The Power of Cryptocurrency Forks

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“The crypto world has one very powerful idea going for it and that’s the idea of forks. Right? Imagine…Barack Obama, Mitt Romney, let’s let them both be president. Imagine if we could fork America and just let them both be president, and then the Americas could compete and people could invest in one, pull their liquidity out of one, and put it in the other. You have this in the crypto world. Ethereum forks into Ethereum and Ethereum Classic, and you can pull your liquidity out of one, and put it in another, and people vote with their dollars.”

– George Hotz

There are so many things about crypto that make it special, magical even, but the one I think is often overlooked is a cryptocurrency’s ability to fork. I’m not talking about forking as in upgrading, or when someone modifies the original Satoshi codebase to start a new chain with a separate genesis block. I’m talking specifically about those forks that begin with a disagreement, and end in a chain split.

For example, when Ethereum suffered the DAO hack in 2016, the network forked into Ethereum and Ethereum Classic. When Bitcoiners couldn’t agree on whether or not to increase the block size, we ended up with Bitcoin and Bitcoin Cash. And of course, most recently, when the BCH stakeholders couldn’t agree on a new proposed self-funding mechanism, it resulted in the fork we now call eCash.

So why do I think the ability to fork is so important? Because to me it’s almost as revolutionary as the idea of censorship resistant money itself. It represents a totally new paradigm and something we’ve never been able to do before. Crypto has effectively given us a way to have our cake and eat it too, and to those who say you can’t have it both ways, in crypto you can.

Imagine if you could fork companies or a nation state. You think Facebook would be more profitable if they charged a subscription fee? What if you could fork it and one version of the company can run as is, and another version goes with the subscription model? Everyone would be able to choose the version of Facebook they prefer. Users can choose whichever one they want to keep using, and shareholders could choose whichever one they want to invest in by selling shares in one to buy more in the other.

You think the US would be better under a different political system? Go ahead and fork it. Citizens could then choose to sell their assets in USA Red to buy more assets in USA Blue, or vice versa.

But to me, the power of forking goes beyond just being able to vote with our money. It’s about more than just giving us the opportunity to try multiple experiments simultaneously. It’s also about giving us the chance to not have to compromise, to not have to be forced to follow a set of rules that we don’t agree with. Forking allows us to be on the team of our own choosing rather than have to keep swimming against the current. How much more productive would we be as a society if instead of arguing all the time, we were simply allowed to choose to live under the set of conditions that we thought was in our best interest?

Obviously, this isn’t possible in the analog world. We can’t just spin up a fork of China and see how things might turn out under a different set of rules and incentives. But the cryptocurrency world isn’t so limiting. While the internet gave us the freedom to access and share new ideas and information, cryptocurrencies have given us the freedom to launch and pursue new economic systems, as well as a way to determine which systems can create the most value through the power of forks.