The time is ripe for popular cryptocurrencies like Bitcoin to get their act together address the trust deficit that prevents them from becoming financial assets with longstanding reliability, says a new study.
According to Benjamin Trump, lead author of the study published on Sep 12, 2018, that’s the only way forward if the crypto space wants to live up to its potential as a revolutionary force that can radically transform the realms of commerce and information exchange.
The study underlines how the inefficiencies in handling software updates are causing big setbacks for most cryptocurrencies including Bitcoin.
Inflection Points Jeopardize Software Updates
The study, points out how inflection points during a major software update can compromise the entire process by pulling off a ‘hard fork.’
A hard fork is when the blockchain at the heart of a cryptocurrency splits into two during a major protocol update. It occurs as a byproduct of a major change in the blockchain’s existing code, resulting in both a new and an old version. Unlike soft forks that come into existence from the same underlying process, hard forks don’t have backward compatibility. That means the new version doesn’t consider the blocks or transactions on the original blockchain as valid (and vice versa).
Using Map of coins and the Bitcoin Exchange Guide, Trump and his co-authors examined more than 800 publicly traded cryptocurrencies that were forked from or inspired by the original Bitcoin blockchain. Based on the results, Trump says hard forks are among the biggest stumbling blocks preventing Bitcoin and other cryptocurrencies from attaining long-term reliability.
“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.”
The study, however, also points out that not all forks lead to questionable consequences.
“It is important to note that not all forks are inherently negative, or present significant concern of cryptocurrency volatility, or a threat to public trust in the long-term survival of cryptocurrencies like Bitcoin.”
The way Forward
The study says for any cryptocurrency network to free itself from the trust deficit arising from the lack of longstanding reliability, the community must work collaboratively to duly identify beneficial software updates and undertake them as smooth as realistically possible.
Pre-emptive identification of worthy software updates is essential to avoid harmful hard forks. The community might have to set up appropriate “metrics for key variables that preemptively identify whether or not software changes are needed” to avoid reaching an inflection point. While the study refrains from elaborating on the nature of these metrics, it points out that they would probably be centered around “concern of scalability.”
Trump says this would be possible only when wallet developers, crypto exchange operators, crypto miners, and other stakeholders all do their bit to contribute towards building such a governance framework
Featured image by Sergio Guba