SharkPool to Mine Empty Blocks on Bitcoin Cash ABC as 'Only One Chain Can Exist'

The cryptocurrency mining pool “SharkPool” has recently revealed that if Bitcoin Cash ABC, the bitcoin cash chain that appears to be supported by most businesses in the space, survives the ongoing hashwar, it will mine empty blocks on it.

As CryptoGlobe recently covered, SharkPool is a cryptocurrency mining pool operated by Bitcoin Cash startup CashPay Solutions that has backed the Satoshi’s Vision (SV) side of the recent Bitcoin Cash hard fork. Bitcoin Cash SV was notably also backed by CoinGeek, and self-proclaimed Satoshi Nakamoto Craig Wright.

The pool has, via Twitter, revealed it’s set to “exclusively” mine empty blocks on altcoins and sell its profits for Bitcoin Cash SV.

SharkPool has revealed it sees “all alts, including forks and splits” as “acts of war against Bitcoin” that it claims will be treated as such. Recently, it revealed it will soon start mining empty blocks on altcoins that use the “bitcoin” name, including Bitcoin Diamond (BCD), Bitcoin Gold (BTG), Bitcoin Private (BTCP), and Bitcoin Interest (BCI).

The attack’s warning claimed the “sharks want to sharpen their teeth” and called these altcoins “appetizers,” which implied it was looking to attack bigger blockchains. In a conducted Twitter poll, the microblogging website’s users pointed to Litecoin as its first potential target.

CryptoGlobe caught up with Ari Kuqi, the co-founder of CashPay Solutions, to better understand what’s going on, and what can be expected in the future. From what we were told, one of the abovementioned altcoins using the “bitcoin” name can expect an attack “within 24 hours.”

When asked if the mining pool plans on attacking Bitcoin Cash ABC, Ari replied:

If ABC survives the hashwar mid-term, yes, we will mine empty blocks on ABC and force them into permissioned mining or using a spreadsheet. You should do some research on SolidCoin, they also used checkpoints to defend.

SolidCoin notably appears to be a cryptocurrency that fell to 51% attacks. Its developers attempted to stop them using checkpoints, but ended up failing. These checkpoints – which Bitcoin Cash ABC recently added – are supposed to help protect the blockchain against “block reorganization attacks”  where a separate chain is mined with greater hashpower.

Mining Empty Blocks

SharkPool’s strategy mining empty blocks on altcoins – a move that some can view as an attack – can essentially lead to the end of all economic activity on their blockchains. This, as mining empty blocks stops transactions from being processed, meaning that over a long period of time the blockchain would develop a large transaction backlog.

Moreover, SharkPool plans on selling the block rewards it gets from those empty blocks for Bitcoin Cash Satoshi's Vision (BCHSV). This would both increase demand for bitcoin cash SV, but would also put selling pressure on the altcoins, potentially driving down their price.

The move, according to Ari, isn’t an attack, but part of the cryptocurrency’s governance model:

It’s Nakamoto Consensus. Nothing our miners or our pool does is illegal, we obey all laws and regulations. People have to understand that the governance model of crypto is Nakamoto Consensus, this is part of it. Miners execute their executive power by voting with their hash, building on a block or orphaning it. SharkPool is a sign of Nakamoto Consensus working cross-chains, building full blocks on bitcoin and preventing economic activity in altcoins.

The potential for it to mine empty blocks on altcoins and Bitcoin Cash ABC is, however, real. Per Ari, SharkPool has already had “over 500 sign ups.” While the pool decided “it would be more fun” to initially attack smaller altcoins, it revealed “Litecoin will be the first big one.”

The pool’s operator further claimed that by the next halving of block rewards – expected by March 2020 -  gigabytes's worth of transactions would  be needed for miners to be profitable. To have such a large amount of transactions, Ari added, “only one chain can exist.” Per his words, this is clear when reading Satoshi Nakamoto’s Bitcoin whitepaper.

The hash war between Bitcoin Cash ABC and Bitcoin Cash SV, he revealed, isn’t yet over. To him, cryptocurrency exchanges like Kraken and Bittrex who are giving Bitcoin Cash ABC the BCH ticker are being premature and possibly endangering users’ funds.

Bitcoin (BTC) and Satoshi Nakamoto

Bitcoin Cash SV [Satoshi’s Vision] is notably backed by Craig Wright, an Australian entrepreneur who claims to be Satoshi Nakamoto. We asked whether SharkPool believes he is indeed bitcoin's creator, and what were his thoughts on BTC in its current state.

As for Wright, he revealed it doesn’t matter as “SharkPool fights for sound and stable money. nChain and CoinGeek are the only miners with their own skin in the game who want absolutely 0 change to the protocol.” As long as they support “sound money and Bitcoin as per [the] whitepaper,” he added, they’ll have SharkPool’s support.

As for Bitcoin, Ari Kuqi stated:

Restricting blocksize [to 1 MB], adding RBF [Replace-by-fee] and SegWit [Segregated Witness] have changed the economic incentives of BTC. Bitcoin is most importantly an economic incentives system, changing that, make BTC no longer Bitcoin.

Bitcoin Cash SV, currently trading at about $100 after falling nearly 15% in the last 24-hour period, supports an upgrade to the cryptocurrency’s block size to 128 MB. While the threat of mining empty blocks on Bitcoin Cash ABC’s chain is still there, Coin.Dance data shows it has accumulated more proof-of-work (PoW) than the BCHSV chain.

Blockchain-Enabled Chinese Yuan Could Increase Governmental Oversight, Investor Argues

The Chinese government has been closely studying blockchain technology in order to determine whether the immutable distributed ledger can be used to streamline routine business processes.

However, Chinese authorities have expressed concerns regarding the use of cryptocurrencies in financing illicit activities and potentially disrupting the country’s $12 trillion economy by facilitating capital flight.

People’s Bank of China Considering Blockchain-Based Yuan

While China’s government has attempted to restrict transactions involving cryptocurrencies, the People’s Bank of China (PBoC) has reportedly been conducting research to determine the feasibility of launching a blockchain-based Chinese yuan (CNY) since 2014.

This, according to Dovey Wan, a founding partner at Primitive Ventures, a “market cycle agnostic” investment firm which has invested undisclosed amounts into various cryptoasset projects such as ZCash (ZEC) and DFINITY.

Wan, who earned her Masters in Information Systems from Carnegie Mellon University, wrote in a blog post published on CoinDesk on May 17, 2019 that the digital yuan, or Renminbi (RMB), initiative may potentially allow the Chinese government to exercise greater control over the nation’s local and international economy.

M0 Versus M2

As explained by Wan, digital fiat currencies allow financial institutions to more effectively create credit flows which increase M2, the broad money supply. Meanwhile, blockchain-based digital currencies impact a base currency measure, referred to as M0.

Blockchain-enabled digital currencies could potentially allow central banks to “bypass commercial banks” in order to directly control money creation and supply channels. This would structurally centralize the central financial institution’s power and role in formulating monetary policy, Wan argued.

Chinese Government Will Most Likely Use Permissioned Network

According to Wan, the PBoC is looking at various types of network design for a digital, blockchain-powered RMB. She believes that it will most likely be a permissioned network in which the nodes will be managed by major Chinese financial institutions, including the PBoC.

This indicates that transactions involving a digital yuan would only be seen by Chinese banks, and not the nation’s citizens.

Blockchain-Powered Currencies Enable “Better Coordination Paradigm”

One of the main reasons for using blockchain technology, Wan noted, is to take advantage of “a better coordination paradigm” when compared to “traditional currency supply management, which is heavily dependent on bookkeeping,” Wan wrote.

Moreover, Wan thinks blockchain’s immutable nature and private-key cryptography can prohibit users from entering fraudulent transactions and also prevent users from counterfeiting currency notes.

A blockchain-based yuan could also assist the Chinese government in more carefully monitoring the spending history of the nation's residents. This would allow the government to "accurately assess creditworthiness" and detect illegal activities such as money laundering and tax evasion, Wan noted.