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What happens if two different groups have a definitive disagreement about the evolution of the bitcoin protocol? I have read is several places that the "majority" somehow would win, but is this really true, or could two different branches (A and B) of the blockchain (now tree) survive indefinitely in parallel?

I imagine that since the coins can be spent twice, once in each branch, they would somehow have their effective value halved. Suppose I'm a supporter of branch B, I would want to sell the A versions of my coins to buy more B-coins. The exact exchange ratio between the two new type of coins would depends on the relative size of the two communities. Is this scenario plausible, or is it economically unstable?

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    So far, when a new crypto-currency arises to test a new idea, they start with their own chain, their own genesis block, etc. Crypto-creators would earn almost nothing by reusing Bitcoin's blockchain, and potentially could get a lot of damage for that. Your question could be generalized into "could bitcoin survive a fork that continues indefinitely?" which is in itself a more interesting (and relevant) question. – Joe Pineda Jan 7 '14 at 2:59
  • That was actually my question, so I reformulated following your advice. – madjophur Jan 8 '14 at 23:21
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    The question should be reopened. Especially now after it was edited, it is a technical question with a definite technical answer. – Meni Rosenfeld Jan 10 '14 at 10:00
  • It's now, technically, an acceptable question but it is a bit trivial: Yes, two branches could technically persist if people use different software sharing the basic bitcoin protocol but differing in which blocks they accept and hence which branch they work with. But coins from one branch cannot be moved to the other branch, so the effectively halving the value idea is nonsense; rather, each branch will have their own valuation, with no technical reason suggesting that these two would be anywhere near each other. – pyramids Jan 12 '14 at 18:13
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    Just because the answer is obvious to you doesn't mean that it shouldn't be reopened. – Murch Jan 13 '14 at 10:53
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You've described it very accurately. When there's a protocol change that not everyone adopts, you'll have essentially two different currencies, with any coin in the original currency turning into a coin in each of the new block chains. The total value of the coins in both chains will be roughly equal to the total value of the coins in the original currency. The division of value between the two currencies will depend on the respective demand.

However, if both currencies use the name "Bitcoin" to describe themselves, it will be very confusing, and will make both less usable because it's hard to know what someone means when he says "Bitcoin".

  • Ok, so I understand the blockchain aspect of that situation. However, this leaves open the question of whether the system would be economically stable. What if one community is much smaller than the other? – madjophur Jan 13 '14 at 20:17
  • @madjophur: At first you will just have two currencies with one smaller than the other. If the gap is big enough, eventually the users of the smaller currency will realize that it's not working and grudgingly ditch it in favor of the dominant currency. – Meni Rosenfeld Jan 14 '14 at 9:08

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