The Bitcoin forking risk - there can be only one Bitcoin

As I've touched earlier, there is a growing schism in the bitcoin community. One of the narratives that have been told repeatedly at one side of this schism is that attempts on a "hard fork" - that is, a protocol upgrade which makes old versions of the software incompatible - will cause a risk of a harmful and lasting split, where the bitcoin currency is efficiently split into two different cryptocurrencies. Roll forward some years, and by now this almost seems like a self-fulfilling prophecy.

The difference between Bitcoin and Alts

Looking at coinmarketcap.com, they have a "BTC Dominance"-counter at the top, currently 86%. The number may be a bit skewed, but it is abundantly clear that the value of all existing bitcoins is much bigger than the total value of all other existing cryptocurrencies. There are no technical reasons why Bitcoin is in this position - whatever Bitcoin can do, there do exist alternative cryptocurrencies that can do the same thing better. Some people like to point to the 21M coin cap limit - there will never exist more than 21 million bitcoins, and that makes the bitcoin scarce and valuable. This may be true, but similar limits does also apply to quite some other altcoins. Everything considered, I think the Bitcoin dominance boils down to three points - in prioritized order:

• The network effect - Bitcoin is the lingua franca of crypto currencies; everyone in the crypto currency community can send and receive bitcoins, and if trading altcoins one would often trade to or from bitcoins. If I was to say ... "no, I've stopped dealing with bitcoins, please send me ethereum instead", the other party would say "sorry, I don't have ethereum ... but I can send you some litecoins, would that be acceptable?"
• The trademark - ordinary folks may have heard about Bitcoins, while terms like "cryptocurrency", "altcoin", "blockchain", "litecoin" and "bitshares" may be completely unknown for the outsiders. One shouldn't underestimate the value of a good trademark.
• The security offered by miners; the computing power securing the bitcoin network is quite mindblowing, no actor can afford a 51%-attack on the network. Possibly except the Chinese govt.

Bitcoins special values after a currency fork

Say, the bitcoin currency gets split into a Bitcoin-BIG and a Bitcoin-SMALL. Now, if all the values above are at one and the same side of the currency split, then the currency split is nothing but an insignificant non-noteworthy event. Bitcoin-SMALL will have no value at all. Some few fanatics may insist that Bitcoin-SMALL is the only real Bitcoin - but the society as such probably won't even be aware that there has been a split, Bitcoin-BIG is Bitcoin.

If the values gets spread a bit - like, most of the exchanges sticking to Bitcoin-SMALL and most of the miners sticking to Bitcoin-BIG ... suddenly neither Bitcoin-BIG nor Bitcoin-SMALL will be special anymore, it will just be two more coins in the jungle of altcoins. Value will plummet on both chains.

The trademark is also interesting; it's not legally protected, so both sides will probably stick to the trademark, causing confusion and chaos, further destroying the value.

Bitcoin will fail on a currency split

It won't die; bitcoin can't die - but it's still a major failure if there will be a permanent currency split . Value and usefulness will plummet.

It's reasonable that anyone with a skin in the game - hodlers, exchanges, miners - wants Bitcoin to succeed. Some may be long on competing alt-coins - but remember, crypto currency trading is not a null-sum-game, what is good for Bitcoin is usually good for the altcoins too.

Hence, assuming everyone in the environment is rational actors, Bitcoin can't split. People will not allow it. This has nothing to do with hard forks as such - a hard fork will be successful, given that all players are rational. And still ...

The crypto currency split may be a self-fulfilling prophecy

The schism has become so bad, situation so entrenched - there are lots of fanatics at both sides of the fence that actually want a split by now. This is very sad. In my opinion, the block size issue is not that much about principles and different visions for the future - we all want a "strong and healthy" bitcoin and even if we may disagree about the priorities, we pretty much agrees on what a "strong and healthy" bitcoin looks like. What do we actually disagree about? We disagree not about where we want to end up, we disagree on how to get there - and most importantly we are afraid that the bitcoin project may be derailing if the "other side" wins.

Personally I'm also afraid - I'm afraid the project will derail if we can't increase the capacity soon. I'm not much scared of neither BU nor SegWit.

Now a bitter currency split will for sure harm Bitcoin, so if some solution finally gets major traction, we need to rally up behind it - the alternative is just worse!