On the first of September 5 million low value transactions will be send to the BCH network in a timeframe of 24 hour as a stress test. The idea is to show the world how the Bitcoin Cash network will function under heavy load. Merchants can make their decision whether or not to accept BCH based on the outcome. What is a likely outcome of the BCH stress test and what does it mean?

Bitcoin Cash blocks will be filled up with 5 million transactions in 24 hour during the BCH stress test

Will the network be able to handle it?

Bitcoin Cash increased the block size through two hardforks: First from 1 to 8 MB and later from 8 to 32 MB. However, because BCH is hardly used only 0.2% of this capacity is filled with transactions and the rest of the block space is empty. To prove that the network can handle full 32 MB blocks the stress test is organised.

BTC right and BCH left

There has been a long debate about onchain scaling and opponents of bigger blocks are seeing serious long term risks in increasing the block size:

1: Full nodes will decrease
When blocks are bigger it cost more resources to synchronise and keep synchronised with the blockchain and it will become more expensive to run a full node and less devices will be suitable for this purpose. This will reduce the amount of full nodes on the network and thus create a single point of failure or to attack.

Another negative effect is that more users will be forced to trust others to validate the Blockchain for them and lose monetary sovereignty because they can’t afford to validate themselves. Also power will be moved over from the users to the miners since full nodes add an extra layer of decentralisation by validating coins that are created by the miners and reject them when it is against their will.

When a relevant part of the full nodes is rejecting a certain upgrade done by miners the value of this fork will be smaller than the original chain because they can’t be spend everywhere and miners will lose money by mining it. This way the users regulate the miners because miners can only implement changes where the users agree on. When it becomes expensive to run a full node miners will probably the only one running them and this entire layer of decentralisation is gone.

2: Selfish mining will be easier
Bigger blocks will increase the block propagation time and an attack like selfish mining becomes easier. Selfish mining means that a big miner doesn’t propagate a block that he found but immediately start mining the next block. When other miners find a block it will be invalidated when the selfish miner propagates his 2nd block because this will create the longest chain.

This way competing miners are wasting work and this will benefit the selfish miner. Because the selfish miner will mine way more efficient than the rest it will lead to miner centralisation on top of the fact that it is unfair.

Bigger blocks cause serious problems in the long run

Very serious problems can be caused by bigger blocks in the long run, but non of them will be exposed within 24 hours, it will take years. Nodes will not centralise in one day and one day of selfish mining will not centralise the miners. I am very certain that the BCH network can handle 5 million transactions in 24 hours, worse case some transactions will go to the mempool and fees will rise a bit as the network is designed to work.

The outcome is already known especially when the size and amount of transactions is decided by the organisers since they can calculate exactly how many will be included in the block and how many will end up in the mempool. With the tiny amount of transactions done by real users it is very easy to plan this stress test to a perfect outcome, an unknown spammer is the only one who can disrupt it.

I predict that the BCH stress test will play out smoothly and the network is perfectly able to handle it

If the network is able to handle this it isn’t surprising at all and doesn’t tell anything

The claim of the organisers of the BCH stress test

I took a look at their website because I was curious what they want to prove with this stress test because in my opinion it is fairly useless because the real issues will not be exposed anyway. I found where I was looking for:

So the organisers claim that it proves that 0-confirmation transactions are safe to accept when this stress test is successful. Although it is obviously less risky when the transactions don’t stay in the mempool for hours but are included in the next block, A ZERO CONFIRMATION TRANSACTION IS ALWAYS RISKY TO ACCEPT, because they can always be double spend fairly easily.

https://en.bitcoin.it/wiki/Irreversible_Transactions

Two types of double spend attacks are easy and very cheap to execute and thus very likely to occur, they are ONLY possible with 0-confirmation transactions. The other 3 types of attacks are very to extremely expensive and thus very unlikely to occur. This means that 0 conf is very risky, 1 confirmation is still a small risk and from 6 confirmations the risk is almost eliminated.

There are generally 5 ways to double spend a transaction and the most easy ones that don’t need a lot of capital to execute are only possible with 0-conf transactions. These double spends can happen within one block period and thus are NOT eliminated by the fact that there is no obstruction in the network.

Be aware! 0-confirmation transactions are NEVER safe to accept no matter what the outcome of the stress test is!

Satoshi doesn’t count 0-conf as a transaction too

Non tech people are very welcome

Merchants are mostly focussed on the commercial and financial side of the business and it can not be expected that they all have technical knowledge to fully understand this stress test, their only conclusion will be that the network can handle a lot of transactions without problems.

Non techy people are invited to inform non techy merchants about this stress test and everyone will think that the outcome is amazing while it actually isn’t telling anything. I see this entire event as an empty but smart marketing event purely to create false hype.

Conclusion:

The previous hardfork that increased the block size from 8 to 32 MB while hardly 50 KB is used and the implementation of op-codes that were removed from Bitcoin because of security reasons was hyped enormously complete with mainstream media shilling for it and manipulation of the market price of BCH. It finally turned out to be a fad and the only result was that 20% of the full nodes was kicked off the network and still around 10% didn’t manage to come back online.

Bitcoin Cash pump and dump events often come with a hyped event and I suspect that this will be the next one. A while before the event the price will start pumping, CNBC who’s marketing manager is the wife of the Bitcoin Cash fund will start chilling for it and paid shills on social media will be all around again. When the stress test, an empty marketing event happens the hype will die out and the price will dump to base levels again.

If you are a merchant and you want to accept fast and cheap payments BTC Lightning Network is a much better option. It is instant without the risks of 0-conf transactions and much cheaper to transact with than BCH. Furthermore, it can scale way further than 5 million transactions per day in a sustainable way and without the above described risk factors. Also you will enjoy the network effect, much more people own BTC than BCH.

Maybe most importantly, you are not involved in a centralised network controlled by greedy lying and aggressive marketeers who don’t care about security by using BTC Lightning Network!

Disclaimer
This is no financial advice, just my view on the market.

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