Bitcoin Cash Miners Preparing Controversial “Miner Tax” to Reward Devs

Miners on the Bitcoin Cash network appear to be preparing a plan to finance the protocol’s development using their own block rewards. The controversial plan would see 12.5 percent of the total BCH coinbase go towards those building on the network.

Those behind the plan say that it is impossible for developers to work without financing. They reason that existing solutions to the problem present their own problems.

Bitcoin Cash Miners to Trial Rewards Programme

According to a Medium post by the CEO of the mining pool BTC.Top, development of cryptocurrency protocols are often underfunded. Jiang Zhuoer and other leading mining pool operators are proposing a scheme by which miners themselves will pay developers. Zhuoer himself describes the topic as “controversial”.

The CEO writes that other efforts to fund cryptocurrency development as flawed. Previously, developers have had to appeal for corporate sponsorship. This, for Zhuoer, is problematic since it limits the work to areas that the sponsor deems pleasing. There is also a problem with too few companies offering to pay for protocol whilst too many want to benefit from it without contributing towards its financing.

The post details how the some of the most prominent known Bitcoin Cash miners have come together to launch a six month donation plan. The initiative will reportedly see 12.5 percent of the coinbase of each block go towards infrastructure development. To facilitate this, the post mentions a Hong Kong-based corporation. It will reportedly accept and disperse the BCH generated.

Most controversially of all, the post details that miners following the plan will orphan those blocks that do not include the 12.5 percent developer donation. This means they will be rejected by the chain. Zhuoer writes:

“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.”

The post is signed by Jiang Zhuoer of BTC.Top, Jihan Wu of Antpool and BTC.com, Haipo Yang of ViaBTC, and Roger Ver of Bitcoin.com. The plan is intended to go into action on May 15 and run for six months, until November 15.

Almost Sounds… Centralised?

Despite not being a protocol change, the ease with which major Bitcoin Cash miners are coming together to enforce such a controversial policy on the network should be cause for concern for those with an interest in the network’s future. If the equivalent of a miner tax can be levied against BCH miners at such sudden notice, what other changes could be made in the future?

Some cryptocurrency industry observers have been quick to criticise the planned developer fund. Bitcoin proponent WhalePanda comments that the level of centralisation such a plan requires equates those behind it to a “totalitarian regime”. WhalePanda adds that Bitcoin Cash is likely vulnerable to 51 percent attack should miners be prepared to collude in such a way again.

$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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