Does anybody remember 2013, when Bitcoin developers introduced, and then rolled, back a buggy hard fork? It was the beginning of a chapter in cryptocurrency history that will be remembered as the era of forks and altcoins.
The world did not end: developers were willing to scrap the update rather than force the Bitcoin community to support a buggy blockchain. The miners were perfectly willing to back the developer team and so were ordinary Bitcoin users who didn’t want to use a faulty system.
What has changed about the Bitcoin community that suddenly we seem to have two camps of Bitcoin users? One camp is pushing for bigger blocks and touts mining centralization as their chief reasoning – their goal is to avoid the cloning of the centralized financial system and its abusive power structure.
We are approaching a situation in which there will be two branches of Bitcoin. One branch of Bitcoin will use Segregated Witness and at least double the capacity of each block in the chain. The other will, for now, rely on Segregated Witness without technically increasing block size.
Which version of Bitcoin is going to win out in the end, and will Bitcoin as a concept (and a supposedly unified community) even survive the conflict?
Forks And Altcoins Are Nothing New
The development team might have handled the failed 2013 fork well, but members of the Core development team began opposing increased block sizes at around the same time. They didn’t want to admit that small block sizes might cause severe transaction backlogs and skyrocketing transaction fees. One does wonder whether they had a stake in limiting block sizes to 1MB, because they were perfectly willing to let the argument fester until it reached the current epic battle that has been referred to as a “Bitcoin Civil War”.
An initial meeting in China resulted in a tentative compromise – Segwit would be added and block size was slated to increase to 2MB – but this led to an impasse between the 40% of miners who signaled for Segwit and 40% of miners who signaled for increased block sizes.[i] In an attempt to resolve the matter, a group of miners and business leaders met in New York to come up with the New York Agreement[ii] – essentially the same thing, but with more solid backing. This agreement also saw the rise of Segwit2x, the second version of Segwit.
However, Bitcoin Core developers contend they were never consulted in this agreement, remain adamantly opposed to Segwit2x, and do not intend to upgrade to the new version of Bitcoin. This is likely to cause yet another fork in the system. What remains unclear is whether there will be two versions of Bitcoin (BTC and BCH) or three after the deadline in November.
Rebranded Forks Have Yet To Lower Bitcoin Value
When Bitcoin Cash forked off of Bitcoin, did it cause the value of Bitcoin to drop? Actually, it didn’t seem to affect Bitcoin’s upward movement very much. Level heads in the Bitcoin community got some free money and maybe spent it on Yours if they didn’t promptly dump their Bitcoin Cash. If it caused any confusion at all, it mostly had to do with people trying to dump their Bitcoin Cash on ShapeShift[iii] and forgetting to choose Bitcoin Cash instead of Bitcoin.
Forks and altcoins also seem somewhat intertwined – the infusion of Bitcoin Cash may have helped fuel the rapid growth in market cap of Litecoin, DASH, and others immediately following the fork.
Of course, the number of Bitcoin-whatevers could be confusing to a newcomer. There’s Bitcoin Cash, Bitcoin Dark, and the upcoming Bitcoin Gold[iv]. Will the real Bitcoin please stand up?
This may mean being patient with the new Bitcointalk members who ask questions with answers that seem obvious to many. Educational efforts help us strengthen the community, not to mention boost Bitcoin’s value. The entire ecosystem is better off when newcomers aren’t getting taken for a ride just because things are a tad confusing for them.
What remains unclear is the true intent of either camp, and as everyday users and enthusiasts, we must keep a watchful eye on both. Forks and altcoins are an inevitability – but profiting from either, is not.