The controversy surrounding the Ethereum hard fork presents an interesting question for Bitcoin if ever challenged by a similar situation. Exchanges are rising up and miners are declaring ‘51% attacks’ on ETC. More forks may be in our future.
So, what would Bitcoin do if there were a similar theft of from an exchange? The DAO’s “theft” was massive – about 10% of market cap. For BTC, that’s just over $1 billion.
Would the miners and mining pools bail out the exchange with a hard fork? What if miners, core devs, Bitcoin companies and exchange CEOs lost funds from the theft? What if you had your life savings tied up in the theft? This is a common sentiment: just recently, one of the largest Bitcoin mining pools unofficially stated they would support a bailout.
Choosing to fork could spell the end for Bitcoin as a cryptocurrency of choice. Satoshi’s whitepaper strongly suggests Bitcoin’s purpose is to avoid control through decentralisation, and therein lies its value. Bitcoin’s role is not to correct theft but to promote trustless transactions. Can a ledger be trusted when it is susceptible to revision by social forces?
Let’s say the fork is declined instead. I believe Bitcoin would survive, but would raise usability doubts from companies thinking about investment. Such a loss could actually draw more regulation to the industry.
The question creates a serious moral hazard. Both options have major drawbacks.
Ethereum and Bitcoin are different and serve different purposes. The EF’s decision to fork may not serve as a good indicator to what would happen in Bitcoin’s case. There have been a number of hacks to show that Bitcoin stays strong to its beliefs and the community should be reminded that recourse is not guaranteed. My best advice is to store your Bitcoins in cold wallets and be wary of FOMO’d projects like The DAO.