exist, whoever funds a project always ends up having some control over it, at the very least because the funding can be pulled.

This is why Bitcoin ABC has been very careful about accepting funds. For instance, we recently rejected funding from OKex for that very reason.

However, no organization can operate durably, yet alone thrive, without funding. The miners who decided to propose the plan all have proven that they care about the success of Bitcoin Cash. I cannot think of a better source of funding.

In addition, the value of the funding depends on the value of BCH, which creates great incentives for its beneficiaries to act in the best interest of Bitcoin Cash.

This is obviously the elephant in the room. After all, maybe Jiang, Jihan and others only plan to cooperate to increase their share of the mining reward and won't provide anything to the infrastructure?

First, such a scenario is highly improbable, as we've seen before, the cartel would dissolve. But the question of transparency of the funds remains. We need to be sure they will be spent in a way that benefits Bitcoin Cash's commons.

This is a difficult task because we do not want to transform the whole thing into a bureaucratic process that would be both slow and inefficient. In a free market, the most efficient system wins.

I propose that the control of the key needs to be 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.

I would also invite a group of trusted community members, such as Vin Armani, Josh Ellithorpe, Chris Pacia or Mike Malley 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.

I'm enthusiastic this proposal can yield very beneficial results to Bitcoin Cash, granted the details are done right. I think the proposed setup would inspire more trust from the community than a faceless corporation, which seems to be the major concern.

I predict that if this is done right, the impact on Bitcoin Cash can be fantastic and will result in benefits for all ecosystem participants.