Bitcoin Plunges Below $5,000 as a Battle Over Bitcoin Cash Erupts
Mike Mish Shedlock
Bitcoin Cash Battle: Bitcoin Jesus vs Satoshi’s Vision
The battle over Bitcoin cash is getting very expensive. Escalating feuds have hit the entire crypto sector.
> Born out of the original Bitcoin blockchain on August 1, 2017, Bitcoin Cash (BCH) has split the cryptocurrency community into warring factions with their own arguments, verbal skirmishes, leaders, convictions and occasional get-togethers. On November 15, BCH developers are preparing to undergo its next hard fork, a split of the blockchain, which can give birth to new tokens named Bitcoin SV (Satoshi’s Vision), Bitcoin Unlimited and Bitcoin ABC.
Expensive Blockchain Governance
I asked William Entriken on the Ethereum project for his take. His email response follows:
The governance process for public blockchains is extremely expensive. This is how it works:
The original project developers or another group of developers proposes a change. Each change requires significant adoption to be successful and each change is incompatible with the previous version.
Typically, changes to a blockchain project proposed by the original developers have been accepted by the community very quickly. But in the case of Bitcoin Cash (and previously with Ethereum Classic) billions of dollars in market value are lost while the community decides who will win.
These battles are somewhat comparable to hostile takeovers of technology companies and open source software battles. In the typical open source hostile takeover, a person or group can take control of the project or the company and get all the users, but they cannot walk away with any money.
Some notables Software Forks include OpenOffice.org -> LibreOffice, MySQL -> MariaDB, XFree86 -> XOrg, KHTMl -> Safari web browser, NCSA HTTPD -> Apache web server.
Currency blockchain forks are so much more interesting because a group could potentially conspire to take all of the money. In practice, risk of outright theft by this method is slim, but it isn't zero.
The bigger risk is that changes in the fork may kill much of the monetary value of the losing fork. That's what's happening right now with Bitcoin Cash.
Because these battles are so expensive, I recommend that changes to public blockchains be may only when critically necessary. Meanwhile, everyone should be prepared for a weird outcome when a change proposed by the original developers of a project is soundly rejected by the community. That case will happen some day and it will have a destructive effect of more than $10 billion.
About William Entriken
William Entriken is the lead author of the "token standard" for tracking physical assets using blockchain (ERC-721). He actively advises blockchain companies for projects he believes in and organizes Chain 76, a conference for applying blockchain to supply chain problems in the pharmaceutical industry.
Entriken shares his vision in Beyond Bitcoin and ICOs: The Future of Blockchain.
Mike "Mish" Shedlock