Since its inception in 2009, Bitcoin has undergone several forks or splits that have given rise to new cryptocurrencies and variations of the original protocol. As of May 2024, there are There are more than 100 Bitcoin branches.with varying degrees of adoption and success.
These forks have sparked heated debate within the cryptocurrency community. Some see them as catalysts for innovation and progress, while others see them as forces that destabilize the network and its core values.
And that duality is exactly what we’ll be focusing on today. We’ll look at why these splits happened, what they achieved, and what they mean for the future of Bitcoin.
Major Bitcoin Splits and Their Impact
Although the nascent Bitcoin community was by no means cohesive, people were still somewhat successful in implementing Satoshi’s vision. However, the first attempt was It appeared with the creation of Bitcoin XT in 2014.which divided society, but provided a valuable lesson in governance.
This split in the cryptocurrency world occurred because developers wanted to increase the block size from one to eight megabytes, but others thought this was too much. Thus, Bitcoin Classic (Close now), with block sizes of 2 MB, and followed by Bitcoin Unlimited is heading in a completely opposite direction. With giant blocks of 16MB.
However, this was followed by the emergence of forks with real impact, forks whose impact is still felt today. These include:
Bitcoin Cash (BCH)
Bitcoin Cash (BCH) was created on August 1, 2017, as a result of a hard fork of Bitcoin. The primary motivation behind this fork was to address Bitcoin’s scalability issues, particularly slow transaction times and high fees resulting from Bitcoin’s 1MB block size limit.
Bitcoin Cash supporters, including influential figures such as Roger Ver, It is claimed that increasing the block size would allow for more transactions per block.Thus reducing fees and speeding up transaction times.
Once created, Bitcoin Cash quickly gained traction and was adopted by many exchanges and traders. It also experienced an initial surge in value, reaching a significant market cap.
Over time, Bitcoin Cash has continued to evolve, with ongoing development and updates aimed at improving its functionality and scalability. It has maintained a dedicated community of supporters who believe in its potential as a peer-to-peer electronic cash system.
However, Bitcoin Cash faces competition from other cryptocurrencies that also aim to offer low fees and fast transaction times. Today, the debate over scalability and transaction fees continues to influence the direction and development of Bitcoin Cash.
Bitcoin SV (BSV)
Bitcoin SV (Satoshi Vision) appeared on November 15, 2018, after the controversial split from Bitcoin Cash.
The split was caused by disagreements within the Bitcoin Cash community, particularly regarding block size increases and development direction. It was piloted by Craig Wright and Calvin Ayre.who aimed to restore what they considered Satoshi Nakamoto’s original vision for Bitcoin.
Bitcoin SV has significantly increased the block size limit, initially to 128MB and then to 2GB, allowing for a much larger transaction volume. BSV proponents claim that this large block size Essential for the network to support enterprise-level applications and large transaction volumes..
Similarly, this massive increase in block size has also raised concerns about centralization, as running a full node has become more resource-intensive.
Bitcoin SV remains a controversial fork within the Bitcoin and broader cryptocurrency community. Its focus on large block sizes and high transaction rates makes it unique among major cryptocurrencies. However, it still faces ongoing challenges in achieving widespread acceptance, With Coinbase finally phasing it out for good in 2023.
Bitcoin Gold (BTG)
Bitcoin Gold was created on October 24, 2017 with the goal of making Bitcoin mining more decentralized. This was achieved by changing the mining algorithm from Bitcoin’s SHA-256 to Equihash, which is more resistant to ASIC mining.
The purpose of this change was Allowing more people to mine BTG using regular GPUsreducing the dominance of large mining farms and making the token truly democratic.
Bitcoin Gold uses the Equihash algorithm, which is Designed to be memory-intensive and resistant to ASIC mining hardware.This divergence aims to democratize mining by making it more accessible to individuals.
Bitcoin Gold received initial enthusiasm and was adopted by many exchanges. However, it faced security challenges, including: A massive 51% attack in 2018 resulted in $70,000 in double spends..
Today, Bitcoin Gold still exists as a smaller player in the cryptocurrency market. Focus on decentralization in mining Bitcoin Cash remains its core distinguishing feature, although it has struggled to gain the same level of adoption and market presence as Bitcoin Cash and Bitcoin SV.
Motivations Behind Bitcoin Splits
Bitcoin splits occur for a variety of reasons, driven by a mix of ideological, technical, and economic motivations.
For example, one of the primary drivers of Bitcoin forks was the need to address scalability issues. As Bitcoin’s popularity grew, the network faced challenges in handling an increasing number of transactions, leading to longer confirmation times and higher fees.
Forks are also created to introduce technical improvements or new features to the Bitcoin protocol. May include changes to the consensus mechanism.enhanced privacy features, or offering smart contract capabilities.
In some cases, personal motivations, such as power struggles, ideological differences, or financial incentives, have contributed to the creation of Bitcoin forks. If you Pay attention to historical fluctuations. Among forks like Bitcoin SV and Bitcoin Cash, you will notice that some people have looked at them as investment vehicles.
For example, Bitcoin Cash, which split from Bitcoin in August 2017, has seen Prices rise to around $4355 In December 2017, shortly after its creation. However, it later stabilized and traded within a range of $200 to $500 over the following years.
How These Major Forks Impacted Bitcoin
Aside from the obvious impact, the increasing threats to the original Bitcoin and major forks have had both a tangible and intangible impact on the crypto community as a whole. In fact, none of these forks had a tangible impact on the crypto community as a whole. They emerged as legitimate solutions to cash flow problems.But its impact still exists.
Market volatility
Bitcoin fork Often leads to increased market volatility.For example, the Bitcoin Cash (BCH) split in August 2017 caused significant fluctuations in the prices of both Bitcoin and the newly created Bitcoin Cash. Before the split, the price of Bitcoin was around $2,800, but it dropped to $2,700 immediately after the split. On the other hand, Bitcoin Cash started trading at around $555.
Similarly, Bitcoin SV (BSV), which split from Bitcoin Cash in 2018, has seen significant price fluctuations. In January 2020, BSV peaked at around $441.20, But by June 2024, its price has dropped to around $63.These fluctuations are often driven by investor speculation and market manipulation, with some viewing these forks as opportunities for financial gain.
Scalability and network development
The forks also stimulated Important discussions and developments regarding the potential for Bitcoin scalability.
The original Bitcoin network had limitations, such as a 1MB block size and a 10-minute block generation time, which limited transaction throughput. As mentioned earlier, these limitations led to the creation of Bitcoin Cash, which increased the block size to 8MB to handle more transactions per block.
The forks highlighted the need for scaling solutions, prompting a number of projects and protocols to enhance Bitcoin’s transaction capacity. A notable example is the Lightning Network, a layer-two solution. Designed to make transactions faster and cheaper. By creating off-chain payment channels
Security concerns
Some forks have introduced security vulnerabilities. For example, the low hashrate and interest in Bitcoin SV has made it more vulnerable to 51% attacks, where a malicious actor could control the majority of the network’s mining power, compromising its security.
This has unfortunately raised concerns about the long-term viability and security of some Bitcoin forks. What’s the point of more forks if organized malicious actors can easily seize control?
conclusion
As the cryptocurrency market matures and increasingly integrates with traditional financial systems, the impact of Bitcoin forks on the broader economy cannot be understated. The success or failure of these forks will not only impact the wealth of individual investors and businesses, but could also have consequences for the stability and security of the global financial infrastructure.
Ultimately, the future of Bitcoin and its forks will depend on the community’s ability to find common ground and work toward a shared vision of a decentralized, inclusive, and resilient financial system.
This is a guest post by Chiara Taylor. The opinions expressed here are entirely their own and do not necessarily reflect the views of BTC Inc or Bitcoin Magazine.