Last night, Wu Jihan, cofounder of the world’s largest mining hardware manufacturer Bitmain, shared stories behind New York Agreement and answered another top 10 most concerning questions in the community. Here are a few highlights.
Q1: The market cap of bitcoin reached an all-time high of some $320 billion and goes done to around $110 billion today. Do you see the potential that Bitmain’s market value will overtake that of Bitcoin?
Jihan: Market cap is an illusory concept. It rises and falls when boom-bust cycle, macroeconomic fluctuations and individual risk preferences are at play. When you run a company, you’d better focus on identifying and developing the company’s core competencies rather than market cap.
Q2: Cobra, moderator of Bitcoin.org, suggested this February that bitcoin should change its POW algorithm into the combination of POW+POS. And last Friday, he tweeted that you and Viabtc CEO Yang Haipo can easily start a 51% attack to bitcoin. But you responded that Cobra should read the whitepaper first before he wants to change it. And 51% attack will not destroy bitcoin. Could you further explain this considering 99% bitcoin users never actually read the whitepaper.
Jihan: Here is what the whitepaper says about attacking bitcoin—“We consider the scenario of an attacker trying to generate an alternate chain faster than the honest chain. Even if this is accomplished, it does not throw the system open to arbitrary changes, such as creating value out of thin air or taking money that never belonged to the attacker. Nodes are not going to accept an invalid transaction as payment, and honest nodes will never accept a block containing them. An attacker can only try to change one of his own transactions to take back money he recently spent.”
See? Even if attack happened, the whole system is not open to arbitrary changes. And the attacker is only able to change his own transactions and take back money he recently spent. Only part of users who are unaware of the attack and receive payment from the attacker will suffer a loss.
Q3: Bitcoin Gold fell victim to the 51% attack and hackers stole $18 million in BTG tokens. You own about half of the network’s hashrate, why should we trust you?
Jihan: First of all, I do not “own” so much hashrate. Many of our clients operate miners themselves, but they point hashrate at our mining pools. This part of hashrate is “trusted” and is very flexible. Our clients can switch them to other mining pools if they find us attacking the network or doing anything unethical.
As to the BTG attack, there are a few suspicious points about it. The hacker controls the private key of 380,000 BTG. Think about it, who has such a large amount of BTG?
The attacker sent these BTG tokens to an exchange, trades them for another coin and makes a withdrawal, then returned those same coins in his/her wallet, hence the double-spending problem. The hacker has stolen about $18 million.
What kind of exchanges will allow users to withdraw $18 million once and for all? Any users who could do this must have complied with strict KYC. If so, how could the hacker ever get away from it?
Q4: Why broke the NY Agreement and support BCH?
NYA represented the result of compromise between small blockers and big blockers. And it was later abandoned by both parties. 
Last April, Bitcoin Core and their supporters as a whole denied the legitimacy of the Hong Kong Consensus. All of the efforts made to scale bitcoin came to nothing. To break the deadlock, DCG founder Barry Silbert invited all of the important figures in the industry to come to New York and sit together for a solution. Blockstream (BS) CEO Adam Back first promised to attend the meeting and then took his words back. (Adam later in Hong Kong told Bitmain CEO Micree Zhan that he didn’t come because he was stopped by “an important Blockstream partner" ) Instead, Samson Mow, a lower-ranking employee of BS who always insults industrial players on twitter would come for negotiation. Representatives of other companies refused to have Samson at the meeting. At last, Barry told Samson that he could not come.
The meeting was held on Sunday, May 21, 2017 at an outdoor rooftop of a hotel. We focused on whether the activation of Segwit should be combined with hardfork to increase blocksize.
Barry suggested that we should activate segwit first and talk about bigger blocks later. But Bitpay, Blockchain.info and other companies wished to combine segwit with hardfork. They explained that users are upset about high fees and would use ETH and other coins for better experience. Some even threatened to leave saying if not combined today, the meeting would turn into another failure after the HK Consensus. Finally, we all agreed to activate segwit and then double the block size, or Segwit2X.
Blocks signalling for the SegWit2x are setting bit4. But something weird happened the next day. Bitcoin core developer James put up with a proposal BIP91 which is simply a soft-fork to activate segwit at 80% threshold rather than 95%. BIP91 also set bit4.
In this case, miners could randomly change their positions between BIP91 and Segwit2X. In fact, two big Chinese mining pools signaling bit4 initially claimed to support segwit2x and later said that they meant to support BIP91. All of these forecasted that segwit2x will not get enough support and fail.
Meanwhile, some extreme Bitcoin Core activists started to support the so-called UASF proposal. UASF is very dangerous. Once adopted, the bitcoin network will split into two coins, UASF token and BTC token. If the price of UASF token pumped, miners would switch to mine it, and then the UASF chain would grow longer than the original BTC chain. This is practically a market-based 51% attack to bitcoin.
After discussing with developers and experts who support bigger block, we proposed a contingency plan called UAHF. If the UASF chain is activated and if the UASF chain gains the majority hash rate, then the nodes following the original chain will reorganize and begin to follow the UASF chain. In such an event, a significant number of financial transaction records will disappear. This is a risk that UASF nodes impose on nodes intending to follow the original chain. In contrast, a UAHF does not threaten the nodes following a different rule set with this same risk.
Later some big blockers realized that we could have a brand new blockchain with bigger blocks that is independent from the original bitcoin chain if we carry out a UAHF and add certain technical approaches. This is the stories behind the birth of BCH.
I think I'd better stop here and answer your next question.
..........
OMG, Wu Jihan was so talkative last night. Let me translate what’s left tomorrow.
BTW, happy China’s Dragon Boat Festival!
 

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Comments
  earned 25.0¢
Thanks a lot!! please *do* translate the rest tomorrow
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   9mo ago
25.0¢
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Great post. Thanks!
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   9mo ago
  earned 0.0¢
This is really really informative and should be explained to the masses. It’s obvious that certain individuals did not want bitcoin fees to be low, and it wasnt the miners.
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   9mo ago
  earned 0.0¢
Amazingly insightful
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   9mo ago