On this 4th of July, it’s interesting to note that one of the unique properties of blockchain projects is that the same mechanism used to propagate change can be used to disobey and declare independence from the chain. This dynamism is a feature not a bug: forks are the liberty mechanism for blockchains.
Photo by Ursula Spaulding on Unsplash
First things first. What’s a fork?
Forks are tools for changing the consensus rules of a blockchain. Mike Hearn explained this succinctly:
“A soft fork is when the rules of the…protocol change such that old nodes don’t realise the rules are different, and continue to accept blocks created by newer nodes that follow the changed rule set. A hard fork is when the rules of the…protocol change such that old nodes refuse to accept blocks created by newer nodes.”
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Both soft and hard forks are used as a part of blockchain governance as a way to address key issues such as scalability. In his piece “Forks, Signaling, and Activation” Eric Lambrozo explains the process of activation, by which forks for new consensus rules get implemented.
If forks are, in some cases, simply a process for making necessary changes, other times, they represent a fundamental split — usually rooted in values or incentives — that divides one protocol community in multiple.
Two well known examples of this are the case of Ethereum Classic and Bitcoin Cash.
Ethereum Classic was the result of disagreements about how to handle the circa $50m that was ultimately stolen during the DAO Hack. While most of the community (89%) voted to hard fork back to before the hack in order to recover the funds, the group that disagreed — valuing the immutability of the chain above the money — forked what would become Ethereum Classic. For more on this, check out “Down the Rabbit Hole: Ethereum, Immutability, Consensus-Rule, & Forks.” And to understand how the community was debating the fork then, read this overview piece and this piece by Blockstack’s Muneeb Ali about the emergence of the Ethereum Classic alternative.
Bitcoin Cash meanwhile was the result around Blockchain Improvement Proposal 148, which introduced Segregated Witness (SegWit) in mid 2017. At core, the debate around BIP148 was one around how to scale bitcoin. As bitcoin.com put it: ‘Segwit sought to compress the amount of data in each transaction, thereby freeing up block space, while bitcoin cash made the size of each block bigger, up to a maximum of 8MB.” If a little reductionist, the debate effectively pitted the user community against miners (a battle that would continue later in 2017 with the SegWit2x proposal and the counter No2x movement that eventually popped up). As the threads below show, these were pivotal moments that bifurcated and continue to shape the community.
As it stands today, Ethereum Classic is the 15th largest cryptocurrency by market cap, while Bitcoin Cash is the 4th. Both are now among the 5 currencies tradable on Coinbase.
The maturation of these community lends legitimacy to the use of forks as a meaningful expression of discontent, and that in itself shapes how other communities develop. In application, forks transform a technical process of rewriting the rules of blockchain consensus into a social, democratic process of debating the values that should underlie those rules.
From Subjects to Citizens
This new agency to question decisions and even defect will likely impact the mentality not only of developers but on the wider communities of users of services built on blockchains.
Web 2.0 was built on a set of assumptions that put companies above users: that ceding personal data to third parties and platforms was the cost of doing business on the web; that users were subject to whatever changes the services wanted to make, regardless of whose interest they were made in.
In Web 3.0, those assumptions will change. The liquidity of everything — in other words, the agency capital, coders and communities have to declare independence — changes the digital zeitgeist in fundamental ways. Forking, and the broader set of emerging governance processes it represents, is emblematic of the shift of consumers being users of products to consumers being citizens of participatory technology ecosystems.
Of course, democracy is a messy process. A paraphrase of Churchill’s famous “democracy is the worst form of government, except for all the others” line (which, unlike many famous but apocryphal quotes, Churchill actually said) has been making its way around cryptotwitter capturing this sentiment:
What’s more, just like in the physical world, much of democratic process is actually about interest groups trying to exert their will and impose what’s best for them on the group as a whole. One needs look no further than the tension between what users want vs. what miners want to see this play out.
Still, today is the 4th of July. On America’s independence day, it’s hard not to be excited about the new norms emerging with which developers and digital citizens can exert their liberty and shape a more dynamic, free and open technology era.
Further Reading
If you’re like me, and you geek out on this stuff — or if you simply need to pretend to be doing work to get a quick break from your family who, of course you love, but, you know, they can get overwhelming — then here you go:
To fork or not to fork (Lane Rettig)
Hard Forks and the Myth of Crypto Immutability (SFOX)
The Bitcoin Core Merge Process (Eric Lombrozo)
An Explanation Of Cryptocurrency Forks (Phil Glazer)
Democratizing Blockchain Forks (æternity)
Scalability, Hard Forks and Markets (Stephen Pair)
How To Price Hard Forks (Jill Carlson)
In defense of “white” hard forks, like the Ethereum DAO-repair (DK)
Peeling the layers of blockchain forks (Muneeb Ali)
Guide to Forks: Everything You Need to Know About Forks, Hard Fork and Soft Fork
Fork this: What an unprecedented court battle says about the future of cryptocurrency