This video is about someone who is a threat to the entire crypto space; especially to the top coins like Bitcoin and Bitcoin Cash. He is respected by a few, but hated by many. He's not very famous. He doesn't dress fancily. He barely has any recorded interviews and he rarely spoke in crypto conferences until very recently. His desire seems to be working in the shadows, faded from view. He likely holds the most power and influence in the crypto space today.
I'm talking about Jihan Wu, co-founder and CEO of Bitmain. In the last few months it's been harder for Jihan to keep a low profile as much as he may hate it. A lot of news websites like Bitcoin.com and Cointelegraph have started to profile him as the world is starting to scrutinize this 32 year old Bitcoin Billionaire.
Indeed there are many other threats to the crypto market's existence...but this video is not about them. They are external threats. This one is not only an internal threat, but he is at the center of the crypto space itself and holds a lot of influence, its scary.
Before we get to the main point of the video. Let me give you a short background.
Jihan was born 1986 in an unknown town in China. Little is known about his distant past but he is currently based in Beijing. He studied at Peking University with a double major in Psychology and Economics.
He was once an Investment Manager at China Grand Prosperity Investment, a private equity firm in 2009. Later, he moved on to become a financial analyst.
Jihan first discovered Bitcoin in 2011. While reading Satoshi's whitepaper he was drawn to Satoshi's vision of Bitcoin that he decided to create the first Chinese translation of the Bitcoin whitepaper.
He later founded the Chinese Bitcoin news website, 8btc.com, which is still operational to this day. It was in this website that Jihan proved his expertise as he explained the fundamentals and value of Bitcoin. These initial efforts brought him to the main stage of Bitcoin in China.
So how did his company start?
In 2013, Wu met up with chip designer Micree Zhan at a local restaurant. Zhan had pitched Jihan years earlier on an investment in his startup but now, Jihan is proposing to start a chip company. Zhan's startup was struggling at the time; the next day he called Jihan saying he was in. This was the start of the global chip manufacturing empire that would dominate the crypto space today.
Jihan is the proud CEO of the ASIC chip manufacturing company, Bitmain. To those who dont know what an ASIC chip is. It is short for Application-specific Integrated Circuit. It is used for mining Bitcoin and other cryptocurrencies. What makes it special is that it is extremely energy efficient and has phenomental computing power. Compared to an ordinary GPU or CPU, mining on ASICs consumes less electricity and provides more hash power. For that reason, mining on GPUs and CPUs became less and less profitable forcing miners to purchase an ASIC to remain competitive.
Bitmain produced one of the earliest and most popular ASIC miners, and this brought Jihan to the top of chip mining industry. In February 2018, Bitmain held 70-80 percent of the global market for mining hardware and boasted $4 billion in operating profits last 2017--higher than the giant American GPU manufacturer Nvidia. Bitmain's private valuation is $12 billion. Of course, Jihan refuses to share how much his net worth is.
So what part of this makes Jihan dangerous? . . . . . the part where his company may be doing more than just manufacturing ASIC chips. Jihan has been accused of many sneaky and malicious deeds like attacking other crypto networks, abusing his influence to control Bitcoin, monopolizing majority of the Bitcoin and Bitcoin Cash hashrate, mining with their brand new chip before releasing the model to the market, among many other things. This video is not about accusations. There is enough of that going around... rather this video is about recognizing the potential dangers of having this company at the center of the crypto space.
Last 2017, before Bitcoin forked into BTC and BCH or Bitcoin Cash, there was a big debate in the bitcoin community. This debate is still ongoing today but let's focus on what transpired last year in the events of Jihan's conspiracy.
At that time, Bitcoin had a problem. The network effect, which caused Bitcoin to explode in popularity in turn became network congestion, where the network was carrying more data that it can handle. This made Bitcoin transactions slower and leveraged miners to charge a high fee for transactions. They had to fix this through scaling, allowing the network to handle more data. The safest way to do this was through a soft fork upgrade into Segrated Witness or Segwit for short. This would allow backwards compatibility and overall a lot safer to do. This was the most logical thing to move forward to at that time.
However, Jihan opposed this! But why? Seemingly no reason at all. Of course the Bitcoin community pressured him to accept this. Instead, he pushed the decision to do a hard fork- irreversibly splitting the network. This posed a lot of risk and wasn't very logical to do considering a soft fork would do the same job with less risk.
He had a lot of influence being the CEO of the company that holds majority of the world's Bitcoin hashrate.. but why would he do something that could put his business at risk not to mention the entire network of bitcoin?
This is where it gets controversial... Let me be the first to admit that I do not know exactly what goes on in the mind of Jihan but I can only deduce his motives slightly through his behaviour pattern.
It all started with Greg Maxwell allegations. Greg is the CTO of Blockstream, a blockchain company that provides funding for the development of Bitcoin Core, the predominant software implementation of the Bitcoin network. In an email sent to other Bitcoin developers, Greg revealed that there was a method to give miners an unfair advantage over other miners. This comes in the form of a method called AsicBoost, which allows a miner using it to exploit a design flaw in the Bitcoin Protocol, saving electricity costs by up to 20-30 percent while mining.
According to Maxwell and I quote, "This could have a phenomenal centralizing effect by pushing mining out of profitability for all other participants, and the income from secretly using this optimization could be abused to significantly distort the Bitcoin ecosystem in order to preserve the advantage."
There were 2 ways to use ASICBoost. One way was highly detectable and was not used but there was another way which was extremely hard to detect. Allegedly, someone was mining in secret using the covert method of ASICBoost. This brings us back to the Segwit upgrade. Upgrading to Segwith via a soft fork was incompatible with the secret use of ASICBoost but a hard fork upgrade would allow ASICBoost to continue as usual. This could have been the motive behind Jihan's opposition of the soft fork at the same time pushing the hard fork. You may ask, there are many Bitcoin miners in the world, why are we pointing our hands at Jihan? It turns out that Jihan's company Bitmain actually has a patent for ASICBoost in China. Although, admitting to ownership of the patent, Jihan angrily denied the allegations against him and his company. He claims that they are legally allowed to use ASICBoost but they chose not to for the greater good of Bitcoin. That they only "tested" ASICBoost, but didn't use it in real mining operations. That there is no relationship between ASICBoost and his opposition to the soft fork upgrade.
It is no surprise that lot of the people actively involved in Bitcoin's development didn't find his reasons convincing. After all, as a businessman, people assumed he was motivated by profit. And based on Greg Maxwell's calculations, Bitmain could potentially be able to bag an extra $100 million if they continue to exploit the ASICBoost's unfair advantage. And besides, what's the point of filing a patent if you never intended to use it or profit from it. It just doesn't add up.
