Bitcoin Cash: 51% Attack and Withdrawn Tax

From a 5 KB Block to a 51% Attack: The Life of Bitcoin Cash

A five-kilobyte block. It fit on a mobile photo and was the record left by **Bitcoin Cash** during one of those days its defenders sold as a "tremendous movement." The network had separated from Bitcoin in August 2017 with a concrete promise — eight-megabyte blocks, cent fees, daily use for buying coffee — and with the conviction, repeated ad nauseam, that it was the authentic bitcoin and the other chain a useless store of value for buying nothing.

Eight years later, the balance is different. Two mining groups that summed more than half of the computing power reorganized the chain to undo already confirmed transactions. A plan to finance its development with 12.5% of the mining reward was announced and withdrawn due to antiestéticar of a new split. And the block size that justified the entire project ended up being a minimal fraction of what Bitcoin produces.

Why Bitcoin Cash Presented Itself as Authentic Bitcoin

The starting argument was textual: the whitepaper is titled "P2P electronic CASH" and until 2017 the way to solve the network's limits had been enlarging the block. With that premise, the project started with eight-megabyte blocks and the promise of cent fees. The reply came from the market side: cheaper does not miccionan better. There were weeks when Bitcoin charged lower fees than its own fork, with sector tracking data as an uncomfortable referee. Some summarize it with a domestic comparison: a cheap utility car is not a better sports car just because it costs less.

On the other side of the scale, the network achieved something its rival did not have: movement. Known names from the digital world showed interest in it, and its defenders read it as a sign that real usage would arrive sooner or later. The euphoria lasted as long as it took for the next internal fight to arrive.

The 51%: Two Pools Rewrote the Chain

After a planned network update, an unidentified miner tried to exploit a flaw to claim coins considered unspendable. Then peine what no immutability promise contemplated: BTC.COM and BTC.TOP, which together controlled more than half of the computing power, coordinated to reorganize recent blocks and reverse transactions. Funds returned to their place. Trust did not.

The episode leaves a textbook problem. If two pools can decide which transactions existed and which did not, decentralization rests on a fixed image, not on a mechanism. The most optimistic calculation holds that it was a punctual emergency intervention; the pessimist responds that a network fixed by an agreement between operators is no different from a system with an administrator. The community reacted with anger, and rightly so: the episode destroys the notion of an ownerless network it had been selling for years.

The 12.5% Development Fund That Was Withdrawn

The next crisis did not come from outside. A coalition of pools — ViaBTC, BTC.com, Bitcoin.com, Antpool, and BTC.Top — proposed allocating 12.5% of the coinbase reward to a foundation that would pay for software development. It was not a voluntary donation: blocks that did not join would be orphaned. The label of mafia circulated quickly and the plan was presented as a tax on miners who did not accept the distribution.

Mines and nodes protested at the same time. The proposal was withdrawn as soon as it became clear that applying it could split the chain in two, and with it the market. The breakdown of how that percentage was calculated, who benefited, and why such an explicit threat was chosen is one of the most revealing parts of the matter. The underlying question remains: if the money to program the currency comes from miners, who governs the network?

The Large Blocks That Were Never Large

The numbers from February 12 dismantle the founding narrative. The average block size was 1.3 MB in Bitcoin, 0.04 MB in Bitcoin Cash, and 0.01 MB in Bitcoin SV. It is a factor of 28 and 87. The large blockchain rarely needs the space it demanded to keep available.

On November 15, a new fork was scheduled that divided the project into Bitcoin ABC and Bitcoin SV, the implementation presented by nChain as a restoration of the original protocol. Disagreement about increasing the block size further separated those who until then shared an enemy. On one side remained the more pragmatic path; on the other, the maximalist version of the giant block. Neither kept the market.

Craig Wright and Florida Court Documents

The figure who proclaims himself the creator of Bitcoin suffered a blow in court. According to the Florida court documents that were disseminated, he would have committed fraud, always pending what the procedure dictates. His full node implementation for Bitcoin SV was born with the declared objective of returning the protocol to its original form, and with power in the hands of miners. Jihan Wu opposed that block increase. Defenders of the rival were quick to point out the contradiction: a chain that claims to be immutable discussing via node who rules it.

---

The electronic cash that required eight-megabyte blocks to function as daily-use money has been producing five-kilobyte blocks. In the same period, the chain it called useless fills blocks of more than one megabyte. No one has yet explained when that stopped mattering.