Vitalik Buterin: Bitcoin is likely to hard fork this year

Ragnar Lifthrasir, chairman of the International Blockchain Real Estate Association (IBREA), recently tweeted that it is irresponsible for UAE real estate projects to choose to use the Ethereum (forked) blockchain. Compared with the Bitcoin blockchain, ETH is an inexperienced, changeable, and unstable platform. In response to this comment, ETH co-founder Vitalik Buterin tweeted that he believes that Bitcoin is more likely to undergo a hard fork this year than ETH.

Lifthrasir’s comments touched on the pros and cons of PoS and PoW mechanisms.

Lifthrasir cited the DAO incident in criticizing the UAE's decision, in which $145 million worth of Ether was forced to move due to a bug in the smart contract programming language. Ethereum developers created a new network and issued new rules. Miners switched to the new chain after the hard fork on July 20 last year. Lifthrasir said that such incidents prove that in the Ethereum system, only a few people can make major decisions due to investment interests or political factors.

The Problem with ETH

Lifthrasir further stated that the hard fork also brought another problem - not all miners were willing to accept the change, so they continued to mine on the old chain ETC (Ethereum Classic), causing two chains to compete with each other. Therefore, using the ETH network to register property rights is likely to result in two different versions of ownership information, which Lifthrasir said is the fatal weakness of the ETH blockchain.

He added that ETH had three hard forks between August and December 2016 to solve technical problems. On November 24, 2016, a synchronization error occurred between the Parity and Geth clients, causing ETH to temporarily split into two blockchain versions.

ETH developers are considering switching from PoW to PoS, which also poses a threat to network functionality, stability, and security.

Lifthrasir said that Bitcoin’s total computing power is nearly 40万倍of ETH, and its market value is 23倍ETH. These two data are enough to prove the security of the Bitcoin network.

Buterin’s response

Buterin added that when he was talking about Bitcoin forks, he was referring to forks like ETC and ETH, not accidental consensus forks.

He added that the “idea that blockchain can solve everything is a stupid arrogance.”

Lifthrasir said that for the UAE government’s immutable ownership registry system, the use of two competing blockchains (ETC vs ETH) is the Achilles’ heel of blockchain applications.

Buterin responded that the UAE simply "chose a more suitable blockchain" and made a wise choice.

Buterin explains PoS

Later, Buterin explained the PoS mechanism in detail. Recently, he stated his position in a Medium blog. He believes that blockchains guided by social consensus are too slow and inefficient in resolving disputes; in contrast, economic consensus can ensure system security in the short term.

PoW attracts a large amount of computing power through economic incentives, while the PoS mechanism does not use rewards to ensure security, but achieves this goal through fines.

Buterin said that good protocols always work well in different modes and scenarios - "economic rationality and coordinated decision-making; economic rationality and individual decision-making; simple fault tolerance; Byzantine fault tolerance..."

At the same time, he believes that consensus protocols that develop too quickly are bound to be risky, so more caution must be exercised when using them.