Bitcoin ($BTC), despite being close to 40% below its all-time high since November 2021, has continued to revel in generally bullish news. The most recent being its recent approval as a currency in Russia, as their central bank seeks to facilitate and regulate crypto transactions. This could finally be the domino that leads to worldwide adoption, beginning with El Salvador earlier in 2021. With $BTC in the spotlight, it raises the question what happened to the Bitcoin hard forks? A hard fork is a breakaway from Bitcoin’s into an entirely new branch of the blockchain – completely different to Bitcoin itself. Despite early successes with their launches, a majority, especially during 2021 failed to break into the top ten cryptocurrencies by market capitalisation, and their price action has been less than favourable. So, is there still potential in trying to achieve “Nakamoto’s true vision”, or has Bitcoin truly asserted its dominance as the forks fade into obscurity?
After Satoshi mined the Genesis Block (the first block on the bitcoin blockchain), he made early changes to the network before disappearing. Since then, no individual group can determine how the network should be upgraded – which led to the hard forks. The first prominent hard fork was Bitcoin XT in 2014, which promised to increase the transaction speed. It since went defunct due to a lack of user base, but this didn’t stop more communities to continue to try and innovate on Bitcoin.
The most prominent and well-known hard fork is Bitcoin Cash ($BCH). BCH split from BTC in 2017, due to disagreements due to the SegWit implementation (a protocol intended to reduce the validation time to increase transaction speed). They promised larger block sizes which would increase scalability and reduce transaction speeds and fees. The early promises were reflected in the price, reaching upwards of 4,000 USD in December 2017. However, this has been little more than a promise, the average block mined on BCH is significantly smaller than Bitcoin, due to its network congestions and its faster transaction fees. These have since been dwarfed by the likes of other cryptocurrencies, such as layer 2 solutions such as Avalanche or Fantom. Even BTC now has faster transactions, due to the lightning network, and lower fees than BCH. Overall, this disappointment has been reflected in the price. Bitcoin Cash has never come close to 4,000 USD again and currently sits around 300 USD, and despite the major bullish trend for Crypto as a whole, BCH’s market share declined from 0.84% to 0.37%. Overall, it has been a disappointing year for BCH.
Moreover, Bitcoin Cash also had its very own hard fork: Bitcoin Satoshi’s Vision (BSV). BSV believe that implementations such as SegWit and the Lightning Network were against the original vision of Bitcoin. Instead, only increasing block size for scalability was the true vision. As BCH started to deviate and make structural changes, the fork of BSV was created, therefore the belief is that BSV is the “true” Bitcoin. These larger blocks, however, sacrifice a major component of Crypto belief: decentralisation. As its leading to fewer nodes, it can store the entire blockchain history due to storage requirements. Moreover, Bitcoin SV has been shrouded in controversy since its launch, primarily due to its creator Craig Wright. He claims to be the founder of Bitcoin: Satoshi Nakamoto (which is just a placeholder name). There has been an ongoing discussion since his initial claim to the creation of Bitcoin but most of the Crypto community has rejected his claim. Due to this controversy, BSV has been delisted from large exchanges such as Binance and Kraken, along with names such as Vitalik Buterin (founder of Ethereum) calling Wright a fraud in 2018. This has therefore, been reflected negatively in the price action. Despite the claim of being the original Bitcoin, BSV lost over 94% of its value in 2021 compared to BTC and was one of the worst performing digital assets for the year, losing over 20% of its value. Even in comparison to the beginning of 2022, it currently sits below its January value.
There are many other forks to mention, such as Bitcoin Gold and Bitcoin Diamond, but none of the projects seemingly have come close to toppling its predecessor. As Bitcoin strives for institutional and nationwide acceptance, the hard forks have been left in the dust, as both Bitcoin and other Cryptos seek to surpass them.
By: Samuel Buchan
Sector Head: Sophia Li