Miners vs Developers
In order to police and keep Bitcoin and the blockchain world moving forward, Bitcoin and the crypto community, not only needed developers, but also miners to verify transactions on the Bitcoin network and other crypto networks.
In contrast to Satoshi’s ambition to decentralize, miners and developers, have on occasion, fallen into disagreement over blockchain enhancements and/or developments.
For Bitcoin, minors had cornered the market with mining farms, leaving want-to-be minors out in the cold. This also meant that the income stream was just too large to give up control. Decentralized became centralized in a matter of years.
As a result, the Bitcoin community and the crypto community became divided between those in search of crypto income and the ideologists looking to continue to prize control from governments, central banks, and the world’s largest financial institutions.
This divergence in view and intent ultimately led to the splitting of crypto communities. The crypto technical term for this being a “Fork.”
The Fork
In the crypto sphere, there are two types of forks that investors need to be concerned with. The first and generally of little impact to value and the broader market are soft forks.
In the event of a soft fork, only one blockchain remains valid, with users adopting the changes made to the blockchain.
By contrast, hard forks can have a material impact on price in the lead up and immediate aftermath of a fork.
In a hard fork event, both blockchains coexist. The coexistence occurs from nodes continuing to support the original blockchain.
In some instances, therefore, both blockchains can coexist and remain prominent in the crypto market place. This is when there is sufficient support for both the old and the new versions.
In some cases, however, nodes may eventually shift to the new version, leaving the old blockchain obsolete.
From an investor perspective, an important feature of a hard fork is that holders of the original crypto are awarded the new coins upon completion of the hard fork.
In the case of a successful hard fork, where both chains coexist, the value of the coins can increase substantially.
For this reason, anticipation and an eventual hard fork can have a material impact on price and crypto market volatility.
Since Bitcoin’s creation, the total number of cryptos in the market place have surged to a whopping 11,064 based on numbers from CoinMarketCap.
Notably, in spite of numerous soft and hard forks, Bitcoin (“BTC”) continues to be the dominant crypto.
The 2017 Convergence
Back in late 2017, we did see Bitcoin’s dominance converge with the likes of Ethereum. This coincided with Bitcoin’s first major hard fork, which resulted in the creation of Bitcoin Cash (“BCH”).