Does Ethereum Hard Fork Confirm Bitcoin Block Size Conservatism?

Rage Comment : Bitcoin users have long been arguing over how to best expand the network to attract more users. Some believe that Ethereum hard forks can promote further development of the blockchain and allow the conservative Ethereum community to accept changes. This fork can create more value. The market value of ETH and ETC is greater than the value of Ethereum itself. Another blockchain can also give users more choices and attract more users.

Translation: Nicole

Could progress on the Ethereum blockchain solve bitcoin’s biggest controversy?

This is not a simple question, as there are differences between the two blockchain networks. After all, Bitcoin is a censorship-resistant digital currency, and Ethereum is trying to be a decentralized application platform.

But last month’s hard fork decision, which split ethereum into two competing blockchains, has also puzzled some academics and analysts.

Just over a month after the collapse of The DAO, two Ethereum blockchains emerged, leading to a chaotic trading environment and sparking much debate over whether this was the “right decision” in handling the DAO incident.

In the context of decentralized management, the Ethereum hard fork plan has triggered a dispute in the Bitcoin community over the block size. This dispute began in 2015, with Bitcoin users arguing over how to best expand the network to attract more users.

From a certain perspective, the Bitcoin Core development team was too conservative and too worried about the technical failure of the hard fork solution. But since Ethereum changed the consensus rules with a technical patch, this idea has changed.

For example, Joe Colangelo, executive director of Consumers' Research, said he believes the results are a validation of the steps taken by Bitcoin Core, which is a mostly volunteer development team.

Colangelo explained the conservative nature of the development team, saying that while the block size change may disappoint some, it gives him and his team confidence in the other rules that keep Bitcoin valuable.

He told CoinDesk:

“The intransigence of the Bitcoin development community is a feature, not a bug. If the block size cannot be easily increased, then Bitcoin with a 21m limit is secure enough.”

The rewards of conservatism

In simple terms, this can help understand why blockchain networks fork, or make changes that allow participants to accept new rules of the blockchain.

Late last month, the development community behind ethereum decided to make changes to the blockchain that would restore funds lost by investors in The DAO, a smart contract-based funding vehicle launched this summer that raised millions in ether.

To do this, all participants in Ethereum must adopt a new version of the blockchain's transaction history in which all stolen funds of investors are transferred to a new wallet.

This is an emergency measure, a trade-off designed to prevent malicious attackers from stealing more funds.

To some extent, all Bitcoin incidents begin in a similar way, with the network's ability to trade being attacked, and then action being taken to respond.

But Bitcoin Core, the voluntary development community that works on the code, resisted a hard fork that would increase the block size, and its members prefer incremental solutions, such as Segregated Witness, to scale the network.

Some believe that the stance of Bitcoin developers, while controversial, has been validated by Ethereum, while others believe that its impact goes far beyond that and will have long-term effects on the industry.

Chris DeRose

Industry observer Chris DeRose told CoinDesk that bitcoin’s success is the result of a development team that is “detached from short-term speculative motivations.”

He said:

“The Bitcoin leadership model has advantages over more cautious macroeconomic management by actual users, which is generally in the interests of short-term investors.”

It's too early

As for what we can learn from this — whether hard fork conservatism is justified — it’s unclear to others.

Some observers told CoinDesk that it will then be decided which viewpoints will inform the wider industry, or what conclusions can be drawn.

Gil Luria, head of technical research at Wedbush Securities, said he believes it is too early to make a decision on the ethereum hard fork.

One potential reason is that it is unclear whether the old version of the blockchain, ETC, maintained by the new development team, will continue to develop, and traders who provide market liquidity for both blockchains are debating the issue.

Gil Luria

He told CoinDesk:

“Ethereum is entering uncharted territory and the Ethereum community is learning new things every day. The last few weeks have been just like the early days of Bitcoin, which has gone through many difficulties but has emerged stronger in the end.”

Jim Harper, a senior fellow at the Cato Institute, agreed.

He said:

“I think the Ethereum hard fork taught Bitcoin and digital currencies a valuable lesson, and I don’t think we can know yet whether this fork will be good or bad.”

Take the right action

On the other hand, others believe that an Ethereum hard fork could promote further development of the blockchain and make the conservative Ethereum community accept the change.

Roger Ver, a Bitcoin investor who has campaigned on increasing the block size, believes the Ethereum hard fork is not the disaster that most people think it is.

He believes that by allowing investors to own value on both chains, more value can be created and Ethereum's reputation will not deteriorate.

Roger Ver

He told CoinDesk:

“The market value of both Ethereum blockchains is actually greater than the value of the original blockchain, so this means that the market value of ETH and ETC is greater than the value of Ethereum itself.”

He believes that even if the network forks, no one will lose money.

He said:

“It means no one loses money, no one is hurt, and now there’s another digital currency to choose from in the ecosystem.”

Ver went on to say that such a move “seems to be the best option for bitcoin to grow,” and that multiple versions of bitcoin would give potential users more options.

The disagreement suggests that the activity has been under review for some time, at the very least, and that there will be controversy over how the blockchain community is changing.