12 December 2017, a hardfork happened in the Bitcoin Network on block 498,888 resulting in a new cryptocurrency called Super Bitco. Three more hardforks of Bitcoin Uranium, Lightning Bitcoin, and Bitcoin God are to happen by the end of the year. According to experts, successful network forks may help the first cryptocurrency in the world to reach its "true" destination.
What is the fork?
The Bitcoin network has gone through a lot of forks since the advent of this cryptocurrency in 2008. These forks were supposed to help developers to solve problems such as scalability, low capacity of TPS (transaction per second), limited block size, and in general to facilitate the Bitcoin network overload. With bitcoin being an open source software, any user on the network can copy, modify, and introduce their own rules in the code. Thus, any user may create new protocols and chains that are considered to be forks, namely soft or hardforks of the network.
Softfork is a reversible change in the blockchain protocol that does not prevent the nodes of a new chain from communicating with the nodes of the old chain. The best softfork example is Segregated Witness or SegWit. Network users have activated this softfork in August in order to optimize the structure of block transactions so that they would occupy less memory space. The softfork allowed for blocks to hold more information without changing the work of the Bitcoin network.
Hardfork is a new network chain that is formed when the new rules become incompatible with the old blockchain protocol. In this case, the nodes of the new and old networks would not be able to "communicate," since hardfork implies changing the consensus mechanism itself. With the help of hardforks, network users try to solve key problems of the Bitcoin network such as low network bandwidth that allows to process up to seven transactions per second and limited block size that, according to many, should hold more than 1 MB of data. Hardforks also allow users to create new cryptocurrencies, as the alternatives to bitcoin.
Past hardforks results
Bitcoin XT is the first Bitcoin network hardfork, which was held in August of 2015. The hardfork, which is based on the source code of Bitcoin Core, was supposed to increase the block size to 8 MB, thereby increasing the network bandwidth up to 24 transactions per second, but cryptocurrency did not gain the necessary support from the mining community. To implement Bitcoin XT it required 75% of all Bitcoin network miners to enter the new network, but only 12% of them supported the hardfork. In this regard, one of the main developers Mike Hearn sold his cryptocurrencies and left the project in 2016. As a result, only 20 nodes were left from the original 4,000 units, which made the network unavailable at that moment.
Bitcoin Unlimited hardfork was launched to change the block size in May 2016, when miners were proposed to choose the size of the future network block. According to miners, expanding the size of the block will not only eliminate the queue but also improve their profitability by increasing the total commission fees in the block. But hardforks critics, most of whom were developers, noted that this strategy could increase the possibility that large centralized pools of miners would begin to manipulate the network development.
This meant that miners with limited hardware capabilities would not be able to participate effectively in the development of the network and in the long run would be completely superseded. Thus, the network would become centralized in several pools. Experts also found several bugs in the Bitcoin Unlimited software, which first in April and then in May of this year led to the downfall of 70% of the nodes in the network, thereby undermining crypto community trust to these forks.
Bitcoin Classic project was launched to address the Bitcoin network scalability problems, which had not been solved by the Bitcoin XT hardfork. The goal of the project was to increase the block size to 2 MB and then to 4 MB. But this hardfork did not gain the necessary support of the crypto community. At the very beginning more than 2,000 nodes took part in the project," but the number dropped to 100 by 2017. In November it was announced that the project was shutting down after SegWit2X had been canceled and developers of the project had openly supported Bitcoin Cash, the new cryptocurrency.
Bitcoin Cash is probably the most famous and successful Bitcoin network hardfork. As a result of a forced hardfork protocol, Bitcoin Cash appeared on the block 478,558 on 1 August. As part of the fork, the block size increased from 1 MB to 8 MB, and this, in turn, increased the network capacity and reduced transaction fees. After hardfork, Bitcoin holders had an equal amount of Bitcoin Cash in their e-wallets. The new network has provided a mechanism that protects from concurrent transactions in two blockchains. Today, 13 December, the Bitcoin Cash exchange rate is $1,616.84 and is currently placed third by the cryptomarket capitalization.
Bitcoin Gold cryptocurrency appeared on 24th of October as a result of hardfork on the block 491,407 carried out by mining firm Lightning ASIC in Hong Kong. The goal of the project is to become a more attractive currency for the non-professional miners than the original bitcoin. In this regard, a greater number of network users can mine Bitcoin Gold and the cryptocurrency motto is "make bitcoin decentralized again." Instead of the old Proof-of-Work protocol hardfork initiators use the new one, Equihash. This algorithm is more sensitive to the size of random access memory (RAM) and is also used when mining cryptocurrency Zcash. Today, 13 December, Bitcoin Gold exchange rate is $276.88 and market capitalization is more than $4.5 billion.
Bitcoin Diamond is the hardfork, which happened at the end of November on the block 495,866. Bitcoin Diamond miners create blocks on a new algorithm of proof of work (PoW). Also, this cryptocurrency differs from the very first one by the ten times increase in volume of emissions and block size of 8 MB. Developers believe that this hardfork is intended to solve such problems as lack of privacy protection, slow transaction confirmation, and high threshold for new participants to enter the network. To create Bitcoin Diamond mining network, e-wallet, nodes code, and API, as well as to add open source code on GitHub is planned by the end of the year.
Super Bitcoin, a new cryptocurrency, appeared on 12 December, as the result of the division in the Bitcoin network on the block 498,888. The Super Bitcoin motto is "make Bitcoin great again." It is noteworthy that instead of the traditional ICO this platform uses a new method of attracting investments, called Initial Fork Offerings (IFO). The hardfork provides the unit increase up to 8 MB. The network uses a technology Lightning Network that will allow conducting an unlimited number of micropayments. Moreover, Super Bitcoin network is running smart contracts. Developers note, however, that the fork is intended to realize the crypto community desires and it is rather an experiment.
Lightning Bitcoin — the network division will presumably happen 23rd of December on the block 499,999. The developers of the new network want to combine the best qualities of bitcoin and ethereum. Thus, the Lightning Network technology will also be used in the new network for carrying out micropayments and the new DPOS (Proof of Delegated Stake) mechanism will be applied for consensus. To increase the unit up to 2 MB, which will increase transaction speed and it is expected that the network will support smart contracts. The network will also have an increased speed of new block creation which will take up to 3 seconds. While hardfork does not support SegWit, it provides protection from repeated transactions. However, it is worth noting that despite the approaching launch date, the project has still to set up a working website.
Bitcoin God hardfork, initiated by the Chinese cryptocurrency investor Chandler Guo, is to happen on the block 501,225, on 25 December. The businessman said that pre-mining would not occur, while the emission volume would amount to 21 million GOD. Several stock exchanges have already confirmed that they will work with the new cryptocurrency, which will be gifted to bitcoin holders at a ratio of one to one.
Bitcoin Platinum was presented as a Bitcoin network hardfork, which was supposed to happen on the block 498,577 and create a new cryptocurrency. However, as Cointelegraph reports, the hardfork is a scam created by a teenager from South Korea, and the currency itself is a full copy of the Bitcoin Cash code.
According to the Pavel Kravchenko, the founder of the blockchain company Distributed Lab, forks give the opportunity to ideological crypto market leaders to realize their ideas into practice. So they can make positive changes in the development of different Bitcoin network protocols, and they don’t have to seek constantly the cryptocurrency support. Moreover, thanks to the forks the need to create a new cryptocurrency from scratch and to find new markets for them eliminates. Thus, more successful technological solutions will appear on the crypto market and the community will be able to select and promote the best of them.
Co-founder of ZenCash, Rob Viglione believes that the forks are the adequate step of blockchain development:
"Open-source ecosystems are designed to evolve, whether that's through in-project improvements or forks in which the entire code base goes in an incompatible direction. Evolution is a messy process, so it doesn't always turn out well, but sometimes that's the only way to have big breakthroughs."
The leading developer of blockchain in Sweetbridge, Bob Summerville believes that the forks are good because they allow members to decide how the network should develop:
“There have been years of fear, uncertainty, and doubt within the Bitcoin community about the ‘risk’ of hard forks. It is apparent to me that most of that noise has been coming from groups that favor coercion and censorship over free markets and the right to secede.
There is no such thing as a ‘bad fork.’ You don't have to cheer one team or the other. Experimentation and competition are good. Let the market decide and participate where you see value.
My most valuable learning experience from the ETH/ETC split was that minority chains are viable. If a crypto community has irreconcilable differences, then you can go your separate ways, and that is just fine. You get a divorce and both move on with your lives, rather than living together in misery forever, constantly arguing.”
But Director of LOOMIA, Saul Lederer has a completely opposite point of view:
“Saturating the market with different versions of Bitcoin is confusing to users and discredits the claim that there are a limited number of Bitcoins—since you can always fork it and double the supply,” notes Lederer. “What's deeply troublesome is that these spin-offs sprung from a relatively minor squabble in the Bitcoin community on how to handle the block size limit. Instead of coming to an agreement, the community, developers, and code are fracturing into different groups.”