Charlie Lee Comments on Bitcoin Cash (BCH) Mining Wars with AsicBoost Causing Havoc
Bitcoin Cash [BCH]’s Unfair Mining With AsicBoost Causes a lot of Problems
During the Mediterranean CoinsBank Blockchain Cruise that was held between 8th and 11th September 2018, Charlie Lee, the creator of Litecoin [LTC] gave his open opinion as a speaker on AsicBoost and the SegWit User Activated Soft Fork (USAF) and also on the intrinsic value of Bitcoin Cash [BCH].
UASF is a mechanism where the activation time of a soft fork occurs on a specified date enforced by full nodes. It requires a lot of industry support and coordination. UASF concept was combined with SegWit activation. A soft fork is a change to the software protocol where only previously valid transactions are made invalid and requires only a majority of the miners upgrading to enforce the new rules.
SegWit allows transactions data and signatures to be split and when the signatures are compressed more transactions fit into the regular 1MB block. Smaller blocks lead to more hosting nodes. AsicBoost is a patent-pending method to lower your total cost per Bitcoin mined.
Proof of Work Mining
In Proof of Work mining, Miners verify that transactions within each block are legitimate by solving a mathematical puzzle and A reward is given to the first miner who solves each blocks problem. The verified transactions are then stored in the public blockchain.
The cost of production of PoW cryptocurrencies is considered to be the bottom of the price of that coin such as Bitcoin and it provides a resistance level upon which the price builds making it an important part of the intrinsic value of the cryptocurrency.
Charlie Lee posted on Twitter that production cost does not equate to intrinsic value and it being non-zero is one of several factors that make Bitcoin and Litecoin to be considered as sound money.
On the BCH network, AsicBoost technology is still allowed to function secretly and miners who use it to mine blocks on the network will result in a much cheaper cost for the coin. The use of AsicBoost before SegWit was secret resulting in an unfair advantage for miners using the AsicBoost. The implementation of the SegWit method denied users the option of using AsicBoost which does not function with SegWit enabled.
Lee continued that on Bitcoin, a user-activated soft fork was done and SegWit was added that killed covert AsicBoost making mining fair as unfair mining causes a lot of problems. He said unfair mining is happening now with BCH.
If any issue arises, miners will decide to fork meaning that miners in some point in the future will decide to keep the mining rewards high as people are greedy. When it happens with Bitcoin Cash, it’s just going to go through because there’s no one who is going to stand up against it.