Bitcoin forks : Get ready for a wave
Bitcoin forks : Get ready for a wave. On August 1, a dissident faction of the Bitcoin community created a new payment network called Bitcoin Cash. There are lots of Bitcoin-derived spinoff currencies, of course, but this was unusual because it branched off from the existing Bitcoin blockchain. The result was the cryptocurrency equivalent of a stock split: everyone who owned one bitcoin before the split suddenly owned a “cash” bitcoin after the split.
Today, the value of Bitcoin Cash in circulation is about $20 billion. That makes it the third most valuable currency, after only the original Bitcoin and Ethereum. And this appears to be newly created wealth. The value of vanilla bitcoins didn’t fall significantly on the day of the split, and it has since zoomed upwards so that the value of all conventional bitcoins is now around $150 billion.
With that kind of money on the table, it was inevitable that others would try the same trick. In early November, another group of Bitcoin developers publicly launched the Bitcoin Gold network. This version of Bitcoin swaps out Bitcoin’s current mining process—where people compete for bitcoins by computing SHA-256 hashes using custom-designed mining hardware—with a memory-hard algorithm that, designers hope, will make it resistant to acceleration by custom hardware. The creators say they want to re-democratize Bitcoin mining, once again making it possible for anyone to earn Bitcoin Gold with their home PCs.
Like Bitcoin Cash, Bitcoin Gold split off from the main Bitcoin blockchain, so everyone who owned a normal bitcoin before the fork got a “gold” bitcoin after the fork. But the Bitcoin Gold team added a controversial twist: after the fork, it rapidly mined approximately 100,000 bitcoins for itself before opening the network to the public.
Bitcoin Gold is now worth around $270 per bitcoin, so the team essentially created a $27 million endowment for itself, which it says will support development of the Bitcoin Gold project. The Bitcoin Gold network as a whole is worth $4.5 billion, making it the sixth most valuable cryptocurrency after Ripple and Dash—and slightly ahead of the earliest successful Bitcoin fork, Litecoin.
The question now is who is going to try this trick next. The answer is: a lot of people. In recent weeks, a bunch of different people have announced plans to create new currencies. There’s Bitcoin Silver, Bitcoin Platinum, Bitcoin Diamond, Bitcoin Uranium, Bitcoin Cash Plus, and Super Bitcoin.
Most of these forks will fail, but a few might succeed. It’s hard to tell how many of these projects are serious. Bitcoin Uranium, with a ticker symbol BUM, sounds like it’s probably a joke. Others have little more than a post on the Bitcoin Talk page and on Github.
But with so much potential free money on the table, it’s practically guaranteed that we’ll see more efforts to fork Bitcoin in the coming months. The Bitcoin Gold team created a currency worth $4.5 billion—and kept $27 million for its own use—with a few months of work.