BCH triples in two weeks, is the PoW narrative revival a dream?

Written by: Qin Xiaofeng, Planet Daily OdailyNews

No one could have predicted that the current market rally driven by mainstream financial institutions applying for Bitcoin spot ETFs would ultimately benefit Bitcoin fork projects the most—BCH (Bitcoin Cash).

Coingecko data shows that over the past week, BCH has led other cryptocurrencies with a 106.5% increase; in the past two weeks, BCH rose from a high of $101 to $325, with a maximum increase of 221%, currently reported at $294.

Interestingly, as BCH rises, several other forked coin projects have also seen significant gains: the BCH fork project eCash (formerly known as BCHA) had a weekly increase of 58.2%, ranking second; another BCH fork project, Bitcoin SV (BSV), led by CSW (nicknamed "Faketoshi"), ranked fourth with a weekly increase of 35.2%. Since these tokens all use the POW mechanism, the community is shouting: Make Pow Great Again, and a number of established POW public chain tokens like Litecoin (LTC), DASH, and Ethereum Classic (ETC) have also seen an increase of over 10% today.

In addition to the token price increases, there is also a circulating and heated discussion within the BCH community: the former king Wu Jihan is about to return to build, and the community is shouting that the next resistance level for BCH is $1000 (the historical highest price is $1650). Although there is no official news to verify the rumors, the name Wu Jihan carries weight in the BCH community—just as Vitalik Buterin does for Ethereum.

For newcomers to crypto who started investing after the DeFi explosion, Wu Jihan, who has rarely spoken in the past two years, seems like a stranger. However, before 2021, he was undoubtedly a top figure. As one of the founders of Bitmain, the world's largest mining machine manufacturer, and labeled as the "mining overlord" by the media, Wu Jihan is a godfather-level figure in the crypto world, and every word and action has a significant impact on the entire market, much like today's Binance founder CZ.

BCH, under Wu Jihan's promotion, became the hottest fork coin in the market in 2017, but after two hard forks and Wu Jihan being embroiled in the "palace intrigue" of Bitmain, he failed to chase the DeFi wave that truly ignited the next bull market, and BCH gradually faded from the mainstream circle.

However, the spectacular drama of BCH in the past is not inferior to today's various industry stories and incidents.

(1) Wu Jihan forks Bitcoin, BCH is born

In 2017, the Bitcoin community erupted in intense conflict: one faction, represented by Bitcoin ABC, advocated for a large block solution, proposing to increase the block size limit (from 1 MB to 8 MB) to improve Bitcoin's transaction speed; the other faction, represented by Bitcoin Core, consisted of fundamentalists who insisted on solving scalability issues through advanced technologies (such as the Lightning Network) without changing the Bitcoin network code.

Ultimately, with the support of Bitmain, which controlled a large amount of computing power, the first fork in Bitcoin's history occurred, giving birth to Bitcoin Cash (BCH). At its peak, BCH's market capitalization briefly entered the top four— in December 2017, the BCH/BTC exchange rate reached an all-time high of 0.284 (now it is 0.01), and it has never reached that level again.

After BCH, hundreds of Bitcoin fork projects emerged in the market, but they all faded away quickly and failed to achieve BCH's success. Wu Jihan, who took the lead in forking Bitcoin, was also labeled with various derogatory names, but this did not affect his satisfaction with the "work" he created.

"Bitcoin Cash has become an important player in the digital currency market; it not only has its unique characteristics and advantages but can also complement and coexist with other digital currencies." "Although the Bitcoin Cash fork event generated some controversy and volatility, it also brought more opportunities and challenges to the entire digital currency market."

Although in a February 2018 interview, Wu Jihan criticized some designs and implementations of BCH and believed that the project could not achieve its originally set goals, he did not give up on BCH, as can be seen from the subsequent fork wars.

(2) BCH forks, Wu Jihan battles CSW

A year after BCH was born, the Australian self-proclaimed Satoshi Nakamoto, CSW (Craig Wright, nicknamed Faketoshi), began forking BCH, and Wu Jihan also experienced the pain brought by forking.

In November 2018, BCH underwent an upgrade that introduced a new feature called Canonical Transaction Ordering (CTOR). However, this upgrade did not gain consensus from all members, and the radical CSW proposed to directly adopt a 128 MB super-large block and "lock" the client to the Satoshi era's version 0.1, which was opposed by Wu Jihan and the Bitcoin ABC team. Wu and CSW quickly ignited a prolonged war of words, exchanging insults.

Ultimately, two incompatible versions emerged: BCHABC (supported by Wu Jihan and Roger Ver) and BCHSV (supported by CSW and others). At the beginning of the fork, both sides claimed to be the legitimate BCH and sought community support and market recognition; subsequently, the competition between the two sides intensified, including mining power struggles, community voting, and various propaganda offensives and defenses. The conflict ultimately ended with Wu Jihan's victory, and BCH ABC was renamed BCH again, while BCHSV was replaced by BSV.

Although Wu Jihan won, BCH experienced a price crash after the fork—within just a month, the price of BCH plummeted from $552 before the fork to $74, a drop of 83%; even accounting for the BSV generated after the fork, investors still suffered heavy losses.

(3) ABC team backstabs Wu Jihan, BCH forks again

"Congratulations! There will be no more troublemakers in the BCH community after this new block!" On November 16, 2018, Wu Jihan tweeted this after defeating CSW. However, at that time, he did not anticipate that BCH would experience another fork two years later.

The core of the fork was an upgrade known as the "Infrastructure Funding Plan" (IFP), which would mandate that 8% of each block reward (earned by miners in Bitcoin Cash) be allocated to software projects that support BCH, such as Bitcoin ABC.

The IFP forced all BCH miners to give up more profits to donate to developers, which was something the miners did not want to see. As a result, early BCH developer Freetrader chose to fork independently and gained the favor of many miners, community members, and users. Ultimately, BCH once again hard-forked into two chains: BCHN (Bitcoin Cash Node, without IFP restrictions) and BCHA (Bitcoin Cash ABC, with IFP restrictions).

With the new fork, a new round of "BCH" naming rights competition began. It was initially thought that the ABC team, which had led BCH development for three years, would win, but the final result was that BCHN, with its advantage in public opinion and support, emerged victorious and obtained the BCH naming rights, while BCHA announced its rebranding to eCash (XEC) in August 2021.

The question arises: why did Wu Jihan not stand up when his gold medal team ABC backstabbed him and caused community division? The answer is that Wu Jihan was deeply embroiled in the palace intrigue of Bitmain at that time and had no intention of managing BCH.

(4) Bitmain palace intrigue

Starting in 2019, the long-standing conflicts between Wu Jihan and another Bitmain founder, Jihan Zhang, became public.

In October of that year, Wu Jihan issued an internal letter to employees, relieving Jihan Zhang of all positions at Bitmain; in November, Wu Jihan held a "special shareholders' meeting" in Beijing, completely stripping Jihan Zhang of absolute control over the company.

Jihan Zhang, who was ousted from the company, had no choice but to file a lawsuit. He even wrote an open letter stating that he had been stabbed in the back by the partner he once trusted the most and the brother he had fought alongside. Subsequently, Jihan Zhang filed lawsuits in multiple locations and, in January 2020, received support from the Haidian District People's Government, requesting the Market Supervision Administration to change the legal person of Bitmain to Jihan Zhang. On May 8 of that year, a dramatic scene unfolded. Jihan Zhang received the business license at the Haidian District Government Service Center, only to be robbed by a group of unidentified men, causing an uproar in public opinion.

After that, both sides entered negotiations, which lasted for several months, and finally reached an agreement in January 2021. Jihan Zhang purchased nearly half of Bitmain's shares held by Wu Jihan and a group of founding shareholders for $600 million, and Wu Jihan officially resigned from his position at Bitmain; Bitmain would divest its mining pool and cloud mining business, with Bitdeer and the mining sites in the U.S. and Norway being separated from Bitmain, and Wu Jihan became the chairman of Bitdeer.

In the following two years, Wu Jihan's public statements decreased, and after several splits and his departure, BCH was no longer prioritized by Bitmain, ultimately leading to its decline. Meanwhile, as Ethereum transitioned to PoS according to its established route, the mainstream narrative and direction of the industry also changed, with multiple new PoS public chain ecosystems emerging, DeFi igniting a new bull market, and the POW narrative and the mining industry, which once held the pulse of the industry, gradually leaving the center stage under regulatory pressure. BCH developers also attempted to embrace DeFi at one point, but it did not create much of a stir.

However, it seems that BCH is now at a turning point where the flowers bloom on the willow bank.

Firstly, the attractiveness of Bitcoin spot ETFs is increasing, being expected to ignite a bull market; secondly, the Bitcoin ecosystem has gained new stories with the popularity of Ordinals, and many old developers have returned; additionally, the recently launched EDX Markets, supported by leading traditional financial giants, has included four tokens for trading, including BCH—BCH has not been classified as a security by the SEC, while several PoS tokens have been classified as securities.

Is this merely a temporary pump by the market makers, or is it a narrative revival or even a value return for the crypto industry? It is still too early to say.