Contentious hard forks from an investor’s perspective

To give you some background, I was an investor in the second wave (starting sometime in 2013). I was very heavily invested then, but I am even more heavily invested now. I own my fair share of Bitcoin. It has been a roller coaster ride, but I have been keeping an eye on everything since then.

I’m not going to discuss the merits of SegWit or the different options for increasing the block size. But I’ll be clear that I’m in favor of SegWit for now, and I’m leaning toward a reasonable/cautious block size increase. I hope this problem can be solved in the future (perhaps the very far future) through automation. If you look at my post history, you can verify that I’m a staunch advocate of core.

What I want to discuss however is the fear of a hard fork. This is a sensitive subject: it is so sensitive that I think advocating for an implementation of Bitcoin that would result in a hard fork is currently banned from r/bitcoin. This is dangerous in my opinion.

I think the first mistake is to name a Bitcoin hard fork an altcoin. This does not distinguish between copying the Bitcoin code to create a brand new coin and copying all Bitcoin transaction history from the genesis block to the present to create a new ledger. Therefore, to avoid confusion, I prefer to name the result of the hard fork alt-bitcoin. (Translator's note: The standard English word for altcoin is altcoin. Here the author created a word alt-bticoin to represent the Bitcoin branch that appeared in the hard fork).

As a Bitcoin holder, I feel I must protect myself from the risk of another forked ledger overtaking Bitcoin. To do this, I decided to buy any altcoin above a certain threshold. Otherwise, for different reasons, it could threaten Bitcoin's hegemony. This cost is very high and very annoying. But prudent investors will try to hedge when necessary.

Nothing is more annoying to investors than uncertainty. At the same time, Bitcoin carries greater expectations. Ideally, Bitcoin should replace the current global monetary system, so Bitcoin needs to go through the test of fire. It needs to show its anti-fragility. To do this, we can't just solve the troubles without perceiving its fragility, we need to attack them, and the honey badger needs to stand up again.

To many people, hard forks seem like a big risk. Ethereum is a good example of this. Because a contentious hard fork resulted in two tokens. Even hard forks that were not initially controversial could result in two tokens, and some people believe that we should not implement hard forks.

The thing is, you can be scared, you can cover your eyes and ears, you don't talk about it. But at the end of the day, it's still possible that it will hard fork. It's not that hard, whatever is going to happen will happen, so we better be prepared for it.

The community is currently split in two, and we don't know the exact percentage. It could be anywhere from 90/10 to 50/50, and we can see both sides expressing their views on their respective subreddits. I think this split is the result of inevitable differences in opinions. More than that, I think maybe Bitcoin can't do everything at once? Maybe there is a need for "corporate Bitcoin" and "anti-government crypto Bitcoin". Today people are talking about block size and decentralization, tomorrow they will be talking about privacy or some other topic.

I feel like the only way to resolve this is through a contentious hard fork. Maybe two Bitcoins will survive, maybe more, maybe not. Am I afraid of a short-term price crash? Yes, let's not kid ourselves, traders take every moment of fear and greed. The more we talk about the possibility of a hard fork, the more "priced in" it will be. This shouldn't be a surprise.

Not only that, I think from the perspective of an investor currently trying to get into Bitcoin, I am very concerned about the uncertainty of future hard forks. Because it has never happened before, I don't know how the market and the network will react. When we have experienced it once and seen that it is possible, this uncertainty will decrease. More investors will be able to invest in the known Bitcoin and survive the fire of the hard fork.

Another good point is, I would rather have two Bitcoins that are striving to take their own market or fight each other for dominance than open the door to altcoins and give up these areas. Because I already own Bitcoin. I am not willing to buy other coins. Ultimately, the market will decide whether we only need one, or two, or three. I don't think there is a definitive answer to this question at this time. But I think currency has a huge network effect.

Back to the Ethereum eth/etc issue, I would say that many people ignored the possibility of two tokens appearing after the hard fork, but now we know it. We should be prepared for the hard fork before the eth/etc split.

Will it add a lot of hassle? Most likely. . . Exchanges will deal with this, payment processors will deal with this, wallets, holders, it will be confusing, negative publicity, etc. Prices will probably come under pressure. Investors will wait and see which coin will win.

But this sword is hanging around our necks, and I would rather see it on the floor. It is a matter of time before altcoins have 10 to 20% of the crypto market share. Some investors have already started waiting to see whether Bitcoin or Ethereum will win. A hard fork will show that the real power of Bitcoin is not in its open source technology, but in the ledger.

So let’s not be afraid of a hard fork because ultimately we can’t avoid it. Instead, let’s prepare ourselves for it and discuss it as much as possible.