What Does It Mean To Fork A Cryptocurrency

Rather than a solar day of infamy, Baronial 1, 2017 will probable go down as the twenty-four hour period of no consequence. For months, cryptocurrency chatter focused most exclusively on the “ceremonious war” among Bitcoin advocates. Years later on its introduction, Bitcoin transaction volume spiked to unprecedented levels, bogging downward transaction speeds. A proposed solution, chosen a hard fork, suggested “spinning off” a divide “Bitcoin cash” cryptocurrency using the original architecture.

Other advocates balked at the idea.

The obvious business concern is that two similar currencies will compete in the same market space. In 2016, Ethereum, the No. 2 ranked cryptocurrency in terms of market capitalization, endured a split. Although the conflict ultimately didn’t negatively bear on the original Ethereum (it’s upwardly nearly 2,700% twelvemonth to date), it’s confusing. A Bitcoin fork only adds to the perplexity and mysticism of digital markets.

Another unhelpful headwind was fright-mongering. Both the mainstream media and some cryptocurrency insiders ramped upwardly the rhetoric over the Bitcoin fork.

In reality, the resultant Bitcoin cash is nothing more than than another digital alternative amid 836 alternative solutions.

The Heart of the Bitcoin Compages

To understand Bitcoin, 1 must understand the blockchain, the underlying architecture that makes cryptocurrencies tick. A blockchain is simply a database where entries and transactions are verified without needing central administrators or third-party intermediaries. Instead, “miners” verify each transaction.

Mining is a procedure where decentralized agents compete with each other to verify blocks of transactional data. Specifically, this stride involves the apply of high-powered computers, often armed with GPUs produced by
NVIDIA Corporation
(NASDAQ:

NVDA

) and
Advanced Micro Devices, Inc. (NASDAQ:

AMD

), to solve complex mathematical problems.

Upon completion, the verified data block is entered into a sequentially-ordered ledger chain; hence the term, “blockchain.” Miners who successfully verified the blocks first receive a cryptocurrency unit, such as Bitcoin, as a reward.

The problem that sparked the Bitcoin fork debate was that transactions were getting larger than the system could adequately handle. Initially, advocates proposed increasing the size of each cake. However, doing and so would increase hacking vulnerability. Larger blocks would mean greater transactional value potentially compromised.

Bitcoin supporters argued that doing nothing is not a solution. Essentially, the blockchain was condign a victim of its own success. To further the commonage goal of crypto-normalization, quick, convenient and reliable transactions are non-negotiable elements.

Absolutely, no piece of cake solutions be. Irksome transactions are anathema to the whole blockchain concept. At the same time, security is a major business organisation in light of the Mt. Gox debacle. Furthermore, Bitcoin cash lacks its predecessor’s cache.

The Bitcoin Fork Was a Major Lark

For all the hysteria over the Bitcoin fork, it only didn’t exercise anything. Those hoping for the “crypto-king” to crash were sorely disappointed. At time of writing, the original currency was trading hands at just under $2,700.

On the flip side, Bitcoin greenbacks had a solid introduction, which currently has a market capitalization of $10.6 billion. That puts it at No. iii amid the most highly-capitalized cryptocurrencies.

Notwithstanding, the Bitcoin fork was more than hype than substance. It simply adds another option for traders, investors and businesses. Merely, it did non solve Bitcoin’s scaling problem, just offering the markets another cryptocurrency. More challenging is that trusted exchanges, such as
Coinbase, reject to support the offshoot currency.

As time goes on, I think the digital markets volition simply take the two versions, just like with Ethereum. The following quote from
Bloomberg
perfectly sums up my sentiment:

“There’s a role for both of these coins,” said Cathie Wood, the New York-based master investment officer at ARK Investment Direction, which oversees the starting time substitution-traded fund with indirect exposure to bitcoin. “One is much more natural for store of value and the other one for a means of exchange.”

Ultimately, the Bitcoin fork was nothing more than a selfish distraction. Those who want faster transaction speeds will become it with Bitcoin cash. I don’t call back engaging in a ceremonious war was necessary, nor was off-shooting from the original blockchain.

Despite my misgivings, the future of cryptocurrencies remains secure. Via the blockchain applied science, they offering a platform to store and transact value outside of the traditional financial hegemony. No controversy, no hard fork, can ever have that away.

Josh Enomoto is long bitcoin and ethereum, and is a strong advocate for cryptocurrencies.