No matter how many times you fork, Bitcoin will always be the only one

There has been some panic in the Bitcoin community recently regarding various Bitcoin network “forks”, especially among non-technical people who have heard inaccurate or incomplete news in the mainstream media. So it’s important to clear up some of the panic, as there are a lot of so-called “forks” coming.

First and foremost, it is important to know that there will only ever be a maximum of 21 million bitcoins in existence, and this has never changed.

Bitcoin has and will continue to fork into several currencies that all have full snapshots of Bitcoin at the time of their emergence. However, there is still only one Bitcoin. Bitcoin Cash, Bitcoin Gold, Bitcoin-something else, etc. None of them are interoperable with the true Bitcoin network.

Bitcoin skeptics have been telling people that the Bitcoin Cash fork has resulted in 42 million Bitcoins. Soon after, when the Bitcoin Gold fork occurs, these same people will start claiming that the number of Bitcoins has increased to 63 million. This is pure bullshit.

Bitcoin Cash and Bitcoin Gold are cryptocurrencies that cannot be used on the Bitcoin network. As far as the Bitcoin network is concerned, they are just altcoins, just like Litecoin, Dash, etc. They are not Bitcoins, and they cannot be said to be. There is only one Bitcoin, and there will always be only 21 million Bitcoins.

Difference between forking and splitting

Many unsophisticated investors react with fear when hearing about forks. Keep calm: forks are nothing to worry about. Bitcoin and numerous altcoins have successfully forked over the years without any adverse effects. In fact, Dash has performed a carefully designed "stepped hard fork" ('Spork') every time it upgrades the protocol. And each time it has not resulted in a chain split.

There are two types of forks: soft forks and hard forks. Soft forks are backwards compatible, which means that upgraded nodes can use the new features, while old nodes can still be used, but cannot use the new features. Bitcoin's recent Segregated Witness (segwit) upgrade is a soft fork.

With segwit, not all bitcoin nodes need to upgrade their software. Anyone who does not want to use segwit features (such as lower transaction fees) is free to continue using older bitcoin client versions without any problems.

A hard fork is the opposite: all nodes must be upgraded. Any node that does not upgrade will no longer function. The real danger is that a soft fork is reversible because following the new rules is not mandatory but optional. A hard fork is irreversible, and any code bugs or unexpected network behavior that occurs after a hard fork can only be solved by issuing another hard fork. This can quickly lead to a black hole.

The worst-case scenario is when a hard fork results in a blockchain split. A blockchain split occurs when a hard fork goes badly and the network itself splits in two. One part of the network follows one set of rules, while the other part of the network follows another set of rules. A blockchain split is extremely dangerous and essentially renders the network unusable until the split is resolved via another hard fork. Given the massive size of Bitcoin's network and economy, it would be extremely difficult to perform a subsequent hard fork to resolve a blockchain split.

A large enough blockchain split could kill Bitcoin.

What is Bitcoin Cash?

When it became clear that the segwit solution would be the winner of the Bitcoin civil war, a group of dissatisfied developers decided to create an alternative version of Bitcoin. This version, Bitcoin Cash, retains the entire Bitcoin transaction history and all of its rules and structures. However, three changes were made: Bitcoin's 1MB block size limit was increased, the segwit code was removed, and an "Emergency Difficulty Adjustment (EDA)" was added.

Due to the nature of the fork, everyone who held Bitcoin before the fork received an equal amount of Bitcoin Cash after the fork. However, the two networks did not directly fight each other. For one, Bitcoin Cash added a feature called "replay protection" that prevents transactions on one network from affecting the other network.

Another reason is that almost all Bitcoin miners continue to mine Bitcoin, except for reducing their mining time when they are able to make more profit using Bitcoin Cash’s EDA. Most Bitcoin owners either sell the new currency or simply ignore it.

There is never any danger that Bitcoin Cash will replace Bitcoin. In fact, in the long run, Bitcoin Cash may be a good thing because it gives those who are dissatisfied with the Bitcoin community a currency of their own, eliminating their dissatisfaction with the Bitcoin community.

What is Bitcoin Gold?

Bitcoin Gold is a Bitcoin fork that is expected to occur on or about October 25, 2017. Like Bitcoin Cash, Bitcoin owners will receive an equal number of Bitcoin Gold coins when the fork occurs. Like Bitcoin Cash, Bitcoin owners who hold Bitcoin Gold may do nothing and continue to hold the new coins, or choose to sell them and exchange them for Bitcoin (assuming the new coins have value).

Just like Bitcoin Cash, Bitcoin Gold will be an altcoin. Bitcoin Gold will also have replay protection added, and since almost no miners will leave the Bitcoin network to mine Bitcoin Gold, this new coin will not threaten the Bitcoin network in any way. Bitcoin Gold has no chance of "replacing" or "killing" the Bitcoin main chain.

Bitcoin Gold is a protest against the growing power and centralization of miners. Bitcoin miners continue to mine Bitcoin using increasingly powerful specialized ASIC computers. These ASICs are extremely expensive and benefit greatly from economies of scale, leading to greater centralization of the Bitcoin network. Currently, a small number of miners (or mining pools) control the majority of Bitcoin's network hashrate.

Bitcoin Gold will use a different mining algorithm that changes the network consensus rules. This algorithm change will make ASICs inoperable and allow miners to use more readily available GPUs. This change is expected to reduce the centralization of miners on the Bitcoin Gold network.

Again, Bitcoin Gold will not impact Bitcoin in any way. Bitcoin Gold will be an altcoin with its own network and its own rules.

Fork vs. Airdrop

Although Bitcoin Cash and Bitcoin Gold are technically forks of Bitcoin, they do not affect Bitcoin in any way. They are not a threat. They simply use Bitcoin's code (mostly) and distribute their own coins proportionally to all Bitcoin holders.

Using the word “fork” to describe Bitcoin Cash and Bitcoin Gold is often confusing to newcomers, given that the word is usually associated with an attempt to upgrade the network. A better word would be “airdrop.”

An airdrop is a way to distribute the initial token supply when an altcoin is created. Byteball is a good example; users link their Byteball addresses to their Bitcoin addresses, and at a specific time, they receive a number of Byteball tokens in proportion to their Bitcoin ownership. Given that the only thing Bitcoin Cash and Bitcoin Gold use the Bitcoin blockchain for is their initial token distribution, they are actually more like airdrops than forks.

Don’t worry. None of these forks harm the Bitcoin network in any way. They don’t increase the supply of Bitcoin. How could they? They are not Bitcoin!