Bitcoin Fork: The Reasons and Profound Impact Behind It

In the world of digital currencies, Bitcoin is undoubtedly the most representative. However, the history of Bitcoin has not been smooth sailing, and the bifurcation phenomenon that occurred during its development has become a hot topic. So, why does Bitcoin need to fork? What are the reasons behind these forks? In this article, we will explore in depth the causes, impacts, and future development trends of Bitcoin forks.

The original intention of Bitcoin was to create a decentralized digital currency that allows users to trade without intermediaries. As Bitcoin becomes more popular and used, more and more users and developers begin to pay attention to its technology and economic model. At the same time, the Bitcoin network is also facing many challenges, including transaction speed, handling fees, and scalability. These problems have prompted a series of forks, which are both challenges to existing technologies and explorations of future directions.

First of all, technical limitations are one of the important reasons for Bitcoin forks. Bitcoin's block size limits the number of transactions that can be processed in each block, which is particularly prominent when the network transaction volume surges. For example, in 2017, Bitcoin's transaction fees soared, and some users even had to pay tens of dollars in fees to complete transactions. In this situation, many developers and miners began to seek solutions, which eventually led to the birth of Bitcoin Cash. Bitcoin Cash attempts to solve the problems of slow transaction speed and high fees by increasing the block size. Such a technical fork reflects the community's different views on the future development of Bitcoin.

Secondly, forks can also be seen as a reflection of Bitcoin's governance structure. Bitcoin is developed and maintained by a decentralized community, but different stakeholders have different views on the future direction of Bitcoin. For example, some developers want to keep Bitcoin decentralized and secure, while others want to improve its scalability through technological innovation. This difference has led to the emergence of forks, such as Bitcoin Gold, which aims to increase decentralization by changing the mining algorithm to allow more users to participate in Bitcoin mining.

In addition, economic interests are also an important factor that drives Bitcoin forks. In the digital currency market, forks often mean new investment opportunities and potential profits. For example, after Bitcoin forked into Bitcoin SV in 2018, many investors quickly turned to this new currency in an attempt to profit from it. Such economic motivations not only attracted the attention of investors, but also further promoted the occurrence of forks. Forks are not only a choice of technology, but also a product of market competition.

Furthermore, differences in community culture and values also play an important role in forks. Within the Bitcoin community, there are different understandings of the technical, economic, and social impacts. For example, some supporters believe that Bitcoin should become a global means of payment, emphasizing the convenience and low cost of transactions. Others believe that Bitcoin should be used as a value storage tool, focusing on security and scarcity. These different views and values are reflected in the forks, forming different currencies and communities.

The bifurcation of Bitcoin not only affects its own development, but also has a profound impact on the entire cryptocurrency market. With the increase in Bitcoin bifurcation, more and more altcoins have appeared in the market. These currencies have their own characteristics in technology and economic models, enriching the ecology of digital currencies. However, this has also caused confusion in the market. Many investors are confused when faced with many choices and do not know how to judge which projects are worth investing in.

When analyzing the reasons for Bitcoin forks, we also need to pay attention to the trend of technological development. With the continuous advancement of blockchain technology, many emerging technologies such as Lightning Network and Sidechain have begun to be introduced into the Bitcoin ecosystem. These technologies are designed to increase the transaction speed and scalability of Bitcoin, which may reduce the need for forks in the future. The Lightning Network allows users to conduct fast and low-cost transactions by establishing off-chain transaction channels, while the Sidechain allows Bitcoin to interact with other blockchain systems. The emergence of these new technologies may provide new solutions for the future development of Bitcoin.

In this context, the Bitcoin fork phenomenon has also triggered discussions about decentralization and centralization. Since forks are often accompanied by the creation of new currencies, this means that the Bitcoin ecosystem may become more complex. On the one hand, forks provide users with more choices and opportunities; on the other hand, too many choices may lead to market fragmentation and affect users' decision-making ability. Therefore, how to find a balance between decentralization and centralization has become an important challenge facing the Bitcoin community.

Looking ahead, the phenomenon of Bitcoin forks may continue to exist, but its form and frequency may change. With the advancement of technology and the maturity of the market, forks may no longer be the main way to solve problems, but become a means of exploration and innovation. The Bitcoin community may pay more attention to the iteration and upgrading of technology, and promote development through consensus mechanisms and community governance, rather than resolving differences through forks.

In summary, Bitcoin forks are a complex and multidimensional phenomenon involving technology, economy, culture and other aspects. Forks are not only a challenge to existing technologies, but also an exploration of future development. With the continuous evolution of blockchain technology, Bitcoin and its forks will continue to play an important role in the digital currency arena. For investors and users, understanding the reasons and impacts behind forks will help better grasp the pulse and opportunities of the digital currency market. In this era full of change and innovation, only by continuous learning and adaptation can we remain invincible in the wave of digital currency.

The four most famous international exchanges:

Binance INTL	OKX INTL	Gate.io INTL	Huobi INTL
China Line　APP DL	China Line　APP DL	China Line　APP DL	China Line　APP DL

Note: The above exchange logo is the official website registration link, and the text is the APP download link.

Why does Bitcoin fork? What is the reason for Bitcoin fork? Bitcoin fork, this topic may make many people curious, so this article is written for ordinary readers. It will not involve the knowledge that has been debated before. The founding version of Bitcoin, which was carefully laid out by Satoshi Nakamoto, has always been very clear. The controversy is about growth. In 2008, he answered the first question about the design of Bitcoin, saying:
Visa processed 37 billion transactions in fiscal year 2008, or an average of 100 million transactions per day. This amount of transactions requires 100GB of bandwidth =
Bandwidth equivalent to 12 DVDs or 2 HD quality movies = bandwidth at current prices of about $18.
Assuming the Bitcoin network reaches this size, it will take years, by which time sending 2 HD movies over the Internet may not be a large transaction anymore.
At that time, he (Satoshi Nakamoto) was more fed up with the issue of Bitcoin's scalability than any of us. His plan was to make Bitcoin popular from the beginning, and he knew that this success would change how people used his system. In 2010, he said: "We keep the (blockchain) file as small as possible, and it's good to do so. The final solution will not care how big it (the blockchain file) becomes. But for now, while it is still small, keep it small, so that new users will grow faster. When I finally implement the pure client mode (client-
only mode), then it is no longer an issue.”
In 2011, I expanded on Satoshi’s scaling intuition in detail through a series of calculations: If Bitcoin becomes so popular, will it completely replace VISA? The answer is that his plan is credible -
You don't need anything more than a computer to handle this much traffic. Before he left, I implemented the model he talked about.
Satoshi's project brought us together. It has changed the lives of thousands of people around the world. Some of us gave up our jobs, others dedicated their spare time to this project, some founded companies, and even traveled around the world. It was an idea of ordinary people being able to pay each other through the blockchain and create this global community.
This is the vision I signed on to, this is the vision Gavin Andresen signed on to, this is the vision thousands of developers, startup founders, evangelists, and users around the world signed on to.
And that vision is now in jeopardy. In recent months, it’s become clear that there’s a small group of people who have completely different plans for Bitcoin. These people never really understood Satoshi’s intentions because they fear success. What if the technology never improves? What if people can’t run Bitcoin on their home computers? Doesn’t that make Bitcoin less decentralized and more like banking? What if people start to rely on Bitcoin, even if it’s imperfect?
Now that Satoshi Nakamoto has chosen to disappear, they want to make major changes: significantly increase transaction fees, end support for mobile P2P wallets, abandon unconfirmed transactions, and many other things that were not in the project's founding documents.
The so-called Lightning Network, which is about to be promoted as a replacement for Satoshi Nakamoto’s design, is a
The whitepaper describing it was released earlier this year, and if it ever comes to fruition it will be a huge departure from the Bitcoin we know and love. Pick just one of the many differences, Bitcoin addresses don’t work. What they’ll be replaced with has yet to be worked out (because no one knows). There are many other surprising gotchas, which I’ve covered in another post. What it will ultimately produce that will make our existing Bitcoin network better is still extremely unclear.
What happened to the free market?
In theory, none of this should be a problem. The Lightning Network is built on top of the blockchain, but it requires a fairly trivial upgrade process to achieve its best functionality. Of course, people are willing to explore this direction, and that's completely fine. If what they build works better than the existing regular Bitcoin network, then the market will choose their way, and if that's the case... fair game for them! Bitcoin's current design is unlikely to be the final version for payments. It's reasonable to imagine that one day it will be eliminated in the competition, or enhanced by something else.
But our system, it works today, it has an ecosystem, it has developers, exchanges, wallets, ATMs, books, apps, conferences, and a lot of people have already learned how it works.
Given a free choice, would people decide to migrate to a completely different system?
We don't know, and the people who are pushing this stuff don't want to let the market decide, and that's what's going on.
A long time ago, Satoshi Nakamoto set up a makeshift "unassembled computer": he limited the size of each block to 1
MB. He did this to keep the blockchain small in the early days until the creation of what we now call SPV wallets (which is what Satoshi Nakamoto called ‘client only
mode’). As mentioned above, when the time comes, it can be adjusted, and it is never said to be permanent. In the end, it becomes irrelevant. In 2011, together with my respected colleague Andreas
Together with Alex Schildbach, we wrote the first SPV tool, and together we built the first and currently most popular Android wallet. Since then, SPV wallets have been used on all major platforms. Therefore, Satoshi’s reason for this temporary limitation was solved a long time ago.
As Bitcoin continues to grow, its blocks are also getting bigger. Reasonable traffic forecasts show that blocks will reach the limits of the current system sometime next year, or at the latest in 2017. If another bubble or stress cycle forces us to exceed this limit before then, the results may not be pretty.
So, now is the time to raise the cap, or remove it altogether. That’s the plan, and that’s where the trouble begins: those who don’t want to see Bitcoin scale have decided to delay that process. They see a wonderful, one-time opportunity to forcibly divert Bitcoin from its intended path to an entirely different technological trajectory. They don’t know what that alternative design will be, and they certainly haven’t built it yet. But that doesn’t matter. They think that by blocking the growth of the blockchain, they can “incentivize” (i.e. force) the Bitcoin community to switch to something different, something more to their personal technological tastes.
Why limit blockchain?
So far, I haven't elaborated much on my views on these people, or who they are. I feel that naming names in this article is a very time-consuming and laborious task, and in the end it seems futile. Those who care about this matter must already know, and those who don't know can't recognize the people involved in this matter.
Suffice it to say that they are among the very few who have access to the Bitcoin Core codebase, or those who are convinced by their arguments.
So we won't discuss these debates here, there are too many. For every question that has been raised, Gavin and I have written articles analyzing them and refuting them. Sometimes the answers are common sense, and sometimes they are deeper and require more work, such as network simulation experiments.
The best place to read about these controversies is on Gavin's blog. I was hoping to find a link to a similar collection of opinions refuting Gavin's views, but there isn't one.
To summarize the long and arduous debate among several different opposing groups: If Bitcoin is approaching this limit, we will be stimulated to create something better.
The limit should be raised, but it is not ready yet (actual time is unspecified). If Bitcoin scales, Bitcoin will become more centralized, and it will no longer be Bitcoin.
For others: If you support an objection that is not listed above, please check Gavin's blog and find the answer to it.
The first point may become a reality someday, but there is no comparison with a theoretical system on paper. But no one who has seen any alternative solutions on the table would think that they will be implemented in 12 months, (see the last paragraph for another example)...even assuming they are better. This is also an example of the Nirvana Fallacy:
The Nirvana fallacy is an informal name for the fallacy of comparing something to something that is actually real, to some unrealistic, idealized alternative. It can also refer to the tendency to believe that there is a perfect solution to a particular problem, and is therefore also known as the perfectionism fallacy.
By creating a false dichotomy, one option is clearly advantageous. But it is also completely implausible. People who use the Nirvana Fallacy can attack any opposing idea as imperfect. According to this fallacy, the choice is not between real-world solutions. One is a realistically achievable solution, and the other is an impractical solution, and it is a "which is better" choice between the two.
The answer to the second objection is that it is too vague. There is reason to believe that a full upgrade of every Bitcoin node could take a year, and that overloading the actual Bitcoin network capacity would cause serious damage. We really should be preparing for this long before then. Two people on the Bitcoin development mailing list who have professional experience in capacity planning believe that this process must begin immediately. Postponing it to some indeterminate future is not a sound engineering practice.
The last point is the most troublesome, and by far the most controversial. It is based on two assumptions: if Bitcoin can grow, it will grow, and it will grow faster than technological advances that reduce its costs.
If the Bitcoin network were tiny, it would be more “decentralized” in the abstract sense than a successful, global Bitcoin network.
If the Bitcoin network was compelling, demand for it would be unlimited: I could stop improving my software and wait for the price of Bitcoin to rise and become rich. But as it exists today, Bitcoin is in a competitive market. Growth is not a God-given right. Every user needs to make an effort, and convincing everyone takes time. Bitcoin is currently growing, but only at a gentle pace.
I wish I could confidently say that the cost of running a full node will go up in the future: that would mean that our success is outstripping the collective efforts of the entire hardware industry. That industry would be amazing: the iPhone came out in 2007 and cost $500, and only seven years later the new P9 smartphone came out, costing only $30, and it matched every feature of the iPhone and significantly surpassed it.
The second assumption hits the core of the controversy: Should Bitcoin grow, even if the result is to modify the structure of the network? In the current system, every user is a network node, but this does not mean that they are the nodes needed after the system is large-scale. This is like every newsgroup user running their own NNTP server. This design makes users just users.
To this question, the founder of the Bitcoin project gave a clear answer - YES
We have been working on this plan to this day. Trying to change the answer to this question to NO would not only violate the social contract of Bitcoin, but also go against the wishes of many in the community. Those who truly believe that an über niche currency would be better should create an altcoin with a limited blockchain size.
indecisive
Why couldn’t this dispute be resolved in a more civil manner, rather than in a complete split? Simply put, the resolution of Bitcoin Core’s decision-making process has broken down.
In theory, like all open source projects, the core will have "maintainers". The maintainer's job is to guide the project, what should happen and what should not happen. The maintainer is the boss. A good maintainer needs to collect feedback, weigh arguments, and then make decisions. However, the debate over the block size of Bitcoin Core has been delayed for several years.
The problem is that any change, no matter how obvious, can be completely vetoed if it becomes “controversial”
With five maintainers and many other non-maintainers who can also "dispute", a stalemate has been created. The fact that the block size was never permanent is no longer important: removing the block size limit itself is what is being debated. It's like a committee without a chairperson; the meetings never end. To quote one maintainer, "Bitcoin needs a leader like a fish needs a bicycle."
So what about everyone else? For that matter, the wider community is decidedly uninterested.
The proposal to increase the block size has support from the developers of the most popular iOS and Android bitcoin wallets, as well as one of the most popular web wallets, which have millions of users, among others.
Several of the largest, the two largest third-party payment processors, which account for the vast majority of the third-party payment market, several major mining pools, including all Chinese mining pools, and two of the top five Bitcoin Core maintainers (Gavin and Jeff).
User polls in online forums show that around 75%-80% of people support scaling, and the list is far from complete. Many key people in the ecosystem, who have not yet commented publicly, have expressed support for Gavin and me privately.
So there's nothing weird about what Gavin and I did. If we didn't make this change, someone else would have.
How did those who pushed for 1MB blocks respond to everyone? They didn’t, because they were never asked to answer their opinions. An influential member of the Bitcoin Core community was quoted as saying: “By the way, using a company as a megaphone is risky, you might get a consensus that misleads.”
Companies arguably represent the most passionate, engaged, and technical people in the Bitcoin world. They provide important infrastructure, yet the opinions of those who created them can be considered “misleading consensus.”
What about wallet developers? They have the most contact with users’ daily needs. Don’t ask when they will speak up. It doesn’t make sense. Their opinions are irrelevant.
This is not surprising:
It is becoming increasingly clear that the “consensus” often mentioned by the Bitcoin Core community really only means the opinions of a few people, regardless of what others outside the community think, what work they have done, or how many users their products have.
In other words, “developer consensus” is marketing that pulls a wool over the eyes of Bitcoin users, making them blind: it only takes two or three people acting in unison to change Bitcoin in any way they see fit.
Are they aware of the opposition from a large number of key figures? No, to quote one of the maintainers again:
Gavin is pretty much alone in the Bitcoin Core technical community on this. Many people in my company are concerned about the viability of Bitcoin as a decentralized system, and most of these concerns about this product are addressed in the technical community.
This is only true if you classify the vast majority of engineers who build the Bitcoin ecosystem as “non-technical”. Clearly, the problem is very serious. Communication has broken down, and both sides feel they are protecting Bitcoin’s decentralization and are the true vision of Bitcoin. The community has split.