Words from the Editor

Hard Forks: Are They Ever Acceptable?

The topic of a hard fork comes up every once in a while in the cryptocurrency space, primarily with the conversation about how to scale Bitcoin. The recent conversation has stemmed from the contentious hard fork that took place in Ethereum.

With a hard fork, you go from there being one chain to two chains. The theory has always been that when a hard fork takes place, the actual fork will win quickly, leaving the old one to die.

This did not happen with the Ethereum hard fork.

Instead, the hard fork happened, and the forked Ethereum quickly gained momentum. However, rather than Ethereum Classic dying, it gained some momentum itself. While it’s nowhere near as strong as the forked Ethereum, it did not die quickly like many believed.

Since humanity likes to deal in absolutes, I’ve seen a lot of conversation about how hard forks are now always wrong, no matter what.

The reality isn’t true all the time.

But to determine whether a hard fork is appropriate, there are a few things that need to be determined.

First: Does the hard fork break the fungibility and/or immutability of the blockchain? If it’s not clear already, I was very against the DAO hard fork.

Second: Does the hard fork have true consensus? I don’t believe in 100% and, equally as importantly, I don’t believe in 95%, which others have suggested. I don’t believe that a tiny minority should have control of the majority. But 51% is also unfair. The number has to imply a true supermajority.

Third: Is there no other way to implement an improvement? This is self-explanatory.

Here’s the thing … When it comes to Bitcoin, you’re talking about people’s money, so you want it to be conservative. Hard forks left and right are dangerous. On the other hand, with something like Ethereum, which is not meant to be like money, then hard forks might be a bit easier to achieve.

I was in support of Ethereum’s hard fork to Homestead. It was the only way that they could upgrade the software. And because the community is smaller, it was easier to achieve a certain supermajority threshold.

In my opinion, hard forks have a place. They are necessary for some upgrades and I believe Bitcoin will experience them over the coming years. But they need to be the right decision. It takes discussion to achieve consensus. And fortunately, now that there has been a big-scale hard fork, we know a lot more about what will happen post-fork.

Thanks for reading this week’s Crypto Brief. If you have any questions, don’t hesitate to hit reply. If you have a comment, I’d love to hear it and might include it in next week’s issue (anonymity accepted). Thanks!

Jacob C Donnelly

Companies







Fundraising & Acquisitions

Finance



Tech





Use Cases


Law & Regulation