Late last year I wrote about forking and extending Bitcoin to increase the number of coins. Since then, numerous tulipheads have angrily informed me that I’m an idiot, that Bitcoin cannot be forked, and that you’d need to control more than 51% of the mining capacity even if it could be.
Well, funny story: An anonymous individual now runs a mining pool which controls 51% of the Bitcoin mining capacity, and people are talking about the necessity of the minority “investors” carrying out a hard fork so that they aren’t subject to the whims of Bitcoin’s anonymous de facto controller. Since the rules of Bitcoin are set in the software, if you control which software most people use then you control the rules and can change them, even so as to exclude someone who has more mining power than everyone else added together.
Which points to another way that Bitcoin could be forked. Imagine a big corporation like (say) Walmart decides to start using digital currency. They create a Walmart wallet which can store your existing Bitcoins and let you spend them at any Walmart. They make it so that only Bitcoins from the Walmart Wallet work at the checkout. And then they make their wallet give each coin an associated year of issue and block chain. “Original” bitcoins are accepted by the wallet and given a year of issue of 2014, and tracked in today’s Bitcoin block chain. Each new year gets a new blockchain set up by Walmart.
It would be the classic software company move: embrace and extend. All they would have to do would be to get enough people to accept their software. They could probably do a deal with Verizon and AT&T to preload it on mobile phones. The tulipheads could howl all they wanted about the 2015 Bitcoins not being real Bitcoins, but if the software everyone uses accepts the coins recorded in the new blockchain right alongside “real” Bitcoins, and the new coins can be spent exactly like “real” Bitcoins at a company with the global reach of Walmart, then as far as everyone is concerned, that’s now what Bitcoin is. After all, nobody’s in control to force Walmart to call their extended Bitcoin something else. So suddenly instead of 21m Bitcoins, there would be 21m per year. And Walmart would have huge leverage over them all.
When you have no central authority, you end up controlled by whoever has the most economic leverage. Is that really an improvement?
In the meantime, some are speculating that the new unknown controller of Bitcoin is the NSA.