As a group of mining pools announced their infrastructure funding plan for Bitcoin Cash (BCH), the crypto industry players are discussing if this is a dictatorial move, if it's a soft work, and to how many more forks it may lead. Jiang Zhuoer, CEO of one of the largest mining pools on Bitcoin Cash (BCH), BTC.TOP, published an intention to direct 12.5% of BCH coinbase rewards to a fund that will support Bitcoin Cash infrastructure. This is a "6-month short-term donation plan," (May 15-Novemb...

As a group of mining pools announced their infrastructure funding plan for Bitcoin Cash (BCH), the crypto industry players are discussing if this is a dictatorial move, if it's a soft work, and to how many more forks it may lead.

Jiang Zhuoer, CEO of one of the largest mining pools on Bitcoin Cash (BCH), BTC.TOP, published an intention to direct 12.5% of BCH coinbase rewards to a fund that will support Bitcoin Cash infrastructure. This is a "6-month short-term donation plan," (May 15-November 15), Zhuoer says, which would redirect BCH 20,588 (USD 7 million) towards BCH ecosystem development. Besides BTC.TOP, the proposal is supported by other large mining pools: Antpool, ViaBTC, BTC.com, and Bitcoin.com, and it's signed by Zhuoer, Jihan Wu (CEO of Bitmain), Haipo Yang, and prominent Bitcoin Cash supporter Roger Ver.

As for the reasons behind this move, the group names the lack of funds for full node implementation and for critical infrastructure development, leaving it open to damages and sabotages. They say that the goal is to gather enough funds for this so that BCH developers can hasten its development before what they believe will be a bull market in 2020-2021/22. A Hong Kong corporation has been set up to legally accept and disperse funds, the post says, though it's not clear which corporation or what their process for dispersing funds is.

The initiative announced as Bitcoin Cash is approaching its next mining reward halving, estimated in May this year. Then, the BCH block reward will drop from BCH 12.5 to BCH 6.25. Meanwhile, in June 2019, some members of the Cryptoland started to speculate that Bitcoin Cash is "on the brink of the collapse and developer coup is under way." However, back then, Roger Ver replied that it's "fake news."

Now, the new 'coalition' claims that this is not a protocol change and that the initiative is under the miners' control and direction, but it added this as well:

"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. This is needed to avoid a tragedy of the commons."

In this case, "orphan blocks", or stale blocks, would no longer be included in the Bitcoin Cash blockchain, leaving a miner without the reward.

And while many in the BCH community see this as a "noble cause," it did not sit well with the many in the Cryptoverse.

So if I'm reading this right, 5 mining pools with 35% of the BCH hashpower are threatening to orphan blocks from the other 65% of miners if they don't agree to a 12.5% tax to fund developers? pic.twitter.com/eNQfrsAyGc

— Jameson Lopp (@lopp) January 22, 2020

Ethereum founder Vitalik Buterin commented that "BCH is soft-forking in a Zcash-style in-protocol developer fund." (Last year, Zooko Wilcox, CEO of Electric Coin Company, the firm behind the privacy-focused Zcash, suggested to create a "Dev Fund" and allocate coins from future block rewards for core support functions such as software development.)

Watch the latest reports by Block TV.

Though presented as voluntary, says Buterin, it's a compulsory soft fork, the irony being, he notes, that BCH as a chain born "as a reaction to an ideology that claims that soft forks are the only legitimate way to make changes because they are "voluntary" is.... making a controversial soft fork and insinuating that it's voluntary." This is, however, a natural extension of BCH's ideology, called 'the market of consensus,' he adds.

That said, the thing that I highly applaud is cypherpunks taking public goods challenges seriously. I've been increasingly harping on this topic, as have others:https://t.co/uV5JmbbYHh

— vitalik.eth (@VitalikButerin) January 23, 2020

Litecoin founder Charlie Lee finds that this centralized feature added in coercive manner sets a bad precedent. Furthermore, as "this mining cartel currently owns only ~28% of the BCH hashrate," says Lee, "they can't enforce this coercive soft fork unless they come up with a lot more hashrate. And it would likely lead to many forks."

Popular crypto researcher Hasu noted that BCH pools observe this as an investment and that users are not impacted by this, but BTC miners are.

So if SHA256 miners disagree that this move maximizes the SHA256 pie, they could, in turn, allocate their hashpower to BCH and orphan all blocks by the cartel.The mining market can absolutely resolve this situation on its own!

— Hasu (@hasufl) January 22, 2020

Others, like Angela Walch, research fellow at UCL Centre for Blockchain Technologies, wonder what happened with "censorship resistance and miners being purely ministerial and not exercising discretion over what transactions they process," and if they should rethink the established conclusions about miners.

Meanwhile, BCH is currently (9:35 USD) trading at USD 337. It's down 2.9% in a day, and it's up 6.4% in a week.

Here are a few more comments:

$BCH implementing a 12.5% miner's tax is hilarious and anyone not donating will have their blocks orphaned.Literally a centralized totalitarian regime with a 51% attack threat."A Hong Kong corporation has been set up to legally accept and disperse funds"https://t.co/UsDIv2yEl4

— WhalePanda (@WhalePanda) January 22, 2020

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This is a bit like Burger King saying they plan to close 12.5% of their stores, yet McDonald's workers will bear most of the costs, since wages will be driven downThis is true from a certain perspective, but the key point is fewer Burger King storeshttps://t.co/T11g4RCBLT pic.twitter.com/6DoPgj0Dt7

— BitMEX Research (@BitMEXResearch) January 22, 2020

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Given that, unlike restaurant staff, miners will rebalance immediately, I think the analogy works fine. There will indeed be fewer rewards for the same number of miners.Some miners will become unprofitable and drop off, but those who are still cashflow-profitable will carry on.

— Hasu (@hasufl) January 22, 2020

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Does anyone else feel like they really buried the lede here? I would think a more appropriate headline would be "BCH Schedules Bull Market for 2020–2021/22" pic.twitter.com/GQEM2YeeAO

— _g4brielShapir0 (@lex_node) January 22, 2020