Chainmerger: Could BTC And BCH Ever Become One Again?
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Hard forks litter cryptocurrency. Not all are destructive, but those that make the news are the community disagreements that create irrecoverable splits. Ethereum (ETH) and Ethereum Classic (ETC); Bitcoin (BTC) and Bitcoin Cash (BCH); Litecoin (LTC) and Litecoin Cash (which promptly failed): they may all have shared histories but for all intense and purposes they become separate networks no longer compatible with one another.
The idea of combining two platforms together was until recently unthinkable. Now the question of a ‘chainmerger’ is beginning to attract serious attention from high-profile developers and cryptocurrency projects.
Vlad Zamfir, a lead developer at the Ethereum Foundation currently working on the Casper protocol, proposed the question of whether chain merging was a possibility in a tweet early last week. This sparked off an intense debate on the social media platform. Ethereum co-founder Vitalik Buterin responded that although it was “not an insurmountable” problem, it would be highly complicated.
“Communities *can’t credibly commit* to merging in,” Buterin tweeted. “One part of a community could be excited about a merger and push it through, and the other part could strategically be silent until it happens, get merge-coins, but keep supporting the original chain.”
“It’s basically the complexities of corporate mergers and acquisitions times ten,” he added.
So is a chainmerger possible?
For two separate blockchains to merge together there would have to fork into one another. The actual mechanics of this are reportedly straightforward, prima facie. Both networks would fork at a certain block length and merge their transaction histories together; recognizing and legitimizing both simultaneously.
However, this is where the difficulties begin. Both sets of tokens would need to be merged together in such a way so as not to dilute their value – by increasing the hard cap – but respecting individual holdings. Even in networks that were originally one, like Bitcoin and Bitcoin Cash, both sets of communities would have to agree how the total token supply would be equitably distributed without comprising the 21m token hard cap.
There would also have to practically be unanimous consensus from both communities. Considering the strong rivalry between some communities (for instance ETH and ETC) this would be a Herculean feat in of itself.
Even if general consensus was reached, a small segment could stay on the original fork while still being able to claim the newly minted tokens. This would drastically dilute value and compromise the newly merged network altogether. “It could probably only happen between two communities that highly trust each other where the cores of both are internally united”, Buterin said.
To throw an additional rusty spanner in the works, the chainmergers so far been discussed apply to legacy blockchains. Whether platforms using different architecture, like Nano’s (NANO) block-lattice, or IOTA’s (MIOTA) Directed Acyclic Graph (DAG) structure could also be combined with other blockchains is currently unknown.
Are there any benefits to a chainmerger?
Even if almost impossible to perform, a chainmerger would have its advantages nonetheless. Certain chainmergers between two distinct platforms could create a more comprehensive network. As Zcash’s (ZEC) head developer, Zooko Wilcox O’Hearn pointed out, an Ethereum-Zcash chainmerger could create a smart contract ready protocol with a viable encryption method. Rather than competing, such a merger could benefit both communities.
At Crypto 2018 @VitalikButerin used “ETH❤ZEC” as the hypothetical example, which pleased me. His conclusion was it won't happen because it would result in 3 chains, not 1. My conclusion is: that's fine! See also https://t.co/4gqoS0B3cJ
— zooko (@zooko) September 23, 2018
It could also lead to an amicable consolidation of networks that practically offer the same services without turning into a zero-sum game. A chainmerger could see two communities potentially benefit from each other’s development to create a stronger project; the additional benefit being one side wouldn’t lose the total value of their holdings.
There is, for example, a significant overlap between Bitcoin and Litecoin. Neither project is in danger of collapsing to zero, but both are peer-to-peer cryptocurrencies using the same hashing algorithm and implementations, such as SegWit. Both platforms have a combined market value at press time of nearly $118bn. If a chainmerger could be brokered, it could potentially stop a multi-billion dollar loss for either one of the projects should they turn into direct competitors.
The CEO of Tron (TRX), Justin Sun, took to Twitter today to try and convince developers to defect, promising a far better user experience than Ethereum. Cryptocurrency is riven with unhelpful rivalries; fortunately, the technology is new. Though perhaps not possible at this time, a chainmerger might address rivalries that currently impair development and consensus-building.
By diminishing the possibility of complete failure, they could turn out to be in the best interests of investors too.
The last couple of years have been a period of hard forks; we may now be entering the era of the hard spoon. But would Justin or Vitalik be the little one?
The author is invested in BTC and ETH, which are mentioned in this article.