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Hard Forks Hinder Mass Adoption of Cryptocurrencies: Study

Last Updated March 4, 2021 3:40 PM
Mark Emem
Last Updated March 4, 2021 3:40 PM

A new study has concluded that hard forks are a threat to the adoption of cryptocurrencies.

This is because splits in the blockchain of a particular cryptocurrency tend to lead to the erosion of trust. Additionally, such splits reduce user’s confidence in the capacity of the affected cryptocurrency to continue thriving as a medium of exchange.

Interestingly, more hard forks are predicted to appear with experts expecting up to 50 hard forks this year. The study which was published in Springer’s Journal – Environment Systems and Decisions, was not bereft of solutions needed to ensure the stability of the bitcoin network.

“Suitable measures could include establishing metrics for key variables that can pre-emptively identify whether software changes are needed well before inflection points arise,” a public release of the study noted .

Survival Rate

While there has been a substantial increase in the number of bitcoin blockchain splits, the survival rate of the bitcoin forks, as well as the altcoins, has been low with many of them managing to last for a period of only a couple of months. There have been exceptions though and this includes Vertcoin, Dogecoin and Litecoin which have managed to last for years.

Additionally, Trump called for good governance arguing that clear guidelines that advise when software updates result in a net positive would be beneficial since they would assist in stabilizing cryptocurrencies. The study whose lead author is Benjamin Trump, an Oak Ridge Institute for Science and Education fellow, reviewed over 800 hard forks, source code forks and soft forks.

The fact that the Trump study concluded that cryptocurrency adoption is low because blockchain splits erode trust somewhat comes as a surprise as it rarely ranks high on the list in the various studies that have been conducted over the years.

Commonly Cited Reasons

A YouGov survey released earlier this month, for instance, indicated that the perception that cryptocurrencies are used for illicit activities was likely one of the major factors hindering adoption. In that study, about 25% of the respondents held the view that the biggest use case for cryptocurrencies was in making illegal purchases.

With regards to cryptocurrency investments, a Wells Fargo/Gallup poll released less than two months ago revealed that the one factor holding back investors was the perceived risk with three-quarters of the investors in the United States deeming it too risky.

In some quarters regulatory uncertainty and/or lack of regulation has been cited as one of the biggest factors hindering cryptocurrency adoption. As CCN.com reported late last month, this is a view held by the CEO of Coinbase UK, Zeeshan Feroz:

“The main challenge facing the crypto space at the moment in the lack of regulation, which leads to risk. We see the value in having some form of regulation for crypto exchanges as a means of ensuring due diligence and transparency in the crypto space.”

Featured image from Shutterstock.