A Snapshot Of Cryptocurrency Forks Shows The Biggest Winners And Losers

Forking cryptocurrencies, usually Bitcoin or one of its offshoots, was all the rage 12 months ago. Today, the spate of new forks has dwindled to a trickle. With the benefit of hindsight, and armed with over a year’s worth of data, it’s possible to determine which forks succeeded and why.

Fork-o-mania Is Over

Forking mania has come and gone. Nine months ago, all manner of dead and dying coins were being artificially revived and their prices pumped under the guise of forking them into something better. At least that was the promise. Who can forget Zclassic, this year’s worst performing altcoin, which would now require a 70x for ATH buyers to break even? That wouldn’t be a problem if the forked coin ZCL holders were receiving had performed relatively well, but Bitcoin Private has also proven disastrous. It’s currently trading shy of $3, from a peak of $77, making it 2018’s second worst performing coin. Even the McAfee “magic” couldn’t save BTCP.

A Snapshot of Cryptocurrency Forks Shows the Biggest Winners and Losers
Bitcoin Private

It is no coincidence that three of the 10 worst performing coins this year are all Bitcoin forks: Bitcoin Gold, Bitcoin Diamond, and Bitcoin Private are all down by over 90%. Not all forks have resulted in failure however: Bitcoin Cash remains a top four coin by market cap, and top three by adjusted 24-hour transaction volume according to Onchainfx. In many respects, it was the success of BCH that fueled the glut of forks that followed, their developers eyeing the potential rewards of launching a new cryptocurrency under the Bitcoin banner.

While Bitcoin Cash forked fairly with no pre-mine, the same could not be said of Bitcoin Gold. Then there was Bitcoin Private, whose developers, led by Rhett Creighton, made their money by loading up on Zclassic before announcing the fork. The failure of high profile forks such as BTCP and the disaster-prone BTG, both of which created far more losers than winners, have played a major role in dampening public enthusiasm for forks.

A Snapshot of Cryptocurrency Forks Shows the Biggest Winners and Losers
This year’s worst performing coins according to Onchainfx

There’s More Than One Way to Fork a Coin

Forkdrop.io is a leading resource for tracking cryptocurrency forks. It’s produced a guide detailing the number of Bitcoin forks and their fate to date. It explains: “There are 96 Bitcoin fork projects in total. Of those, 69 are considered active projects relevant to holders of Bitcoin (BTC). The remaining 27 are considered historic and are no longer relevant. Additionally, there are 21 altcoin fork projects which have some similarity to Bitcoin fork projects, but have their heritage from a major altcoin.”

A Snapshot of Cryptocurrency Forks Shows the Biggest Winners and Losers

42 of these projects have active blockchains that can be used for transacting, while another 27 are allegedly under development. It remains to be seen, however, what sort of traction is gained by such coins as Bitcoin Pizza or Bitcoin Holocaust. 41 of the coins Forkdrop.io has data on were created as a straight fork, in which the newly birthed coin shares the same history as its BTC parent. 22 were issued as passive or active airdrops and another six used a combination of these methods to distribute coins. After Bitcoin, the most commonly forked cryptocurrencies are Ethereum (7 forks), Monero (5), and Litecoin (4).

A Brief Study Of Cryptonetwork Forks

In a report published this week, Placeholder VC has taken a deep dive into forked coins and reached similar conclusions to Forkdrop.io, noting that “The vast majority of child networks resulting from chain forks are in disuse and have lost significant value relative to their parent networks…Users and developers tend to remain loyal to the original network, while most miners are loyal to economics only, directing hashpower to the most profitable network of the moment.”

Bitcoin Has Now Forked Almost 70 Times

Placeholder VC does find, however, that “Despite lower use metrics, child networks trade at higher user and transaction value multiples (e.g., NVT ratio) than their parent networks.” It concludes: “Contrary to the narrative of frictionless forking sucking value away from large networks, child chains to date have struggled to attract demand and developer talent from their parent communities.”

Just as the craze for tokenizing everything diminished once the ICO market took a tumble, the same has happened with forked coins. The last time anyone checked in on ZLC/BTCP forker Rhett Creighton, he’d quietly abandoned his plans to do the same with Primecoin to create Bitcoin Prime. The developers of new altcoins, forked coins, and blockchains all vying to create a better Bitcoin have learned that Bitcoin isn’t easily bested. As The Wire’s Omar Little put it, “Come at the king, you best not miss.”

Author: Kai Sedgwick
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Hard Forks Dangerous To Cryptocurrency Stability

Crypto Forks Lead to Loss of Confidence for Investors and Adopters

Hard forks for top of the market coins have had a quiet 2018 compared to last year. The second half of 2017 saw the creation of Bitcoin Cash, forked from the original BTC code commonly referred to as Core, which has led the currency to a position of fourth by total market capitalization, worth nearly $8 billion. Other derivative currencies such as Bitcoin Gold were spawned off in the interim, failing to achieve the market penetrance of BCH. Segwit2x, a contentious fork to Bitcoin that at one point seemed to split the community in two, was set for a high-profile market position with U.S.-based cryptocurrency exchange Coinbase announcing support for the coin. However, just a week before the fork was set to occur, a slew of industry figures and developers came out in support of BTC Core, stating that they would not support the forked coin. In the end the project was largely shelved, but not before creating a massive amount of intrigue for Bitcoin investors and the wider population, particularly over the peculiarity of being gifted “free” coins following forks.

A new study published on Wednesday now suggests that hard forks are not only a confusing aspect for the general crypto public to get behind, leading to the alienation of more casual investors and adopters of the coin, but potentially dangerous to the stability of the entire industry. According to researchers out of the Oak Ridge Institute for Science and Education, who investigated over 800 soft and hard forks from Bitcoin, the possibility of contentious forks could lead to the undermining of the industry of cryptocurrency despite the potential for widespread adoption. The study concluded that crypto has the potential to alter the future state of commerce, fintech and global information exchange through the use of blockchain. However, hard forks lead to governance challenges which create a lack of trust in the currency. Essentially, the average investor in Bitcoin is relying up the coin’s limited supply and written-in-stone governance, a detail that appears meaningless in the event of repetitive forks,

“Disruption of a cryptocurrency’s blockchain in this way might cause people to lose trust in it and its capacity to survive as a reliable vehicle of exchange,”

While Bitcoin Cash (BCH) has managed to become a mainstay in the industry, with a vast amount of adoption and developmental capital being driven through the coin, including the soon to IPO cryptocurrency goliath Bitmain, the majority of BTC forks fail to live past several months and projects are usually shells within a year. Similar to the declining ICO market, the ease of developing a forked coin has lowered the barrier of entry so significantly that the market has been flooded with projects that barely have an underlying idea let alone a roadmap for usability. Forked coin instigators are betting on market confusion in conjunction with the trendy nature of blockchain and cryptocurrency to drive errant capital–a technique that found some success at the end of 2017, but was widely criticized earlier in the year with the introduction of Litecoin Cash. Litecoin Cash was almost universally regarded as an attempt to capitalize on the brand name of the seventh largest cryptocurrency by market cap.

Hard forks present both an intrusion upon the confidence of investors and users of cryptocurrency as well as presenting a further source of confusion for the broader public still trying to wrap their head around crypto. The paper further adds that stability is necessary for the continued growth and thriving of the industry,

“Hard forks are a threat to maintaining a stable and predictable operating platform that is essential if cryptocurrencies are to be adopted for daily financial transactions.”

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Bitcoin Cash Approaches $1,000 Ahead Of Hard Fork

Bitcoin Cash climbed today, nearing $1,000 as traders purchased the digital currency in anticipation of next month’s hard fork.

The alternative protocol asset (altcoin) rose to as much as $983.58 today, CoinMarketCap figures revealed.

At this point, Bitcoin Cash was up roughly 11.3% over the last 24 hours, additional CoinMarketCap data showed.

Further, the cryptocurrency had risen more than 60% from the recent low of $603.71 it reached on April 6.

[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]

A Major Challenge

As digital currencies experience rising adoption, scaling remains one of the biggest challenges to their success, noted analyst Sebastião Coelho.

“Before we see mass adoption of cryptocurrencies, we need to see a significant reduction in the time it takes to process transactions,” said Coelho, CMO of Flashmoni, a blockchain company creating financial solutions for the unbanked and underbanked.

Bitcoin Cash was created with these considerations in mind, using 8MB blocks instead of the 1MB blocks used by the more traditional Bitcoin.

The upcoming hard fork, scheduled for May 15, will give Bitcoin Cash 32MB blocks, expanding its capacity for processing transactions.

Network Upgrades

Further, the network upgrade will add or reactivate several operation codes, noted James Song, founder and CEO of blockchain startup ExsulCoin.

“This means simplified smart contracts will be possible on the bitcoin cash blockchain,” he stated.

“This particular bit of news is what is driving market excitement around bitcoin cash.”

As traders look toward this upcoming hard fork, Bitcoin Cash is benefiting from rising “interest and volumes,” stated Oliver Isaacs, blockchain investor, advisor and influencer.

Disclosure: I own some Bitcoin, Bitcoin Cash and Ether.

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Author: Charles Bovaird
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