This is a question that was asked in a public talk by one of the most widely known bitcoin proponents and popularizer, Andreas M. Antonopoulos. His books are bestsellers and true gems in this area. I very much like and recommend two of his most famous works: The Internet of Money and Mastering Bitcoin: Programming the Open Blockchain
Back to the subject of this post. The question was basically this:
“Right now we know that bitcoin has the largest network effect. So, in the event of a contagious hard fork, how likely is that the bitcoin becomes obsolete as the main currency and other currencies take over by far?”
You can watch his answer on youtube, or simply read what he said below (all the emphasis are ours).
Here’s the answer:
“That’s a very good question. How likely is it that bitcoin becomes obsolete? I don’t think it will become obsolete. I think if it faces a contagious hard fork, this is an example of things to come.
Bitcoin will be attacked. It will be attacked through its mining, it will be attacked through the network, it will be attacked legally, it will be attacked in every possible way. If you don’t think bitcoin is going to be attacked, you misunderstood what this is about.
You don’t go and poke 20 trillion dollar industry and go ‘Hey, we are gonna disrupt you.’ And then wait for it to roll over. This is offensive to a lot of governments and a lot of very very rich institutions, and there are a lot of people who don’t want to see bitcoin succeed because it is decentralized and they are going to attack every aspect of it. Every aspect of bitcoin will be attacked.
So, if a fork happens we get to learn what happens when a fork attack occurs and we learn how to defend against attacks. Make no mistake. Anybody who walks into this thinking that a fork will be unopposed is going to very quickly discover that this will be a battle on all fronts.
Day 1: ‘We’ve achieved 51 percent. We are now going to fork bitcoin.’ Kind of seems like ‘Hey, shipping date is here. Our works is done.’
Your problems are just about to begin my friend. You launch a 51 percent attack? That means you are seven blocks ahead every 24-hour period. If you can sustain it. But inevitably the two sides are going to attack each other. They are going to attack each other on the network, they are going to attack each other with denial of service attack (DDOS), they are going to attack each other with hashrate, are they going to attack each other publicly, privately, anonymously, in every possible way and immediately.
Every bug in the software will get poked and then poked again. And if you try to fix it, you’d better write that code well because if you put another bug in, that’s gonna get poked too. And then it becomes a battle about who has the best software development team and how quickly they can maintain that code and keep uptime because that race is only 7 block wide.
I don’t think some of the people who are threatening to do hard fork of 51% have thought clearly about the implications of what happens immediately afterwards. This is not going to be an easy game. It’s going to actually allow bitcoin to test all the possible attack scenarios, on nodes, on networks, on relay networks, on hashing, transaction malleability, replay transactions and everything else.
What would come out of that? Probably a bitcoin that’s worth a lot less. Or, in my view, a technology that’s worth a lot more because it’s battled hard, and when it has come out of that it will have survived its first fork attack and we will know a lot more about what happens in highly contagious fork environments.
Etherium taught us a lot. But it didn’t teach us much about highly contagious forks. The fork was initiated by the main development team which had more than 80% of their hashrate on their side.
The other thing to remember, and I think this is important, there is a lot of people who say if bitcoin stumbles, it’s going to be overtaken by one of these other currencies. It’s very important to not mistake smooth sailing for good sailors. Right? In order to have scaling problems, you first need to have scale. In order to have governance problems, you need to have a controversy to govern over. Right? And everything is hunky-dory kumbaya until you have 20 billion dollars on the table and then the long knives start getting sharpened…
…And you can then say, ‘Oh, it’s not what it looked like. Don’t pay attention to the stubbing, pay attention to the fact that we all came together to stab together’…
…The point here is that what’s happening in bitcoin now, isn’t unique to bitcoin. If one of the other currencies gets to this scale and has to handle this many transactions, they have a scaling problem which they are going to have to resolve. There will be differences of opinion as to how to resolve that. Some approaches will lead to massive centralization and a takeover by miners.
Some approaches will lead to failures in architecture and software. These problems will repeat for every other currency. These are the rites of passage. You first have to grow up to face them, right?
And so, the big advantage that many of the other block-chain based currencies have is that they can look at bitcoin, watch what happens, and learn these mistakes cheaply, so that they don’t have to repeat them expensively. Now, how many of the block-chains are actually doing that?
Not many. Because for the most part they are too busy going: ‘We are the best. We are going to win next.’ Right? And not paying attention to the fact that these exact same problems are going to exist in their own blockchain. There are no easy answers.”
To my mind, his answer was very encouraging, in the sense that attacking bitcoin at the current phase of development is not an easy task. On the other hand, it is obvious that there will be some kind of confrontation in the future with more or less uncertain outcome. But from current perspective, bitcoin’s fundamentals are pretty strong to me. What are your thoughts and dilemmas? Please share them in the comment section below.