The scaling bitcoin debate has brought us to an interesting yet potentially controversial situation. With Bitcoin Unlimited supporters going to extreme measures to make the world believe their solution has more support, a fork of the bitcoin protocol becomes a realistic outcome. If that were to happen, the consequences could prove to be quite dire for all bitcoin users around the world. Luckily, there are some ways users can mitigate any potential damage with little effort.
A Bitcoin Hard Fork Has Severe Consequences
If bitcoin were to fork into two separate blockchains, a whole new set of problems will be created in the process. It all comes down to which blockchain is the longest. Said blockchain will either be the one running Segregated Witness or the one created by Bitcoin Unlimited. For users who have coins on the “wrong chain”, so to speak, any transactions sent or received during this period of instability can result in a net loss of funds. Transactions can only be recorded on one blockchain, yet if that turns out not to be the official blockchain, all transfers are null and void.
Although some experts may proclaim we will likely never see a bitcoin fork under the current conditions, the option should not be overlooked by any means. The aggressive attitude of Bitcoin Unlimited supporters is certainly pushing bitcoin towards splitting in two, even though that would not be in anybody’s best interest. After all, we would have the Bitcoin currency and whatever else the other blockchain will be called.
To be more precise, various exchanges propose to support Bitcoin Unlimited if it were to cause a bitcoin fork. However, they would list this new currency as an altcoin, rather than labeling it as the official bitcoin people know today. It seems likely this fork would be labeled as “BTU” instead of BTC, indicating the Bitcoin Unlimited chain will always be inferior compared to the real bitcoin. Since no service provider or exchange has openly pledged support for Bitcoin Unlimited as the “best” scaling solution, labeling it as an altcoin in the case of a fork seems more than justifiable.
A similar situation exists in the world of Ethereum. On the one hand, there is ETH, the “original” currency under which Ethereum is listed across cryptocurrency exchanges. However, during one of the previous hard forks, Ethereum effectively split into two camps. Ethereum Classic was created as a result, supported by a group of people who do not support the decision by the developers to bail out investors of The DAO.
It is not unlikely the situation between Bitcoin and Bitcoin Unlimited would evolve in a similar direction. Both blockchains would progress their development accordingly. Considering how Unlimited has some wealthy supporters, funding future development should not be an issue. However, this would result in BTU becoming an alternative form of bitcoin, which will hinder its global traction by quite a margin. Then again, since no service providers actively support BU right now, its chance of success is already limited.
Users who are concerned about a potential bitcoin split need to take ample precautions. Do not move your bitcoins until the network has been stabilized, or funds may end up missing. It is also worth backing up your bitcoin wallet right before the fork will occur. If things turn out similar to Ethereum Classic, bitcoin users would effectively double their amount of bitcoins as the balance exists on both the BTC and BTU blockchain. This would allow users to sell off their BTU on exchanges and make some good money while doing so.
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