Yesterday, Prince Alwaleed bin Talal Saudi, a billionaire investor and chairman of Kingdom Holding Company, called bitcoin “an Enron in the making,” saying it will eventually implode. This news came in the wake of a number of high-profile criticisms of Bitcoin Gold and other cryptocurrencies, including from JP Morgan CEO Jamie Dimon, BlackRock CEO Larry Fink, and former stockbroker Jordan Belfort, of Wolf of Wall Street fame, who declared ICOs worse than anything he had ever done (Belfort spent 22 months in jail after pleading guilty to stock market fraud).
The Bitcoin blockchain has initiated a hard fork today, creating a new currency called Bitcoin Gold. In theory, the fork is an attempt to demonopolize mining and bring decentralization back to the core of bitcoin; however, some network users remain skeptical of this idea. Many in the industry are wondering about the impact of the Bitcoin Gold and fork on the currency, its community, and exchanges.
While some forks can be damaging to the crypto community, when everyone agrees upon new updates, forks can be beneficial in solving problems with scaling. Still, for even experienced veterans in the blockchain space, it can be difficult to determine the technical and financial implications of each fork and what they mean for one’s cryptocurrency holdings.
See below for comments from industry experts on what the Bitcoin Gold split means for the cryptocurrency market
Bob Summerwill, chief blockchain developer at Sweetbridge
“There have been years of fear, uncertainty, and doubt within the Bitcoin community about the ‘risk’ of hard forks. It is apparent to me that most of that noise has been coming from groups that favor coercion and censorship over free markets and the right to secede.
There is no such thing as a ‘bad fork.’ You don't have to cheer one team or the other. Experimentation and competition are good. Let the market decide, and participate where you see value.
My most valuable learning experience from the ETH/ETC split was that minority chains are viable. If a crypto community has irreconcilable differences, then you can go your separate ways and that is just fine.
The ETH/ETC split was very healthy for the community. The Ethereum community moved on to mainstream adoption, and the Ethereum Classic community took control of its own destiny and took the code the way they wanted as well. I think that the chain splits will be healthy for the Bitcoin community for the same reason.
Splits happen periodically in all open-source communities. Having everyone collaborating in a single project is ideal, but sometimes there are genuine differences of opinion, and network effects are not enough to keep everybody together, so a group secedes. This is how humans work. It is a beautiful thing.”
“These forks are very bad for bitcoin. We are looking at a possible fork on Oct 25th with Bitcoin Gold, and another one next month for SegWit2x. Saturating the market with different versions of bitcoin is confusing to users, and discredits the claim that there are a limited number of bitcoins--since you can always fork it and double the supply.
What's deeply troublesome is that these spinoffs sprung from a relatively minor squabble in the bitcoin community on how to handle the blocksize limit. Instead of coming to agreement, the community, developers, and code are fracturing into different groups. We're learning that while a blockchain gives you consensus on a distributed ledger, it does not give you consensus on the codebase, that is what code to run. This does not bode well for bitcoin's future, where it will face new and bigger challenges requiring further upgrades to the codebase.”
Rob Viglione, Co-Founder of ZenCash
"Open-source ecosystems are designed to evolve, whether that's through in-project improvements or forks in which the entire code base goes in an incompatible direction. Evolution is a messy process, so it doesn't always turn out well, but sometimes that's the only way to have big breakthroughs. It's not yet clear whether swapping SHA-256 for Equihash mining is sufficiently value-added to warrant a new coin, especially since Zcash already did that last year (in addition to introducing zk-SNARKs), but that’s ultimately up to the stakeholders."
Taulant Ramabaja, CTO at ULedger
“We can expect many more bitcoin forks such as these in the future. Ultimately the Bitcoin ecosystem has a triangle of 3 veto powers. 1) the Miners, 2) the Exchanges, 3) the Wallets (without key ownership). For any fork to become dominant in the future, a sufficiently large part of all 3 need to jump ship. This is highly unlikely and therefore Bitcoin favors the status quo.
That said, once Bitcoin Lightning based exchanges and wallets come online this picture can change drastically as the role of exchanges and wallets will change.”
Luis Cuende, Co-Founder and Project Lead at Aragon
“I like the end goal of decentralizing the currency as much as possible, but Bitcoin Gold doesn’t seem like a technically sound answer at all. At this moment in time it doesn’t even have replay protection, which makes the fork absolutely reckless and extremely unsafe for all Bitcoin users.”
Abhishek Pitti, CEO and Founder of Nucleus
"In the cryptocurrency world, forks are analogous to stock splits, but involve complex underlying technologies. Bitcoin was built with the intent to serve as an open, trustless, independent, and permission-less protocol, and the long-term success of Bitcoin depends on sustaining these characteristics. On August 1, 2017, the SegWit soft fork was deployed, which was aimed at tackling the scalability of the Bitcoin protocol, and offered several core advantages. However, the upcoming SegWit2x hard fork presents a serious risk to the Bitcoin ecosystem due to its lack of backward compatibility or replay protection, with all major developers and exchanges refusing to support it.
On the flip side, I understand the argument presented in the form of ‘decentralization of Bitcoin mining’ to people with GPUs, rather than the ASIC mining scene, which has become very centralized. Proponents of this idea believe that Bitcoin Gold can help bring mining back into the power of the common users.
With all this happening on the Bitcoin scene, there appears to a major bloodbath on the altcoins market at the moment, with people selling their alts for the rallying BTC, to get some of the newly-created Bitcoin Gold for themselves. This has presented crypto investors with an excellent buying opportunity on altcoins that have recently undergone an ICO and are trading at very attractive valuations. To anyone reading this, my advice would be to follow the legendary Warren Buffet’s investment philosophy: 'Be fearful when others are greedy and greedy when others are fearful.' This bitcoin rally has presented us with a great time to invest in promising ICOs and buy into the altcoin market right now."