The world is filled with great splits. Sometimes a split is just the best way of getting the best of both worlds. It let’s bygones be bygones and leaves freedom of choice to the market which is in the ideal position to determine the best way forward. But in Bitcoin space, talk of a split is tantamount to talking about White Privilege, racism, or dog meat as a food delicacy. Make no mistake, this is a carefully manicured and cultivated reaction culminating from 4 years of careful opinion “shaping” by interested parties, which I have written about several times in the past, but this is not a post to rehash those arguments.
This is an attempt to examine the practical realities of a split in Bitcoin, WITHOUT any of the ethical/emotional/political/ideological baggage that so many have deliberately or inadvertently attached to the debate.
The Fork/No-fork debate polarizes the Bitcoin community into 2 distinct groups: Those who believe that costs to use Bitcoin should be uniformly low (i.e. the direct user base should grow exponentially) –let’s call these people the “Capitalists” , versus those who believe that costs can be high for those who want to use Bitcoin directly (thus capping its direct user base) and low cost L2 solutions should be used by everyone else –let’s call these guys the “Wizards”. Basically one side wants a uniform Bitcoin system and the other a 2-Tier system. Besides the obvious analog that comes to mind between a 2-tiered system and the economic realities of “Have’s” vs “Have-not’s”, both sides fundamentally disagree on how to protect the security of Bitcoin.
First, let’s look at what the practical implications of a split would entail.
Simply put: if Bitcoin were to split tomorrow, and we have all the Wizards and their supporters on their own chain, (even if it is a minority chain) then they will not have many transactions or blocks on their chain. This is totally fine in the wizards minds as fewer but more expensive transactions is actually their ideal operation mode for the network. If this was done via UASF, then the original chain would then only contain those who want to expand the network user base via low fee transactions, which would immediately have the majority hashrate needed in order to safely deploy a hard fork to larger blocks. Wizards get a ‘safer’, slower Bitcoin, Capitalists get a cheaper larger userbase Bitcoin.
Both sides get what they want right?
But what about duplicate coins? Double spends? I have addressed these and other technical issues surrounding supporting dual Bitcoins in the past, so it simply is a choice of the businesses which Bitcoin to accept. Same goes for crypto Exchanges. So If Bitcoin splits into 2 coins, after a bit of a transition period, what is the harm? If you are one to believe that the transition period itself is enough to throw enough chaos and doubt into the ecosystem such that Bitcoin is irreparably destroyed, well then…. we can address this point in a later article but I would say that you don’t understand why Bitcoin works in the first place.
The harm, the UASF supporters would say, is that the original chain may be possibly reorganized into the new UASF chain sometime in the future, and that would cause, once again, indescribable amounts of confusion and chaos, which, again, without explanation, will destroy the ecosystem somehow.
But would it?
A chain “reorg” which is essentially a large rollback and re-writing of the blockchain sounds really scary. But what does it really mean from the perspective of a user or a business? Does that mean transactions would be undone? No. All your txs published to one chain actually exists on the other chain as well by default. Does it mean that I lose coins? No, unless you are a miner. Does it mean that something that I purchased with Bitcoin in the past is now a theft? No. Every business that decided to accept one coin over the other made a conscious choice to support it. Actually all that it means is that transactions that were previously confirmed, are now ‘reconfirmed’ but in a different order than they were in the past. Which for most users won’t matter at all. Everyone that owned Bitcoins on one chain owns the same number of Bitcoins on the other chain.
Conversely, if it turns out that after the split, one of the chains get’s attacked by a state actor, or dies out due to lack of mining support, and it turns out that either one of the Capitalists or Wizards was right, the losing side would capitulate, and abandon their chain. But then the ‘right solution’ would be obvious to everyone, and we would no longer have any debate on how to proceed going forward. No more deadlock, no more in-fighting about which way is best for the community and network. We would be able to move as a unified force again, in full consensus, because all doubt had been removed from the system. We would then be just as effective as ETH, XMR, DASH or any of the other altcoins which have experienced large gains in popularity due to their unity in purpose. Is that not worth the small cost of a potential bit of ‘confusion’ during a split?
We have already seen a successful split in the case of ETH/ETC.
Both Ethereum chains are doing better than they were together before the split. We shouldn’t be afraid to split just because we are afraid of a little volatility and some negative press. If you believe negative press and media reactions to a chain split affecting the price of BTC is tantamount to the security and long term success of the network, then you are doing Bitcoin wrong.