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As discussed in the genesis article, there are a number of risks that are inherent when dealing with hard forks, particularly contentious ones. The immediate risk is to the blockchain/network where the hard fork occurred, which leads to a tertiary impact on those that use that blockchain.
Even in situations where a hard fork reaches unanimous approval by all participants on the blockchain, the implementation process may not go smoothly due to sheer laziness on behalf of some members of the protocol that take excess time in upgrading the version of the client that they’re running. When there are unplanned, contentious hard forks, more chaos can erupt if there are a substantial portion of miner and nodes that choose to flee the network.
In some cases, this could even lead to a blockchain reorganization, which would entail the loss of funds for all those that are on the reorganized chain. Thus, the risks associated with a hard fork are monumental for all those involved.
What About Free Coins?
The genesis article also discussed how ‘hard forks’ are sometimes embraced by the community because of the ‘issuance’ of ‘free’ coins that occur because the network resulting from the hard fork essentially takes all of the information that was contained on the legacy network in terms of coin distributions and ‘snapshots’ the network. There are several methods of obtaining these forked coins which include but aren’t limited to; receiving them via airdrops, pointing one’s respective node toward the new forked network then transferring the coins, or even distributing the private keys to the new network.
Are There Any Risks Associated With This Process?
One of the inherent, yet ambiguous risks associated with this is the fact that the community is relatively new to the concept of hard forks, so there are a fair number of unknowns regarding the long-term systemic impact of so many hard forks on the network, especially if the network is using a Proof of Work consensus algorithm. There’s been a substantial amount of scholarship written on this issue that goes into more depth about the risks inherent in there being such a substantial increase in the number of contentious hard forks taking place on a given network.
Overall, hard forks are an inevitable aspect of cryptocurrency at this point. Some projects have been good, some have been outright scams. However, we must respect the right of the community to develop such projects if we are to stay in-line with the principles of decentralization and open-source code, which is how Satoshi released the Bitcoin code.
Ultimately, if one understands the principle of contentious hard forks, they should realize that it is really the community’s responsibility to audit itself — which means that this is perhaps the vision that Satoshi ultimately had when he was building Bitcoin and eventually disappeared.
Since the cryptospace is new, however, there is plenty of misinformation and misconceptions that have been spread about hard forks, their nature, implementation, and acquisition by coin holders, which had created a great deal of ire and cynicism within the larger community toward such projects.
However, it is important to remember that some projects are very legitimate and, in some cases, even enhance the original software that was released by the developers.
Personally, I feel as though hard forks are beneficial to the cryptocommunity. They’re the community’s way of ensuring that they’ll always have a voice because it gives investors and miners a recourse in the instance that they come to a disagreement with the coin development team.
While there will always be individuals in the community and supporters of the legacy chain that despise any and all hard forks and take the move to be a form of ‘betrayal’, we must all remember that we are essentially ‘knock offs’ of the original idea posited by Satoshi in his Bitcoin creation. And even in that instance, Satoshi owes many of his ideas, including Proof of Work, to the innovations of prior developers that had explored the creation of an online, digital currency.