Is a hard fork the answer for the bitcoin blockchain?
In previous stories, Blockchain Tech News looked at two potential forks for the blockchain: Bitcoin Gold and SegWit2x. Bitcoin Gold went on to create its own alternative to bitcoin, only to suffer a major setback due to a wallet hack that cost users $3.3 million.
The launch of SegWit2x, on the other hand, was halted by its creator due to a major outcry against it by the bitcoin community. With these examples in mind, one has to wonder whether a hard fork would be a good thing or not for bitcoin. Here are the pros and cons.
First of all, a hard fork can help solve significant problems with bitcoin, such as the block size scenario. Due to the current small size of blocks, it can take anywhere from one to six hours to confirm a bitcoin transaction.
This interval can vary enormously over the course of a single week, as seen in the one-week graph below from blockchain.info, which shows transaction times ranging from less than one hour to a peak of more than seven hours:
A hard fork can help solve this issue by simply moving users to a protocol with a larger block size.
In addition, forks can help restore bitcoin to its intended decentralized, individualist spirit. Bitcoin Gold attempted to address the problem of the overcentralization of bitcoin miners by switching the proof-of-work algorithm from SHA256 to Equihas, paving the way for new miners.
"The purpose of Bitcoin Gold is to make bitcoin mining decentralized again. Satoshi Nakamoto’s idealistic vision of 'one CPU, one vote' has been superseded by a reality where the manufacture and distribution of mining equipment has become dominated by a very small number of entities," the Bitcoin Gold website explains.
Of course, all that glitters is not Bitcoin Gold. Here are the arguments against a hard fork.
Firstly, a hard fork can erode overall public confidence in bitcoin and blockchain technology. Many industries such as banking are quite frightened of change, so imagine how wary they would be of bitcoin if it went through change after change within a short time period.
"While occasional forks due to deep philosophical differences are inevitable, habitual forks damage the network effect of any blockchain and undermine security and faith in the system," Bharath Rao, CEO of Leverj, said in an email.
A second issue with a hard fork is that it can fracture the bitcoin community. If one segment within the community opposes the most recent fork, they might create their own alternative to bitcoin, which would lead to further fragmentation and lack of confidence in the cryptocurrency — and by extension, other virtual currencies, as well.
At some point, a hard fork will likely become inevitable, as the block size issue becomes more and more pressing, or if some new major issue arises, such as a major vulnerability.
When such a fork occurs, it is likely rebellious users will create their own alternative or even attempt to sabotage the new fork. There is no scenario that will make everyone happy.
That being said, it is not to bitcoin's benefit to go through constant changes or forks. It is difficult enough to explain bitcoin and the blockchain to outsiders. Imagine trying to tell an investor why they should mess with these technologies when they have been broken apart by constant contentious forks.
Image via Istock.com.
Bradley Cooper is a Technology Editor for DigitalSignageToday.com. His background is in information technology, advertising, and writing.www