I’ve always thought the most beautiful thing about Bitcoin is its ability to fork. For those who don’t know, forking can mean different things in crypto, but for the purposes of this article, I’m specifically talking about forks resulting from chain splits caused by divergent rulesets (aka Bitcoin v. Bitcoin Cash, or Bitcoin Cash v. ecash).
One thing I quickly learned after falling down the Bitcoin rabbit hole is how deep it actually goes. There are levels to this game that outsiders will never experience, let alone understand. In fact there are so many levels that I’ve decided it might just go on forever. Maybe that’s what they mean by it being an infinite game.
For example, you might start by learning about the technology, about how ECDSA or Proof of Work mining work. Then maybe you get turned onto the idea of decentralization and why it’s so important. There’s also the psychological/sociological/political aspects of Bitcoin, not to mention its incentive structure and underlying economics. The list goes on and on.
I’m not saying any one of these things is more important than another, because in many ways Bitcoin is dependent on all of them to succeed. But for me, it’s Bitcoin’s ability to fork that I find myself constantly coming back to. I guess you could say I’m obsessed with the forking level.
Surprisingly, there haven’t been that many forks of Bitcoin in the way we’re discussing here. While there are dozens, if not hundreds, of projects that forked the Bitcoin Core codebase that don’t share BTC’s genesis block, I’d argue there are only 4 active projects that share the same genealogy as BTC.
I’ll get into the specific forks of Bitcoin in a separate article, but let me try and explain why I think the ability to fork is so important.
So how does a fork happen?
A fork can arise when the participants of the ecosystem have a major disagreement that ultimately leads to a chain split. For example, during the blocksize wars, while many in the community were convinced that keeping BTC blocks at 1MB was imperative, others were just as convinced that raising the block size made the most sense.
But just because some folks get into a disagreement doesn’t mean a split is going to occur. You need three things in order for a split to be viable. First, you need protocol developers who can write the code for the new implementation with its own consensus rules. Second, you need miners who are willing to expend energy and mine the chain (aka produce blocks) and protect it against potential attacks. Third, you need people to believe in the vision of the new project who are willing to buy the coin and thereby give it value.
Without any one of these components, the new chain will end up dying on the vine. But if you have all three, you will have a viable fork that has a chance to survive.
I find this entire mechanism beautiful for many reasons, but one of them is because it means that so long as there are people who are able to coordinate and invest enough time and capital into something they believe in, the project can live on. (And while I say people, it can just be a single person that keeps a project alive. After all, that’s what Satoshi did in Bitcoin’s early days.)
This means that Bitcoin features a mechanism that allows anyone to try and improve the protocol in any way they see fit. And since no one controls Bitcoin (which is why people call it a permissionless system), everyone is free to act in what they believe to be their own best interests.
Imagine being able to do this with a corporation, or a country. Let’s say we could fork the USA into USA and USA Cash, with the original USA keeping the rules the same, while in USA Cash a new rule will go into effect getting rid of all taxes. Just before the time of the fork there would only be one country, but from the moment of the split, there would be two identical countries that share the same history, the same buildings, and natural resources. Everyone who had anything of value in the original USA would also own those same assets in USA Cash. Then after the split it would be left to the market to decide the value of everything in both versions.
For example, let’s say 90% of the population believes in the USA vision, while the other 10% believe in the new USA Cash vision. A possible outcome is that everything in USA Cash will be initially valued at ~10% of what it was valued prior to the fork, while everything in the original will retain ~90% of its value from before the fork. Now suddenly everyone is faced with a choice. You can choose to keep your assets in both USA’s because you’re not sure which version will ultimately succeed, or you can sell some (or all) of your possessions in one fork to accumulate more assets in the fork you are more confident in, or you can just sell everything and find a completely new country to live in.
If such a situation were possible wouldn’t that be amazing? Rather than having to fight a war to determine how a country should be run, you’d be able to just make a copy and everyone could live under the rules they prefer. Suddenly people who are incapable of seeing eye-to-eye with one another no longer have to share the country together. Everyone would be allowed to pursue their goals in their own sandbox without interference. Of course this doesn’t mean that there won’t be future disagreements leading to further schisms, but it does mean that the world will have more choices, and for me, I’d rather have more choices than less.
(My example ignores the issue of security, but I don’t think it’s relevant to the ideas being discussed here.)
Most people will agree that one of the most important features of Bitcoin is its censorship resistance. It means that no one can stop you from transacting on the network because it isn’t controlled by any governments or banks, making it the first form of money that has the potential to be truly free. And it could be argued that having a form of money that is free can finally lead to people being free, and that, in my opinion, is what crypto is all about.
I believe that one of the most important facets of freedom is the free competition of ideas. How can anyone be free if they’re not allowed to think certain thoughts? Where would we be as a species if experimentation wasn’t allowed?
The point I’m making is that Bitcoin wasn’t created to just sit there and be stagnant because that’s what some portion of the population wants. It was always intended to grow and evolve. In evolution, new species arise through genetic mutations. But what if this wasn’t possible? What if mutations weren’t allowed and all just remained single celled organisms swimming around in some primordial ooze?
This is why I think forking is so important. It’s Bitcoin’s way of evolving, and on July 1, 2021 we’re about to witness the next evolution of the project as the BCHA fork leaves the Bitcoin name behind and attempts to forge its own path under a new name with its own set of rules and incentives. Wealth redefined, indeed.
(Bonus clue 11: This word has a homonym that isn’t a Bip 39 word)