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Bitbank Weighs in on Ethereum

- Bitbank Weighs in on Ethereum

Bitbank Group is one of the largest Bitcoin companies in the world, encompassing all aspects of the Bitcoin ecosystem. This includes exchange, mining, finance, app development, hardware production and blockchain research. Headquartered in Shenzhen, China, the Bitbank Group family is comprised of four companies — Bitbank, BW, CHBTC and Bter — totaling 200 employees in eight cities in China.

The group’s expertise also extends to Ethereum, with particular knowledge around the controversial split between Ethereum and Ethereum Classic. As experts on the digital platform, and owners of one of the largest ETH and ETC exchanges in the world in CHBTC, Bitbank Group and its team members have particular insight into where things stand now.

“The underlying technologies for Ethereum and Ethereum Classic are nearly the same,” said Lan Hu, COO of BW, making the argument for continued development and growth on both sides of the fork. “They are like twins that are linked and interdependent. We are expecting both technologies to continue to undergo innovative development that will contribute to the continuing growth of decentralized economies.”

Lin Han, CEO of Bter, explained, “If the Ethereum ecosystem wants to attract more business applications and companies to it, it's better to keep the blockchain consistency and treat hard-forking cautiously. That doesn't mean we don't support any hard fork. Bitbank Group’s companies differ on some issues and in our opinion, the hard fork of the Ethereum protocol upgrade or bug fix should be supported.”

“There has been much argument about the ‘Ethereum Hard Fork,’” said Dawei Li, CEO of CHBTC, in support of Ethereum Classic. “First of all, we don’t want to see the Ethereum community split. The Ethereum Classic team adheres to the ideas of decentralization and immutability and we agree. The ideas of decentralization and immutability are a core value of digital money.

“Ethereum Hard Fork is not as scary as it first seems. We are optimistic about the future of both chains and view the incident as a valuable experience for the Ethereum and Bitcoin communities.”

The hard fork which split the Ethereum community into Ethereum and Ethereum Classic was implemented after the collapse of The DAO in the summer of 2016. The Bitbank Group remains optimistic about the future of both chains and views the incident as an opportunity to learn valuable lessons.

“The DAO was a good experiment that stress-tested Ethereum's smart contract system,” said Han. “It reminds us that we must use extreme caution when writing and releasing smart contract codes. Fortunately, it happened at an early stage so that Ethereum could still survive.

We have strong faith that with the development and protocol upgrades, Ethereum will become much more strong and secure.”

Hu agrees: “Although The DAO ended in failure, as a trial for decentralized organization, it is still an incredible project. With Ethereum acting as a ‘world computer’ platform, we are expecting abundant usage through its future application.”

Li pointed out that the success of The DAO crowdfunding shows that people are highly interested in the potential of Ethereum and excited about the future of smart contracts and decentralization.

“It was unfortunate that The DAO failed because of the system bug,” he said. “But it won’t affect the operating of smart contracts on Ethereum’s blockchain in the future. We continue to be optimistic about the development of Ethereum and smart contracts and we believe The DAO was just the beginning.”

Since the implementation of the controversial hard fork, Ethereum and Ethereum Classic have diverged even further in terms of protocol development.

For example, the leading proposal to replace the current monetary policy, ECIP-1017 (Ethereum Classic Improvement Proposal 1017), would put a hard cap on the total number of tokens to be issued at around 210 million ETC. It would involve a sort of “tithing,” a 20 percent reward reduction about every two years. As a result, we can expect the supply will level off at around 200 million ETC in a little over 50 years. The first tithing should occur within the year.

The consensus required to activate ECIP-1017 — which requires a hard fork — has not been met quite yet.

“Current holders and investors of ETC should be taken into account when deciding this issue,” said Chunhe Yang, CTO at CHBTC, “as the amount in circulation now is currently around 80 million. It’s reasonable to limit the total amount, however the number being proposed now may be too high.”

Similarly, Ethereum plans to switch from a proof-of-work (POW) to a proof-of-stake (POS) model at some point in the future.

Yang is skeptical about the move, however. Because POW has been tested both by technical experts and by the market for eight years, the stability that POW offers is a key reason why CHBTC supports Ethereum Classic.

“There are not any large scale blockchains operating with POS, therefore the structure and stability are yet to be seen at this level,” he said. “The switch to POS may cause instability in the Ethereum system and cause uncertainty in the ecosystem as there are many unknown factors at this stage.”

Han, on the other hand, is optimistic about Ethereum’s upcoming switch to POS: “We know that there's a high possibility that Ethereum will change its mining scheme from POW to POS. POS is more energy efficient and should bring stronger network safety against 51 percent attacks.”

In the end, however, the Bitbank Group’s members would like to see a cooperative balance of the two chains with two strong communities that can offer benefits to the blockchain ecosystem as a whole.

“We think both platforms will highly benefit Bitbank Group businesses,” said Han. “For Ethereum Classic, since the mining power will gradually move over from Ethereum (because ETH will change to PoS), the network will also become stronger.”

Hu agrees: “ETC exists because its believers insist on decentralization and immutability. We hope that in the future ETC will pave its own path instead of being in the shadow of Ethereum.”

“We are pleased to see that some positive efforts and improvements have been made by the Ethereum community after the DAO event and the price and transaction activity of Ethereum has begun to pick up,” said Li. “, the digital currency exchange of Bitbank Group, has already become the world's largest Ethereum and Ethereum Classic trading market. In the past year we worked with local Ethereum community members to organize educational events. CHBTC plans to continue to inform the public about the technology development of Ethereum and the development of smart contract applications in 2017. We aim to encourage more people to participate in and enjoy the technical achievements of Ethereum in all of its iterations.”