Bitcoin rose from below $6,000 to more than $13,000 today in less than one month and a half but is expecting more forks. At least three this month and more to come in 2018.
We already talked about Bitcoin God, coming this December 25, but the latest announcement includes plans to launch Super Bitcoin on December 15 that is merely “experimenting” ideas from the community and Bitcoin Platinum on December 23 to “make Bitcoin decentralized again.”
There is more; Bitcoin Uranium will fork on December 31 to “make Bitcoin great again” — BUM!, Bitcoin Cash Plus on January 2 to restore the “original function of Bitcoin as a peer-to-peer system”, and Bitcoin Silver already forked on November. Many wonders why all these forms of Bitcoin?
Forks can play a key role in the continued development of cryptocurrencies according to a Karthik Iyer, India’s ambassador to the P2P Foundation, the organization which hosted a 2009 paper that outlined Satoshi Nakamoto’s vision for Bitcoin, in an interview with Inverse. He was speaking on November 15 after the fork of Bitcoin Cash and Bitcoin Gold.
“These different forks will have a life of their own, they will compete. A thousand flowers will bloom, and whichever system is efficient…I think it will take over”.
He likened the fork situation to an Android operating system where smartphone manufacturers. It can produce their own take on the OS and if they have features that are well received. Thus these features might be implemented in the core edition.
But not everyone agrees especially when there are many forks. Just when do forks become dangerous?
All these recent forks claim to want to solve centralization problem. Besides slow nature of mother Bitcoin just like other forks Bitcoin Cash and Bitcoin Gold and Bitcoin Diamond. None of the upcoming projects (including Bitcoin Silver) prove to have the technology to solve these problems according to an opinion by Rachel McIntosh.
Indeed, according to McIntosh, the many benefits of being part of the booming Bitcoin BTC ecosystem may be a major attraction. Infact for most of the folks initiating these forks instead of starting as an entirely new cryptocurrency. Probably people have realized that you do not need to start a completely new cryptocurrency. However, the value starts at less than $1.000 mostly. For instance, forks created out of Bitcoin have a huge advantage when it comes to their initial valuation.
Some people feel that the increase in the number of forks. And scams around forks could destroy or negatively affect Bitcoin ecosystem.
For instance, he cites Bitcoin Silver (BTCS) that says it wants to make cryptocurrency accessible to the rest of the world and has experts including blockchain developers — and others — from all over the world. But none of the identities of the people in the supposed team BTCS are yet to found. The project has a white paper but lacks actual technical details of the development and its upcoming ICO is suspicious.
But the many forks are not on well-time according to McIntosh. Although ICOs did great throughout the year, the performance is decreasing. Only 69 of 169 ICOs held in October reached their goals as others quit, extended or postponed their ICOs.
Besides, many countries around the world “intend” to regulate and/or tax or even ban cryptocurrencies.
When a fork releases, the automatic wide circulation artificially pumps up the value of the coin. Although there is a waiting period before the new currency is withdraw. But the pump is following a correction when the coin goes for trading in the exchange markets. Holders dump the coin to reap from free coins.
The price then drops significantly and opportunistic buyers might scoop up as many tokens as possible. This could lead to centralization problems (if a few people buy most of the coins of the project). Bitcoin Cash, which was forked on August Day 1, is rumored to have fallen into that trap.
Bitcoin Cash, which rose to a value of $2,000 in one weekend (November 11-12). Tumbled although it has since recovered and is worth almost $1,400.
A few weeks ago after the creation of Bitcoin Gold, it was found that the official wallet code at GitHub had two files of unknown origin (possibly changed by someone). BTG creators told users to treat the files as malicious. Bitcoin BTC holders seeking BTG tokens were targeting and steals their coins. Since via MyBTGwallet.com that prompted them to enter their private keys and the software replaced them with their own.
While BTG does not seem to actively exhibit malicious behavior except the above. It looks like there is a good reason to worry about a fork. Thus, it is possible that someone can create a fork just for the purpose of stealing your BTC coins. For a BTC coin holder wishing to get a share, for instance, getting tokens in the newly created project will require your private keys and things could get messy.
It is recommended to move your BTC coins to a new address before attempting to retrieve newly-forked coins, according to the Bitcoin Core developer Gavin Andresen.
Another issue is that forks may be quickly constituting and lack capacity to handle a large amount of token. For instance when development teams and leadership is poorly constitutes. Bitcoin Cash is criticizing for lack of ‘replay protection’ which could lead to duplicate transactions on the BTC and BTG networks and lack of big names as advisors.
Poor organization can also be possible in the many forks according to McIntosh. Bitcoin Diamond — which forked on November 24, for instance, has no real names on its creators’ list other than team “007 and Evey” and there is no white paper so no technical details for it. Even if the coins are worth $41 on CoinMarketCap, it might be hard to know or estimate the real future markets or demand or even how it should be governing. In fact, some exchanges like Poloniex and Bittrex play safe by listing only vetted coins.