Since its launch in 2009, Bitcoin has experienced numerous forks, leading to the emergence of new cryptocurrencies and variations of the original protocol. As of May 2024, there are over 100 Bitcoin forks available, each with different levels of adoption and success.
These forks have ignited passionate discussions within the cryptocurrency community. Some consider them as drivers for innovation and improvement, while others view them as disruptive elements that threaten the network’s stability and foundational values.
Today, we’ll delve into this duality. We will explore the reasons behind these forks, their achievements, and their implications for Bitcoin’s future.
Notable Bitcoin Forks and Their Consequences
Although the early Bitcoin community was rather fragmented, individuals made notable progress in realizing Satoshi’s vision. However, the first major divide emerged with Bitcoin XT in 2014, which caused a rift in the community but offered critical lessons in governance.
This division arose from developers’ desire to expand the block size from one megabyte to eight megabytes, which some considered excessive. This led to the creation of Bitcoin Classic (now defunct), which proposed 2MB blocks, followed by Bitcoin Unlimited, advocating for massive 16MB blocks.
Nonetheless, the real significant forks came afterward—those whose effects are still palpable today, including:
Bitcoin Cash (BCH)
Bitcoin Cash (BCH) was launched on August 1, 2017, resulting from a hard fork from Bitcoin. The main goal of this fork was to tackle Bitcoin’s scalability challenges, particularly the slow transaction speeds and soaring fees arising from Bitcoin’s 1MB block size constraint.
Advocates of Bitcoin Cash, including prominent figures like Roger Ver, asserted that increasing the block size would permit more transactions per block, thereby lowering fees and accelerating transaction speeds.
After its inception, Bitcoin Cash attracted significant attention and was adopted by various exchanges and merchants, initially enjoying a noteworthy valuation and market capitalization.
Over time, Bitcoin Cash has continued to progress, with continuous development and updates focused on enhancing its functionality and scalability. It has retained a devoted community of supporters who believe in its potential as an electronic cash system for peer-to-peer transactions.
However, it contends with competition from other cryptocurrencies aiming to provide low fees and expedited transaction times. The ongoing debate about scalability and transaction fees continues to shape Bitcoin Cash’s future and development.
Bitcoin SV (BSV)
Bitcoin SV (Satoshi Vision) emerged on November 15, 2018, following a contentious split from Bitcoin Cash.
The fork was motivated by disagreements within the Bitcoin Cash community, mainly concerning further increase in block sizes and the subsequent developmental direction. The initiative was led by Craig Wright and Calvin Ayre, who sought to restore what they believed to be Satoshi Nakamoto’s original vision for Bitcoin.
Bitcoin SV dramatically raised the block size limit, initially to 128MB and later to 2GB, facilitating a much larger volume of transactions. BSV proponents argue that this increase is essential for the network to handle enterprise-level applications and significant transaction throughput.
This notable escalation in block size has, however, raised concerns regarding centralization, since operating a full node becomes increasingly resource-intensive.
Bitcoin SV remains a polarizing fork within the broader Bitcoin and cryptocurrency ecosystem. Its emphasis on large block sizes and high transaction capacities distinguishes it among major cryptocurrencies, yet it still faces hurdles in gaining widespread acceptance, having been removed from Coinbase in 2023.
Bitcoin Gold (BTG)
Bitcoin Gold was launched on October 24, 2017, with the objective of decentralizing Bitcoin mining. It accomplished this by changing the mining algorithm from Bitcoin’s SHA-256 to Equihash, which is less vulnerable to ASIC mining.
The goal of this alteration was to enable a greater number of users to mine BTG using standard GPUs, diminishing the prevalence of large mining farms and genuinely democratizing the currency.
By employing the Equihash algorithm, Bitcoin Gold is engineered to be memory-intensive and resistant to ASIC mining equipment. This divergence aims to enhance mining accessibility for individual miners.
Bitcoin Gold experienced initial enthusiasm and became available on several exchanges. However, it encountered security issues, most notably a significant 51% attack in 2018 that resulted in $70,000 in double spends.
Currently, Bitcoin Gold remains a minor player in the cryptocurrency market. Its commitment to decentralizing mining is its primary distinguishing characteristic, even as it struggles to achieve the same level of adoption and market visibility as Bitcoin Cash and Bitcoin SV.
The Reasons Behind Bitcoin Forks
Bitcoin forks occur for a multitude of reasons, influenced by a combination of ideological, technical, and economic factors.
A primary catalyst for Bitcoin forks stems from the necessity to resolve scalability challenges. As Bitcoin grew in popularity, the network began to struggle with a rising number of transactions, resulting in longer confirmation times and heightened fees.
Forks have been initiated to incorporate technical enhancements or new features into the Bitcoin protocol. These may encompass adjustments to the consensus mechanism, improved privacy functionalities, or the introduction of smart contract capabilities.
At times, personal motivations—such as power struggles, ideological differences, or financial interests—have played a role in the creation of Bitcoin forks. For instance, if you examine the historical volatility of forks like Bitcoin SV and Bitcoin Cash, you’ll find that some individuals have viewed them as investment opportunities.
For example, Bitcoin Cash, which separated from Bitcoin in August 2017, experienced its price soar to roughly $4,355 in December 2017, only to stabilize and trade between $200 and $500 in the years that followed.
How These Significant Forks Have Influenced Bitcoin
Besides the evident challenges posed to the original BTC, major forks have imparted both tangible and intangible influences on the cryptocurrency community at large. To be clear, none of these forks have proven to be effective solutions for cash flow issues, but their impact is substantial nonetheless.
Market Fluctuations
Bitcoin forks often exacerbate market volatility. For instance, the Bitcoin Cash (BCH) fork in August 2017 resulted in significant price swings for both Bitcoin and the newly minted Bitcoin Cash. Leading up to the fork, Bitcoin’s price was around $2,800, but it dipped to $2,700 immediately post-fork. Conversely, Bitcoin Cash began trading at about $555.
Similarly, Bitcoin SV (BSV), which branched off from Bitcoin Cash in 2018, has experienced dramatic price fluctuations. In January 2020, BSV peaked at approximately $441.20, but by June 2024, its value plummeted to around $63. These price swings are frequently influenced by investor speculation and market manipulation, with some players viewing these forks as chances for monetary gain.
Network Scalability and Development
Forks have also stimulated notable debates and advancements concerning Bitcoin’s scalability.
The initial Bitcoin network grapples with constraints, such as a one-megabyte block size and a ten-minute block generation interval, which limit its transaction throughput. As previously stated, these limitations led to the creation of Bitcoin Cash, which raised the block size to 8MB to accommodate more transactions per block.
The forks underscored the necessity for scalability measures, propelling various initiatives and protocols aimed at boosting Bitcoin’s transaction capacity. A key example is the Lightning Network, a layer-two solution that facilitates faster and less expensive transactions through the establishment of off-chain payment channels.
Security Issues
Some forks have introduced security vulnerabilities. For example, the diminished hash rate and interest in Bitcoin SV have rendered it more vulnerable to 51% attacks, where a malicious party could monopolize the majority of the network’s mining power, thus jeopardizing its security.
This unfortunate reality has heightened concerns about the long-term sustainability and security of certain Bitcoin forks. What is the point of further forking if organized malicious entities can seize control so effortlessly?
In Conclusion
As the cryptocurrency landscape matures and becomes more entwined with traditional financial systems, the influence of Bitcoin forks on the broader economy cannot be overlooked. The outcomes of these forks will affect not just individual investors’ and businesses’ fortunes but could also impact the stability and security of global financial frameworks.
Ultimately, the trajectory of Bitcoin and its forks hinges on the community’s capacity to find common ground and strive towards a unified vision of a decentralized, inclusive, and resilient financial system.
This is a guest post by Kiara Taylor. The views expressed here are solely their own and do not necessarily represent those of BTC Inc or Bitcoin Magazine.
