
What is a Bitcoin fork? - sds111
https://blog.coinbase.com/what-is-a-bitcoin-fork-cba07fe73ef1
======
rebuilder
FYI the segwit2x fork this post was probably mainly motivated by appears to
have been called off: [https://lists.linuxfoundation.org/pipermail/bitcoin-
segwit2x...](https://lists.linuxfoundation.org/pipermail/bitcoin-
segwit2x/2017-November/000685.html)

~~~
tryingagainbro
Until it's on again. Didn't they fork a few months ago too (Bitcoin Cash)?

~~~
nikcub
Coinbase didn't sign the notice calling off segwit2x[0] even tho they were an
NYA signatory - but rather said they were "monitoring"[1] the situation

I sense some uncertainty from Coinbase on what they want to do next.

edit: also interesting that the price for segwit2x futures has increased today
to ~$380 after a low of $198[2]

[0] [https://lists.linuxfoundation.org/pipermail/bitcoin-
segwit2x...](https://lists.linuxfoundation.org/pipermail/bitcoin-
segwit2x/2017-November/000685.html)

[1]
[https://twitter.com/coinbase/status/928476503062462464](https://twitter.com/coinbase/status/928476503062462464)

[2]
[https://coinmarketcap.com/currencies/segwit2x/](https://coinmarketcap.com/currencies/segwit2x/)

~~~
deevolution
What is bitcoin futures? Is this speculative pricing on the speculative 2x
fork?

~~~
mbaha
This reminds me of the scene in The Big Short where a manager casually talks
about CDOs, synthetic CDOs and squared CDOs. And Steve Carell's character
start asking: "what are squared CDOs... ?"

------
tmlee
We attempted to snapshot the current situation with
[https://imgur.com/Zlopq7S](https://imgur.com/Zlopq7S)

May be outdated now that 2X has been called off

~~~
sosuke
Nice infographic! oh I just got an email from the Bitcoin Gold peeps saying
they were going live in 2 days

------
Waterluvian
That helped but I do not understand the economic compatibility of a fork. How
do they not wreak havoc and chaos on that coin's economy? Do I get coins for
each of the new coins or do I have to pick? It all feels really risky and that
risk feels foisted upon me. Can I cash out before the fork?

~~~
cjhanks
I don't either. Fiat currencies don't fork - you can simply exchange one for
another. Another close comparison is a traded equity having a 2:1 split,
except shareholders technically lose nothing. Another case would be stock
dilution - though, I have never heard of a public stock diluting to 50%
value... that seems unlikely. If a specific commodity were to suddenly decide
it had an unreported surplus on the order of 100% of current market estimates,
the consequences on valuation would be pretty significant (maybe not a 2x
loss...).

I guess the closest comparison to bitcoin is; oil price is at $60 / barrel
today and speculators believe there is a 30% chance that they mis-estimated
the number of barrels by 100% - but you won't know for sure for another 3
months. What's should the price of oil be tomorrow?

~~~
nikcub
> Fiat currencies don't fork

There was an interesting situation after the fall of the Soviet Union. Because
most of the states didn't have economies strong enough to support their own
currency, they remained a unified currency union as part of the CIS

The only problem was that each state then started printing the money like mad
and then sending it to other states to be sold / traded. Some of the states
then introduced what was a quasi two-currency system - to _buy_ local currency
or to exchange it, you required _both_ the old Soviet Ruble _and_ a new
"permission" note from the state to exchange.

In theory this placed a cap on the inflation but the result was almost like a
currency fork. A lot of these states ended up establishing their own
currencies but still had problems with "swaps" from the old currency - so they
were constantly reissuing new notes and new coins that needed to be exchanged
- but many of the old notes or permission slips would have value on the black
market

~~~
fernandopj
> Fiat currencies don't fork

Another situation: in Brazil 90's, inflation was rampant and a new currency
was being planned. But, until BRL was printed as the final currency, a few
"forks"/new money were introduced, like URV (for one year), which set the
market value for the new BRL, something like 2500:1 old-money:URV then 1:1
URV:BRL. So, the analogy: a fiat fork did happen and a two-currency system was
put in play, until the "miners" decided to ultimately put the hash power into
just one fork.

------
nope96
Do a little searching on the people pushing the "2x" Fork - Here's one
example, CEO of OP's link Coinbase.com:

>Coinbase CEO Owns More Ether Than Bitcoin - Coinjournal

>Coinbase CEO Armstrong: Ethereum Scaling Better Than Bitcoin

Another example, The head coder on the "2x" fork has announced his own coin to
ICO soon,

> Jeff Garzik, ... has seen its shortcomings firsthand. So he decided to
> create a better digital currency.

All the people pushing the 2x fork are very heavily invested in coins
competing with Bitcoin. It's odd.

~~~
flashmob
Both Brian & Jeff are still both heavily invested in businesses that rely on
Bitcoin, they are not just speculators who simply buy and hold.

Their business plans are ruined if Bitcoin fees get too high. Note that
'extremely low fees' was the original selling point of Bitcoin which now has
been ruined. So they were simply defending their businesses.

~~~
nope96
Jeff's business model relies more on ETH than Bitcoin:

"The current launch plan includes launching on Ethereum chain, which will
require paying ETH to obtain MTN tokens"

20% pre-mine

price starts at 1.67 ETH per MTN token

Remember Tezos? That raised a quarter of a billion dollars. There is way more
money in making an ICO and saying "Bitcoin is broken! You need [new coin]!"

Brian makes money when you convert USD/BTC/ETH into USD/BTC/ETH. They
announced they are adding more coins soon.

The main "2x" supporter runs "Grayscale Ethereum Classic Investment Trust" and
tries to sell investors on a coin that nobody has ever used for anything ever.

The people who are "all in" on Bitcoin (the developers for example) think the
"2x" fork is a terrible terrible idea. The people who are heavily invested in
other coins want the "2x" fork to happen.

~~~
flashmob
Oh, I was referring to bitpay, which probably will not last long unless it
pivots into b2b or altcoins.

It's also hard to tell if Bitcoin developers are all in or not. Note that
developers can have different interests than holders (eg. The want to get
control of the codebase in order to get status and recognition & hopefully
future consulting contracts). Note that the current bitcoin devs are mostly a
new generation that got later in the game. Source & analysis about this point
here [http://hackingdistributed.com/2017/08/26/whos-your-crypto-
bu...](http://hackingdistributed.com/2017/08/26/whos-your-crypto-buddy/)

~~~
nope96
> Note that the current bitcoin devs are mostly a new generation that got
> later in the game.

this is 100% false, see this post:

[https://www.reddit.com/r/Bitcoin/comments/72lwzv/if_bitcoin_...](https://www.reddit.com/r/Bitcoin/comments/72lwzv/if_bitcoin_is_subject_to_backroom_takeover_then/dnjkuoc/)

~~~
flashmob
citing reddit? I'm guessing you'd like to point out the commit history table.
Nice.

You might notice that the table (conveniently) starts from 2010, after a good
chunk of coins already has been mined. 2011-2012 is when a lot of the new devs
came in which is the new generation, but it was getting much more difficult to
mine then.

There's also so many problems with git commit history, so let's be honest
here, ie. How many commits doesn't tell the whole story.

Hey, btw, my comments are just observations & not meant to criticize, sorry if
you think I'm attacking you. I'm pretty positive about bitcoin and I think
it's good that it can re-invent itself and find a good niche (the b2b /
institutional market could be huge and certainly would see Bitcoin really
growing up). The direction that the current team has chosen to lead it to has
certainly paid off well. I sincerely wish the project more success in the
future!

~~~
xorcist
There were very few people involved in Bitcoin before 2010. Probably guys like
Finney and theymos. The software was more like a proof of concept back then, I
believe. I think we have to count even people getting involved after it became
mainstream in 2013 as early adopters in the larger scope of things.

------
ricg
Here's another stupid question: Can anybody start a new fork?

Let's say, I invested in the original Bitcoin. Then somebody who has the
marketing resources to build enough interest in a new coin comes along and
decides to fork. Because of the hype around the new coin type, enough people
are willing to trade it after the fork.

I'm being given the same number of coins of the forked kind and the value of
my original coins drops by the difference in value compared to the new coins
(or around that).

If I'd rather only invest in the original Bitcoin, I'd have to sell the forked
coins immediately and buy the original Bitcoin back just to keep my investment
value the same.

If anybody can come along and fork:

That sounds like in the world of stocks, a competitor could come along and
decide to split the stocks of MY company from the outside, driving down the
price of my stocks (me as the company's owner or investor) and there's nothing
I can do about it.

~~~
CydeWeys
Yes, anyone can start a fork. It's hard to get momentum on it though, as it'll
likely just be a shitcoin that no one cares about. Witness what happened with
Bitcoin Gold.

So far there's only been one successful hardfork of Bitcoin (Bitcoin Cash) in
all its history. Anyone can try, but few succeed.

~~~
kbart
Yes, but it doesn't answer the OP's question. What if government, official
bank or other strong entity with virtually unlimited resources starts a fork
(something like Ecoin for those who watch Mr. Robot)? I wouldn't call such
event improbable.

~~~
beefield
I strongly assume that a strong entity would prefer to create a new coin from
scratch instead of donating huge amounts of value to existing bitcoin owners.

------
ricg
Ok, stupid question: in real dollars, if I sell my ONE coin just before a fork
or my then TWO coins right after the fork, will I end up with the same dollar
amount?

For that to happen the old coin type would have to lose in price at which the
fork starts. How is the price for a coin of a fork determined?

~~~
lloeki
For all intents and purposes, from the point of view of each chain, the other
does not exists but it merely turns out their past are the same. IOW BTC _is_
B2X (the money, not the unit) before the fork, and each one considers that its
own blockchain is _the Truth_ †. So:

    
    
        - from the BTC point of view, there is 1 BTC both before and after the fork
        - from the B2X point of view, there is 1 B2X both before and after the fork
        - at any one time the value of 1 BTC is whatever people want to exchange it for
        - at any one time the value of 1 B2X is whatever people want to exchange it for
        - it just turns out that BTC == B2X before the fork
    

Therefore the value of each one merely depends on how much people care to
trade them for, and the fork may affect this value, both before and after.
Both may crash, both may shoot through the roof, or anything in between
independently. But yes indeed since they come from the same past, if T is the
last common transaction on the blockchain, then in between T and T+1 your
1(BTC+B2X) == X$ just became 1BTC + 1B2X == Y$ + Z$ (which at that precise,
immaterial, instant == X$ + X$) by virtue of the fact that they disagree about
the validity of any transaction you may make on each chain, including ones
that get $$ out of the system. Hence you can "double spend" the coin. But
speculation may shortly thereafter make Y and Z stay == X$ + X$, or become X$
+ 0$, or X/2$ + X/2$).

† Without replay protection, transactions may or may not be replayed, but the
blockchains _do_ differ.

~~~
ricg
So if the exchange price for BTC does not drop by the same amount of the
exchange price for B2X, a fork essentially means money (dollars) is generated
out of nothing and given to me as the owner of now 2 coins (one of each type)?

Or in the opposite case, a fork could mean I lose money, just because somebody
else decided to create fork?

~~~
corobo
In fairness you could also lose money because it's Bitcoin and its value is
all over the place, fork or no fork

------
mlamat
A bitcoin fork is a political decision on the currency, like the ones central
banks make.

There are going to be a lot of forks in the future.

~~~
BinaryIdiot
> There are going to be a lot of forks in the future.

I tend to agree. The problem, then, is what happens after 3 forks? 4? 10?
We're going to keep increasing the number of crypto currencies we own and then
we figure to figure out who supports what version of the currency we have to
figure out how to cash out...

The entire idea of a fork sounds like an absolute nightmare. This is why I'm
not putting any serious amount of money in crypto currencies.

~~~
nikcub
More dangerous than the tech part of the fork IMO is that with any one fork
one or more of the bitcoin deposit holding companies can decide at-will that
they'll follow a fork as the "new" bitcoin

This is an even bigger threat when you consider that they could be
incentivized to follow a less valuable fork: exchange your new bitcoin for the
old, convert all your users to the new bitcoin - you can now pocket the
difference.

On the other hand you can also attempt to keep the airdropped funds from
forks. Coinbase at first didn't recognize the Bitcoin Cash fork - it was only
with pressure that they relented. But there have been other trusted holders
who just "ignored" forks

~~~
acchow
Or you could hold your own bitcoin in your own wallet.

~~~
nikcub
That's the moral of the story - but a lot of people don't

I _still_ haven't convinced my own brother that he needs to move his coins
off-market - he said he'll "get around to it at some point"

Also have tech friends who keep coins in Coinbase/Coinbase Vault

~~~
BinaryIdiot
It's hard to ignore how handy it is when someone else holds your money. When
my bank holds my money I can send it to anywhere from any place. Using a
crypto wallet I now have this file I have to somehow keep safe and with me at
all times. What happens when or if it gets stolen? Like cash it's gone.

So I understand why people do it. Ease of use typically outshines most
security issues. Someone needs to figure out how to strike a better balance.

~~~
nicky0
Keep a paper or electronic backup at home and/or another safe place.

Also your should protect mobile/app wallet with a passphrase so it is safe if
you lose it.

------
Double_a_92
So you have a ledger... Somebody makes a copy of it and adds "Gold" or "Cash"
to the title. Then continues to use that ledger with some people however they
want.

------
alexasmyths
This is an interesting paradox because the whole point of the system was that
it was decentralized, and once set in motion the rules could not be changed.

Or so they can?

And who decides?

Because these forks can have considerably favourable or negative outcomes for
specific stakeholders, it's nary impossible to make the decision 'fairly' and
this rather undermines the whole thing, no? And yes, I do understand that
'value' may be the same after such 'forks' but different post-fork mechanisms
will imply different outcomes, surely.

Would it be possible for nefarious actors to wedge themselves into this
process? ... Because we were all looking for the 'technical fault' in the
maths/encryption, we possibly missed this aspect of risk?

~~~
colordrops
Saying the rules can be changed is like saying that your eyes changed color if
you have a child with different color eyes. A fork is not the same chain as
the original.

~~~
alexasmyths
All of the comments above lead me to understand that basically anything can
happen with BTC and this kind of undermines it's value as a 'hard currency'.

The whole point of decentralization was that nobody could control it, and
devaluation was based on some algorithm, limited by tech.

If these rules can change, then the intrinsic value of BTC is truly up in the
air.

What business would invest in using BTC as a currency knowing such things can
arbitrarily happen?

~~~
prewett
Businesses don't invest _in_ currency, they invest _with_ it. Businesses don't
use cash for investments, either. Investing is buying something that will
generate returns, and cash cannot generate any return, kind of by definition.
Fiat currencies have no intrinsic value, either, but everyone still uses them.
But since one has to keep some cash on hand, a stable currency is preferable.

The only reason people are investing in BTC is that the price is going up
because demand is going up faster than supply is increasing. It's not really
any different than if Confederate paper money became the hot thing, and stores
started accepting it for payment, despite it not being legally currency. Since
they only discover new sources of Confederate money every so often, if
everyone wants to buy the stuff, the price is going to go up. If this keeps on
happening year after year, people are going to start thinking it always goes
up and buy it expecting it to go up.

~~~
alexasmyths
Yes, I get what you are saying but BTC - as a currency - will require a lot of
investment 'in' BTC for transactional purposes, accounting etc..

BTC is already waning as a currency - fewer vendors using it.

As a 'store of value' it's really too volatile - there are just too many
other, better options.

So what's left?

------
kluck
Physically a BitCoin is, when you look at it with your own eyes, nothing, not
even air. And probably everyone knows what a fork is (metal thingy for eating
stuff) ... so here is your answer. Everyone else who says otherwise, is
probably employed by Bitcoin ;)

~~~
nicky0
I'm sorry what was your answer??

------
659087
Lately, it's an insider cash grab and market manipulation technique.

------
techno_modus
So a Bitcoin fork is a kind of a git branch or at least one could think of it
so. In this sense, it would be interesting to implement this possibility as a
feature. Then everybody could start a new branch using new software branch.
What is important, all such forks/branches will share the same parent paths
(previous transactions). Essentially, all transactions will be represented as
a git-like tree where each branch is managed by the corresponding software
version.

------
ryan606
If Coinbase only supports one version, what happens to the forked coins?

------
dmitriid
> What is a Bitcoin fork?

An attempt to pretend that an inherently inefficient non-scalable technology
can be made efficient and scalable.

------
known
Forks foster creativity

------
azimsai
Informative post

------
Beejeepa
Coinbase is going to only support Bitcoin Cash.

~~~
vinniejames
This is flat out false. They have no plan to even support it at all, let alone
default to it

~~~
acchow
"We are planning to have support for bitcoin cash by January 1, 2018"

[https://blog.coinbase.com/update-on-bitcoin-
cash-8a67a7e8dbd...](https://blog.coinbase.com/update-on-bitcoin-
cash-8a67a7e8dbdf)

~~~
vinniejames
“assuming no additional risks emerge during that time...We’ll make a
determination at a later date about adding trading support”

They do not have a plan to add it to the trading platform, which is the only
thing that would drive any real value to the Bitcoin Cash market. The only
reason they added it at all is to allow people to take their coin and sell it
on another exchange, to avoid lawsuits.

If they had any plan to add it to add it to the exchange. It would make much
more sense to release it at the same time, thereby profiting off of the
trading fees

