Last week miners and mining pools met in Hong Kong to discuss a plan to donate a portion of mining rewards to fund protocol development and other projects within the Bitcoin Cash ecosystem.

One of the biggest questions on everyone's mind is: will these donations from the miners be 100% voluntary? Or will they someday become a mandatory part of the protocol?

Since I do not possess a crystal ball, I don't know what will happen in the future, but I would like to offer a simple explanation of why substantial funding can occur in a sustainable manner, while keeping the donations 100% voluntary. Voluntary is the Plan Anyway

Just to set everyone's mind at ease, you should know that the plan is to start with voluntary donations anyway, at least for now. But I think it can work long term.

First, here's a few related points:

Why Do We Need To Fund Ecosystem Development?

In a word: competition. You might think Bitcoin Cash is the cat's pajamas but there's other billion dollar blockchains out there that could potentially eat our lunch... not because they're fundamentally superior to us, but because they're better funded and better marketed than us.

“There is no greater danger than underestimating your opponent.” ― Lao Tzu

Why Should Funding Be Voluntary Rather Than Mandatory?

I actually spent much of the day today discussing this with my fellow bitcoin users (about a dozen people). I was probably the most open minded, but everyone else basically hated the idea of compulsory funding and there was a laundry list of concerns that is too long to present here.

Some had concerns about modifying the economic incentives or even legal concerns. Perhaps the biggest issue is that it would be a substantial change to the design of Bitcoin -- it could be one that users and the market would not take kindly to.

So Why Would Anyone Want To Make It Mandatory?

The concerns from miners are that if you make it voluntary, then it might not be sustainable. Plus, only some pools would be donating and not others, which would be unfair and adversely affect the mining competition.

Emergent Consensus

What if the enforcement of participation was done on an emergent consensus basis? Instead of hard-coding the rule into an implementation like Bitcoin ABC, miners simply chose not to build their blocks on top of blocks that didn't participate?

The whitepaper seems to allow this:

"They vote with their CPU power, expressing their acceptance of valid blocks by working on extending them and rejecting invalid blocks by refusing to work on them. Any needed rules and incentives can be enforced with this consensus mechanism"

But this is not the answer. It still counts as a protocol change because the result is the same. Miners can vote on any new rule, but even if its not "baked into the code", by the time it "emerges" it has become the consenus rule.

Why Voluntary Funding Can Work

The main reason that I suspect volunteerism can work is that we only need a very small percentage of the mining revenue to fuel ourselves.

Here's a few things to consider:

1. If most of the hashpower already wants to donate, then "most" of the mining power will be shouldering the burden equally... (You would need most of the hashpower anyway if you were even considering forcing a consensus rule). This somewhat addresses the "fairness" issue.

2. If a miner is profitable and wants to donate a percentage of the profits, they can do so and remain profitable, even if they are the ONLY one donating (although how much they could donate would depend on their profit margin).

3. Pools can freely compete for hash power. Miners that are wise enough to invest in the Bitcoin Cash ecosystem can choose to join pools that give back.

Here's a fairly conservative example of what this could look like:

Assume that BCH price remains at $1200. At 12.5 coins per block, 6 blocks an hour, 24 hours in a day, and 30 days in a month, we have:

1200 x 12.5 x 6 x 24 x 30 = $64,800,000.00 total block rewards per month.

Now lets say that 75% of the miners choose not to donate anything for whatever reason, and that 25% of the miners donated 2% of their block rewards.

Overall that's half of one percent: 0.5%. Multiply 64.8 million by .005 and we still have $324,000 a month!

That's about 10 times what the Bitcoin Cash fund spends each month. Think about it :)