Bitcoin forks became a big thing in the past year. Thankfully, the trend seems to have died off as of late, but we are still left with several “bitcoin” forks. What is out there now, and which of them are worth paying attention to?
So far, we have Bitcoin Cash, Bitcoin Diamond, SegWit2x, Bitcoin Gold, Bitcoin Private and LiteBitcoin. Of course, there is also the original chain, Bitcoin (Core). There are a few others, but they aren’t significant.
First a bit of explanation on what a fork is, and how it differs from an altcoin. An altcoin is a brand-new cryptocurrency with its own blockchain. It may or may not use significant pieces or the majority of Bitcoin’s open-source code. A fork on the other hand is a split of the Bitcoin blockchain.
Blockchains are maintained by miners. There are certain rules that must be followed in order for transactions to be accepted. In Bitcoin, this includes a limit on blocksize. If a group of miners disagree with that limit, or any other consensus rule, they can apply their own rules and start accepting transactions that follow a different set of rules.
The blockchain will then have two different versions, the one with the old rules and the one with the new rules. Both will have a shared history up until the moment that the fork occurs and balances will be copied over. That means if you owned 1BTC before Bitcoin Gold’s hard fork on October 24th, you should also have 1BTG (Bitcoin Gold). You’ll simply need to import your private keys into a bitcoin gold wallet (make sure you find a reputable one, fake wallets have been using this phenomenon to convince people to give up their private keys).
In most people’s perspective, the blockchain that has the most remaining miners is the one that is the “true” bitcoin. “The longest chain wins” has long been a phrase used to describe how miners solve the issue of malicious miners, but it can be applied to forks as well.
But unlike malicious fake blockchains, forks continue for as long as people keep maintaining those blockchains. Both the new blockchain and the original blockchain will continue to be mined and their respective coins used by the people who believe in those consensus rules. These fork coins will technically exist forever, or at least until no one is maintaining their blockchains.
Altcoins, on the other hand, are completely new cryptocurrencies. As mentioned, they have completely original blockchains.
While I suspect most of these forks were quick cash grabs of people trying to double their amount of coins and then quick selling the newly created ones, or worse, making fake wallets that encourage people to give up their private keys, they are here to stay nonetheless.
But none of them, besides Bitcoin Cash, are worth your time. Outside of getting coins you already own due to previous bitcoin ownership and then immediately dumping them, there are only two contenders for the bitcoin crown.
Bitcoin (Core) and Bitcoin Cash are the only two that stand any chance of having a long-term future. It isn’t because of a feature that makes Bitcoin Cash better than Bitcoin Gold, or Bitcoin Core better than Bitcoin Diamond. It is easy to increase the blocksize. It is easy to claim fast transaction speeds when few are using your coin.
What makes Bitcoin Core so difficult to overcome isn’t its usability, but its head start. Bitcoin has been around since 2009. It has been making headlines for years. Everyone knows its name. More people are using it than any other cryptocurrency. The large number of users creates a large number of advocates, which in turn brings in more users. This is called the Network effect. And Bitcoin (Core) has a massive head start on everyone.
But that isn’t to say the Network effect is insurmountable. If that were the case, we would all still be using Netscape Navigator to access our Hotmail accounts. So, Bitcoin isn’t invincible. It will just take a lot to knock it off its perch.
If I were a betting man, and I am, then I wouldn’t put money on any fork, including Bitcoin Cash, to overtake Bitcoin. But if I had to pick one, it would be Bitcoin Cash. That is because, compared to the other forks, it already has a significant network effect. Roger Ver is well known in the crypto community, the main stream media and was once known as “Bitcoin Jesus”. He owns Bitcoin.com and a Bitcoin Cash fan (or Ver himself if rumors are to be believed) owns the @bitcoin account on Twitter.
Bitcoin Cash also has a larger developer community than the other forks, more merchant adoption, more services and more wallets. If the Lightening Network fails and Bitcoin Core never scales, then Bitcoin Cash is waiting right there to pick up the pieces.
I covered in a previous article why I think Ver is hurting the cryptocurrency community with his efforts to hijack the Bitcoin name, but that doesn’t change the fact that Bitcoin Cash is, by far, the second most popular and valuable version of Bitcoin, after Core.
And since all the other forks, apart from Gold, are also primarily focused on increasing the blocksize, there aren’t any conceivable reasons another fork will leapfrog Cash.
LiteBitcoin and SegWit2x have 24 hour transaction volumes measured in the thousands. Bitcoin Diamond and Bitcoin Private are in the low millions. Bitcoin Gold is in the tens of millions.
Bitcoin Cash is around 1 billion USD tx in a day (Bitcoin Core is around 7 billion). That is a massive gap. It would take a Bitcoin Cash failure on a massive scale for any of the other forks to catch it.
All that isn’t to say that if Bitcoin Core fails, Bitcoin Cash will automatically take over. Just that it is by far the most likely candidate among the bitcoin forks. There are still traditional altcoins to consider. Ethereum, Litecoin, Monero, Dash and even Verge after the PornHub news, all have a good chance at taking the mantle of the world’s most popular cryptocurrency, should Bitcoin Core fail.
I contacted Chris Horlacher, CEO and President of Equibit and asked him if he thought any bitcoin forks outside of bitcoin cash had any chance.
“These forks provide no new functionality from a user’s perspective and simply ‘tweak’ some of Bitcoin’s settings in order to cater to particular interest groups within the community.”
Horlacher went on to say that the effectiveness of those tweaks will be borne out in time. But I actually disagree with that. Most of them will likely never get the chance. They need a much stronger network effect before any of their features are tested at scale. Bitcoin Cash is large enough to test out its features and despite its megalomaniac leader, that gives it the next best chance, after Bitcoin itself.
But Horlacher is correct in the first part of the quote he gave me. Bitcoin forks are intended to cater to different interest groups within the community. And there are few people who have more gravity in the Bitcoin space than Roger Ver.
In the Bitcoin Civil War, there are only two major players: Bitcoin and Bitcoin Cash. Don’t waste your time betting on the minor players. Regardless of the questionable actions of Ver and his attempts to hijack bitcoin’s name, Bitcoin Cash is the only other fork with a chance.