Bitcoin Cash, the result of a scaling spat that lead to a splitting of the Bitcoin blockchain is set to undergo its first halving event in fewer than 160 days. Dan Held, Head of Business Development at US based digital assets exchange, Kraken, has warned that this particular halving could prove disastrous for the upstart digital currency. In contrast to the price rally forecasts associated with halvenings, Held bases his prediction on the coin’s current and historic hashrate (an indicator of network support) and foresees the possibility of a 51% Attack taking place.
Increasingly regarded with a great deal of anticipation, halving events are a predetermined deflationary mechanism where rewards to miners who support a particular blockchain’s activity drop by half of their previous amount. This, as the narrative goes, causes speculative investors to buy coins and hold them in anticipation of a shrunken supply (ergo the pre-halving rally) and then trickle them back into circulation while the halving frenzy is in full swing. Perhaps lending credence to voices like Litecoin’s Charlie Lee, who thinks of halving events as self fulfilling prophecies.
A peep under Bitcoin Cash’s hood reveals that halving events don’t necessarily play out in the same manner, and are subject to a number of conditions, both technological and economic (the list may grow as the chapter in the crypto textbook on halving events is continuously expanded upon).
Dan Hedl took to twitter and expressed concern that Bitcoin’s little brother (which has already seen a blockchain split, resulting from yet another scaling war) was suffering a hashrate deficiency that could see malicious mining group enacting a 51% Attack.
“The halvening will be catastrophic for Bcash.” Sounded Hedl, before continuing…“Bcash halvening occurs first > block subsidy drops in half > miners switch to Bitcoin (since they share the same hashing algo) > security spend becomes dangerously low > 51% attacks become very easy https://t.co/wfIDIil4kT” — Dan Hedl (@danheld)
Data taken from BitInfoChart’s visualization of Bitcoin Cash’s hashrate over a period of a year indicates that the cryptocurrency’s network support has dropped in recent months, from it’s Dec-Jan highs. Though a lot of volatility was noted. On November 1st however, Asian digital currencies exchange, Bitmex’s research team stepped in to address some of the crypto communities concerns.
“Not only does the Bitcoin Cash time gap between blocks appear more volatile than Bitcoin, with higher peaks and lower troughs, but it also appears to be slightly less random, with more regular peaks and troughs.” – Stated Bitmex Research, concerning the hashrate volatility on the Bitcoin Cash network.
No sign of manipulation yet, however “We were unable to find any evidence of timestamp manipulation or other nefarious mining strategies. Perhaps the apparent cyclicality is caused by lags in automated systems designed to mine the most profitable coins or some other more benign factor.” – Bitmex Research
While this explains current volatility, it does not eliminate the possibility of a 51% Attack at the time of halving. Though, Bitmex Research did prescribe some adjustments to the Bitcoin Cash Blockchain’s parameters (block times, adjustment period, merged mining etc.) to reduce the chances of a 51% Attack taking place.
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