Cryptocurrencies like Bitcoin have the potential to transform the way international transactions are performed. Yet, due to their high volatility, most users do not see these currencies as reliable.
A recent study in Springer’s journal Environment Systems and Decisions, by Benjamin Trump, an ORISE Fellow at the United States Army Corps of Engineers, looked at why this is the case.
He examined a wide range of software updates – or “forks” – to understand how these can lead to the governance challenges that cryptocurrencies face. Using sources such as Map of Coins and crypto news outlets, Trump and his team examined 800 publicly recognized soft forks, source code forks or altcoins, and Bitcoin hard forks.
What they found was a significant amount of new blockchains emerging from the initial Bitcoin platform. While some of these lasted multiple years, as is the case of Litecoin, Dogecoin, and Vertcoin, many hardly survived a few months.
Experts have predicted that forks are going to become more commonplace in 2018, with some saying that up to 50% are possible. This is problematic as such forks could be the principle obstacle to widespread adoption of cryptocurrencies, they argue. Trump noted:
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.
In order for Bitcoin to become a more trusted currency for global transactions, it needs to be able to prove its reliability through good governance measures, the paper claims. This could require the various stakeholders, such as cryptocurrency miners and developers, to put mechanisms in place to prevent forks from happening.