Since its inception in 2009, Bitcoin has experienced several forks, or splits, which have created new cryptocurrencies and variations of the original protocol. As of May 2024, there are more than 100 Bitcoin forks in existence, with varying degrees of adoption and success.
These forks have caused heated debates within the cryptocurrency community. Some see them as catalysts for innovation and progress, while others see them as disruptive forces that undermine the network’s stability and core values.
And this dichotomy is exactly what we are going to get into today. We’ll take a look at why these forks happened, what they achieved, and what they mean for the future of Bitcoin.
Major Bitcoin Forks and Their Consequences
Even though the fledgling Bitcoin community was united, people were still somewhat successful in implementing Satoshi’s vision. However, the first crack came with the creation of Bitcoin XT in 2014, which broke the public but provided an important lesson in management.
This crypto split happened because of the devs’ desire to increase the block size from eight megabytes, but some think this is going too far. Thus, Bitcoin Classic (now closed), with a block size of 2MB, was born, followed by Bitcoin Unlimited going in the complete opposite direction with 16MB blocks.
However, this was followed by some really influential forks, whose impact is still felt today. This includes:
Bitcoin Cash (BCH)
Bitcoin Cash (BCH) was created on August 1, 2017, as a result of a hard fork from Bitcoin. The main motivation for this fork was to address the problems of Bitcoin expansion, especially the slow transaction times and high costs caused by Bitcoin’s 1MB block size limit.
Proponents of Bitcoin Cash, including influential figures such as Roger Ver, say that increasing the block size will allow more transactions per block, thereby reducing fees and speeding up transaction times.
Upon its creation, Bitcoin Cash quickly gained attention and was accepted by several exchanges and merchants. It also saw initial price growth, reaching large market capitalization.
Over time, Bitcoin Cash has continued to evolve, with continuous improvements 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 money system.
However, it faces competition from other cryptocurrencies that also aim to offer lower fees and faster transaction times. Today, the debate about valuation costs and transaction costs continues to influence the direction and development of Bitcoin Cash.
Bitcoin SV (BSV)
Bitcoin SV (Satoshi Vision) appeared on November 15, 2018, following the controversial split from Bitcoin Cash.
The fork was driven by disagreements within the Bitcoin Cash community, particularly regarding block size increases and the direction of development. The project was led by Craig Wright and Calvin Ayre, who aimed to restore what they considered to be Satoshi Nakamoto’s original idea for Bitcoin.
Bitcoin SV significantly increased the block size limit, initially to 128MB and then to 2GB, allowing for a much higher transaction volume. Proponents of BSV argue that this large block size is necessary for the network to support enterprise-class applications and large transaction volumes.
Similarly, this significant increase in block size has also led to concerns about centralization, as running a full node consumes resources.
Bitcoin SV remains a controversial fork among the wider Bitcoin and cryptocurrency community. Its focus on large block sizes and high transaction volumes sets it apart among major cryptocurrencies. However, it still faces ongoing challenges in gaining widespread acceptance, and Coinbase finally abandoned it in 2023.
Bitcoin Gold (BTG)
Bitcoin Gold was created on October 24, 2017, with the goal of making Bitcoin mining more decentralized. It achieved this by changing the mining algorithm from Bitcoin’s SHA-256 to Equihash, which is resistant to ASIC mining.
This change was intended to allow more people to mine BTG using common GPUs, reduce the dominance of large mining farms and make the token truly democratic.
Bitcoin Gold uses the Equihash algorithm, which is designed to be more memory and resistant to ASIC mining hardware. This division aims to democratize mining by making it more accessible to individuals.
Bitcoin Gold saw initial interest and was accepted by several exchanges. However, it has faced security challenges, including a massive 51% attack in 2018 that resulted in double spending worth $70,000.
Today, Bitcoin Gold continues to exist as a minor player in the cryptocurrency market. Its focus on decentralized mining remains its main differentiating factor, although it has struggled to achieve the same level of adoption and market presence as Bitcoin Cash and Bitcoin SV.
Motives Behind Bitcoin Forks
Bitcoin forks happen for a variety of reasons, driven by a mix of ideological, technological, and economic motivations.
For example, one of the main drivers of the fork of Bitcoin was the need to address the issues of standardization. As Bitcoin’s popularity grew, the network faced challenges in handling the increasing number of transactions, leading to longer confirmation times and higher fees.
Forks are also initiated to introduce technical improvements or new features to the Bitcoin protocol. This may include changes in the consensus mechanism, improved privacy features, or the introduction of smart contract capabilities
In some cases, personal motives, such as power struggles, ideological differences, or financial incentives, have influenced the creation of Bitcoin forks. If you pay attention to the historical volatility of forks like Bitcoin SV and Bitcoin Cash, you will notice that some people have viewed them as investment vehicles.
For example, Bitcoin Cash, which split from Bitcoin in August 2017, saw its price rise to around $4,355 in December 2017, shortly after its inception. However, over time it stabilized and traded in the $200 to $500 range for the following years.
How These Major Forks Affected Bitcoin
Besides the obvious impact, increasing threats to OG BTC, major forks have had both visible and invisible effects on the crypto community as a whole. Truth be told, none of these forks have emerged as legitimate solutions to cash flow problems, but their impact nonetheless
Market Dynamics
Bitcoin forks often lead to higher market volatility. For example, the fork of Bitcoin Cash (BCH) in August 2017 caused significant price fluctuations in both Bitcoin and the newly created Bitcoin Cash. Before the fork, the price of Bitcoin was around $2,800, but it dropped to $2,700 immediately after the fork. Bitcoin Cash, on the other hand, started trading at around $555.
Similarly, Bitcoin SV (BSV), which split from Bitcoin Cash in 2018, has seen its price fluctuate significantly. In January 2020, BSV reached a peak of around $441.20, but by June 2024, its value had 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.
Network Scalability and Development
The forks have also sparked important debates and developments about Bitcoin’s stability.
The original Bitcoin network had limitations, such as a block size of one megabyte and a block creation time of ten minutes, which prevented transactions from going through. 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 balancing solutions, creating various projects and agreements to improve Bitcoin’s transaction capacity. One prominent example is the Lightning Network, a second layer solution designed to facilitate faster and cheaper transactions by creating off-chain payment channels.
Security Concerns
Some forks have introduced security vulnerabilities. For example, the low level of hash and interest in Bitcoin SV made it easy to attack 51%, where a malicious actor could not control most of the mining power of the network, compromising its security.
This, unfortunately, has led to concerns about the long-term viability and security of certain Bitcoin forks. What’s the point of continuing to hack if malicious organized actors can take control so easily?
The conclusion
As the cryptocurrency market grows and is increasingly integrated with traditional financial systems, the impact of Bitcoin forks on the wider economy cannot be underestimated. The success or failure of these forks will not only affect the wealth of individual investors and businesses but may 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 robust financial system.
This is a guest post by Kiara Taylor. The opinions expressed are entirely their own and do not reflect those of BTC Inc or Bitcoin Magazine.