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Are Bitcoin forks advancing progress or threatening stability?

Are Bitcoin forks advancing progress or threatening stability?

The following is a guest post from Shane Neagle, Editor In Chief from The Tokenist.

Bitcoin pushed the financial innovation envelope in many directions. As a distributed digital ledger, it opened up space for transparency and offered a viable alternative to banking. Relying on its proof-of-work algorithm, Bitcoin established digital scarcity. Digital but still anchored to the physical world of hardware assets and energy requirements.

All this while being open-source. And Bitcoin’s open-source nature birthed over a hundred hard forks. These are ledgers governed under different rulesets, so much so that they are incompatible with previous blocks, resulting in a new blockchain version. 

When a new hard fork is created, propelled by different visions of P2P money and incentives, a new version of Bitcoin is born. By market cap, the largest ones are Bitcoin Cash (BCH), Bitcoin SV (BSV), Bitcoin XT (BTCXT) and Bitcoin Gold (BTG). Although none of them come even close to the massive Bitcoin (BTC) market cap of $1.47 trillion, they have injected many ideas that are relevant to Bitcoin’s future.

What Are Bitcoin Forks All About? 

From the very onset of Bitcoin mainnet launch in January 2009, with the first mined genesis block, it became apparent that changes will have to take place to make Bitcoin A Peer-to-Peer Electronic Cash System as Satoshi Nakamoto originally intended.

For that kind of vision to work in the world of near-instant online payments, Bitcoin’s network would have to perform on par with Visa or Mastercard networks. The problem is, those networks rely on centralized databases (ledgers), such as VisaNet, emphasizing efficiency in transaction processing above all else. 

After all, as a money intermediary between banks, Visa is not concerned with any kind of financial sovereignty, in contrast to Bitcoin’s vision.

But how would that be possible with a decentralized computer network? To remain so, each transaction has to be verified by other nodes to arrive at the proof-of-work consensus. Bitcoin’s current performance is around 7 transactions per second, as it takes 10 minutes to confirm each block stuffed with transactions (3,347 transactions per block at present).

There are several implications of this approach to ledger management:

  • With the increase in transactions, Bitcoin transaction fees go up. Bitcoin miners inject this friction because they get to set the new level of fee priority in the available Bitcoin mempool space, as the demand for the…

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