Insights into Chain Death Spiral and Other Vulnerabilities Plaguing Bitcoin
A Closer Look at Vulnerabilities and Issues Bitcoin is Facing
Issue #1: Bitcoin's Vulnerability With Respect to Difficulty Adjustment and the 2016 Blocks
Right at the time of the Bitcoin fork, it became clear that Bitcoin’s protocol has an inherent vulnerability.
The vulnerability relates to the difficulty adjustment: in the event there is a loss of mining power by the chain, it will have to wait for a total of 2016 blocks to be processed before a difficulty adjustment can take place to bring the block time back to its normal ten minute target. If mining power is not restored, it will result in a crash.
Why Has This Vulnerability Not Been Analyzed Yet?
The main reason this vulnerability has never been analyzed or discussed much is because until now, miners did not have any choice but to continue their mining operations on Bitcoin.
However, post hard fork, which resulted in a new coin called Bitcoin Cash (BCH), it’s a completely different situation because miners now have a choice, as well as power that they can use to influence their chain's fate by choosing BTC or BCH.
This positive attribute of Bitcoin Cash (BCH) was noticed during the initial phase when its blocktime moved up to fifteen hours per block. In spite of this, difficulty adjustment occurred well before the adjustment period (2016 blocks) had elapsed, due to the fact that BCH makes use of EDA (Emergency Difficulty Adjustment).
However, Bitcoin currently lacks this type of safety feature and it will not be possible to add one until such time that a hardfork is carried out on the main chain.
Issue #2: Likelihood of a Chain Death Spiral
When Does a Chain Death Spiral Take Place?
Chain Death Spirals usually result from situations in which blocktime has gone up, leading miners to switch chains. As abandonment of the chain increases, the problem intensifies, creating a vicious feedback loop that eventually culminates in a chain death spiral.
Issue #3: Increase in the Mempool
If you have been monitoring BTC since the fork, you must have noticed that its mempool has been continuously increasing since then and recently reached 52 MB. This means that BTC would require another 52 blocks to clear before any further transactions can take place.
The situation was even worse in May of 2017 when BTC mempool reached a peak of 120 MB, creating an uproar within the community and resulting in a greater shift towards altcoins.
As we can see, Bitcoin faces some serious problems, making it less desirable in comparison to Bitcoin Cash. Stay tuned for future posts, after we have time to observe it some more, to discuss whether things are starting to improve for Bitcoin or are worsening further.