'Forks' push cryptocurrency back to its democratized past
It has been several months since bitcoin forked into bitcoin cash and, subsequently, other derivations of the first cryptocurrency have emerged.
Bitcoin cash will fork yet again, gaining larger maximum size for blocks (for faster transaction speed at lower fees) and additional features that allow it to behave more like “smart money.”
The discussion of bitcoin and bitcoin cash, in particular, continues to increase both in primacy (and pain) within the crypto community. For reasons of branding (and, to some degree, ego), many in the bitcoin core and bitcoin cash communities each make their claims to be “real bitcoin.” People who aren’t entirely familiar with how the open-source world works tend to believe the more exaggerated view that this amounts to nothing less than a civil war.
In the end, the point isn’t whether one will “win” over the other, however desirable some amount of certainty might be for some, but the fact that we now live in a world where such choices are open to us. And while forks are often treated as evidence of a failure in engineering or of a community’s cohesion, I argue they are “the system," such as it is, operating in the ways that it ought to.
Here are some reasons why I believe bitcoin forks are necessary—even vital—and why bitcoin cash deserves to have its lineage expressed in its name (rather than take the name “bcash” as some suggest).
In some ways, it’s sad to think about how the bitcoin community’s early dreams of transforming remittances, banking the unbanked or frictionlessly facilitating microtransactions have taken a back seat. At the end of 2017, people were paying a $28 average transaction fee to move even tiny amounts of bitcoin—this from a community that often pointed to Western Union as terribly inefficient.
Bitcoin was supposed to democratize finance but, in practice, began to do exactly the opposite. High network fees, slow confirmation times, complicated fixes and 19th-century workarounds (such as keeping an off-chain “tab”) have made the “peer-to-peer digital cash” described in the Satoshi Nakamoto bitcoin white paper behave as neither “peer-to-peer” nor “cash.” This discourages a lot of people from participating.
Bitcoin has since morphed into a store of value rather than the “digital cash” of its original promise, and we’d be naive to think it wouldn’t stray from its original plan. The largest open-source project ever, Linux, today runs all top 500 of the world’s supercomputers but was originally “just for fun.” Nevertheless, this doesn’t take away from the fact that we still need digital cash.
With bitcoin cash, fees are down relative to bitcoin (nearly 99% lower in one test), transaction confirmation times are where they should be, and it has avoided some of the complicated workarounds. With the new fork of bitcoin cash and its enhanced capabilities, we expect continued improvements.
A visit to the popular bitcoin-related discussion groups online surfaces passionate conversations, many of which center around which is the “one true bitcoin.” The tribalism is akin to those exhibited by political parties or sports teams in that it often transcends reason.
The cryptocurrency industry, even nearly a decade in, is still far too nascent to so quickly sort into viciously doctrinaire camps. In many ways, we get more resistance from each other than those who hold conventional beliefs about “money” that inspired us to do what we do.
As a group, we weren’t satisfied with making the current monetary system better—we wanted to create a whole new one.
In conventional finance, a “fork” in a currency is a bad thing and conveys instability. (Brazil has had seven currencies between 1942 and today.) This is because of the nature of government-led central banking and fiat currency—a tough monetary system to “opt out” of. In the cryptocurrency world, we should welcome forks as an expression of what makes what we’re trying to do different and even groundbreaking.
In evaluating a technology, understanding its lineage is vital. Bitcoin’s characteristics are represented in its basic code. Bitcoin cash takes that code and makes some modifications as to block size, mining difficulty, and so on. Given this, it’s still “bitcoin” in many of the ways that count.
I encourage people who follow the payments industry to be aware of forks in the cryptocurrency space but not to worry about them to the point of distraction. Instead, allow yourself to be part of the new, frictionless future that the cryptocurrency communities are building.