Oct 30, 2017
So many Bitcoin Forks — Is this dangerous or good? — Transcript
Below is a full transcript of the video.
Welcome to the short video,
My name is Julian Hosp, one of the co-founders at TenX
Lately I’ve received a lot of press requests, a lot of friends and people in the entire ecosystem have reached out to ask what do I think about all these Bitcoin forks. It started with Bitcoin Cash in the summer, now we have Bitcoin Gold and 2X coming up. There are talks about a fork literally every other day.
People want to know if this is dangerous or if it is good, and my opinions on it.
Before I delve into that, let me point out why all these forks are happening. This will allows us to understand if they are beneficial or detrimental to the ecosystem. Forks occur for different reasons, that fall mainly into three large groups.
The first reason is that instead of creating an Altcoin or token yourself out of the blue, you can fork off some reputation. Bitcoin Cash, for example, would not have been as exciting if it was just going to be called XYZCash. But because it is called Bitcoin Cash, there is hype for it, and search engine optimisation is increased. Reputation is very very powerful. Instead of creating something new, fork it, fork the code, fork the blockchain, fork a little bit of the reputation.
The second reason that forks occur is political. Taking Bitcoin as an example, the Core development team is a very strong team, a very tight group. It’s very hard for a developer not part of the group to become part of the group. Even if you are a really talented developer, it takes years before you are accepted as a Bitcoin Core developer. This leads to a political power struggle, because if you want to have any degree of influence over the direction of the development of Bitcoin, it is very hard to achieve this on the original chain, the regular Segwit Chain. By forking, you can implement your own ideas as a developer. Imagine Segwit2X or Bitcoin Gold became the main chain. The developers of that chain would be the main developers. They would be the ones who are in charge, and the people working with them, they would hold a certain degree of influence over this technology. On one hand, it is a reputational thing, and on the other, it is a power struggle.
The last reason is economic. Bitcoin has its advantages and disadvantages, in particular its Proof of Work mining mechanism. It benefits Bitmain, the main producer of ASIC miners. Mining can and has become quite centralised. It is very hard for GPUs to mine the “traditional” Bitcoin. The economics behind forking and changing the algorithm allows other companies, other parties to profit.
When we explain why all these forks are happening, we need to consider the short term and long term implications. Personally, I believe that it is beneficial in both the short and long term. This might surprise you, because you might be annoyed with all these forks. You now have to consider so many other variables, for example replay protection. However, in the short run, this also means having a free coin for you. Since most miners are short term orientated, they will follow the money. They will mine whichever coin is profitable. This means that initially, they will mine the new coin, and if it stays, like Bitcoin Cash, then it benefits everyone. If it doesn’t work out, and you manage to sell the forked coin, then you made some free money. Eventually, the money will flow back to the original chain.
Now, let’s consider the long run. We get a lot of questions like “What does this mean for the blockchain?”, “Is this actually scalable?” and “Is this okay for the masses that such attacks keep occuring?” If you listen to any great story or watch any great movie, the hero always has to undergo challenges. The hero will not become the hero until he has successfully faced certain challenges. That is what is happening right now. If we want Bitcoin to be a globally recognised currency, it has to undergo all of these challenges. It has to undergo technical, regulatory and communal challenges. What is happening right now, is the only way that cryptocurrencies will be accepted by the world, by the masses.
While these forks may be annoying, in the long run, it is essential in leading to the inevitable mass adoption of cryptocurrencies. So, don’t get too annoyed, be happy about the free coins that you are getting, be careful to not be the victim of replay attacks- we make some separate videos that address that specifically.
We do general videos related to cryptocurrencies, and some specific to TenX, obviously, since you are in the TenX channel. If you want to have more of this, please subscribe to our TenX channel, join our Riot community, Facebook and Twitter links are at the bottom.
Let me know your opinion on these forks. Are they a pain in the butt, or are you happy about them
Let me know in the comments below, and I’ll see you in a couple of days at the next video
Thank you so much,
Yours Truly,
Julian
