Over 2017 Bitcoin has seen six major forks, the latest of them, Super Bitcoin, launched on December 2017, with three more hard forks, Bitcoin Uranium, Lightning Bitcoin, and Bitcoin God, on the way before the end of the year. The first cryptocurrency itself was going to split into two tokens via the SegWit2x hard fork that was due on November 25th, but was canceled. Some investors and experts remain skeptical about these developments, while the other think that the hard forks are the future of cryptocurrencies that preserves the original vision of Satoshi Nakamoto.

What does the Bitcoin hard fork mean for the average investors and how will this help propel the crypto revolution? Let’s take a closer look.

Background

Bitcoin has been around since 2009, and has seen many forks over that time. The main goal of the developers was to solve the issues with scalability, transaction speed, limited block size and Bitcoin network load.

Bitcoin is essentially an open-source software, so technically any user can copy, edit and create new chunks of the code and establish new protocols and sidechains that can be either soft forks or hard forks of the original network.

The best known example of a soft work is the Segregated Witness (SegWit) protocol activated in August 2017 to optimize the structure of a transaction block. A hard fork is a new chain in the network governed by its own rules incompatible with the original Bitcoin blockchain. Hard forks aim at resolving the most urgent problems in the Bitcoin network such as low scalability, low transaction speed (max 7 transactions per second) and small block size. Developers can also create new altcoins by hard forking from the original Bitcoin blockchain.

The first Bitcoin hard fork, Bitcoin XT, took place in August 2015. Its goal was to increase the block size to 8Mb to increase transaction speed to 24 transactions per second, however, it was not supported by the miners and by 2016 was rendered effectively inoperable. Two other hard forks projects started in 2015, Bitcoin Unlimited and Bitcoin Classic, were all but closed by November 2017.

Benefits

Many experts think that the abundance of Bitcoin forks is actually good for the original cryptocurrency and for the blockchain technology. According to Nathan Bauerle, the director of research at Coindesk, if the splits don’t kill Bitcoin, they make it stronger. Bitcoin is antifragile: the more forks it survives, the more reputable it becomes. There is also a number of other advantages savvy investors and crypto community can exploit.

Hard forks actually increase the overall market cap. Although it may be hard to grasp in a traditional sense of the word, during a hard fork the blockchain is not actually “split”, but “cloned”. The assets are not cut in two, but multiplied. Therefore, a hard fork does not impact the Bitcoin market value, as we have seen with Bitcoin Gold and Bitcoin Cash.

Hard forks like altcoins boost the value of Bitcoin. The first successful Bitcoin fork, Litecoin, was initially marketed as a direct competitor to Bitcoin, however, not only did it kill the original cryptocurrency, but it helped boost the demand for Bitcoin by joining forces with other altcoins to create a cryptocurrency ecosystem as we know it. The majority of cryptocurrency exchanges pair altcoins with BTC. Most of ICOs use Ethereum-based tokens, and this also helps boost Bitcoin, because Ethereum is paired with BTC on most exchanges. There is little evidence to suppose that hard forks will be any different.

Hard forks are a true expression of decentralization. If you support open source and decentralization, you should support forks too, otherwise it would contradict the values of decentralized democracy. When Bitcoin becomes a monolithic entity, it will inevitably lose its original purpose.

Hard forks provide a healthy competition for Bitcoin developers. There is always a risk that a new coin may become more popular than the original. The emergence of hard forks drives Bitcoin protocol developers to stay on the cutting edge and move forward as new technologies arise.

Hard forks in 2017

Bitcoin Cash – probably the better-known and the most successful Bitcoin hard fork which emerged on August 1. Its main feature is the increased size of the block (8Mb) that allows for more transactions per second and serves to cut transaction commissions. As of December 19, Bitcoin Cash was the third cryptocurrency by market cap, with 1 BCC worth $2,364.84.

Bitcoin Gold – Bitcoin Gold hard fork was initiated by Lightning ASIC of Hong Kong on October 24 with the goal to become more accessible for newcomer miners than the original Bitcoin. The motto of the new cryptocurrency is Make Bitcoin Decentralized Again. Its current rate is $331,04, and it sits on the 12th place by market cap.

Bitcoin Diamond forked off from Bitcoin in late November. Bitcoin Diamond miners use a new PoW algorithm to mine 8Mb blocks. Bitcoin Diamond futures are currently tradeable at $44,84, and the developers plan to establish a mining network, node code and API by the end of the year.

Super Bitcoin forked off from the original Bitcoin on December 12. Its notable feature is that the platform will use a new fundraising method, i.e. Initial Fork Offering (IFO). The hard fork will support 8Mb blocks, Lightning Network micropayments technology and smart contracts. Super Bitcoin is expected to be listed on 21 exchanges, and its futures are currently tradeable at $253,50.

Future forks

Lightning Bitcoin is set to take place on December 23. The developers claim to combine the best of Bitcoin and Ethereum. The hard fork will support Lightning Network and a new Delegated Proof-of-Stake algorithm. The network will also support 2Mb blocks for faster transactions and smart contracts. No SegWit support is announced.

Bitcoin God will fork off from the Bitcoin protocol on December 25. This hard fork is initiated by Chandler Guo, a Chinese cryptocurrency investor, who claims that there will be no pre-mining and that all PoS profits will be distributed fairly to the miners. This project receives support from several cryptocurrency exchanges.
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