From the very beginning, cryptocurrencies have revolutionized the financial sector. At the same time, however, they have raised a number of ethical questions and practical disputes that have divided the community. For some, blockchain was a sacred entity, while for others it was just a useful tool. If you are trying to understand cryptocurrencies, you should be aware of the main disputes that have taken place at its center. In this article, we will look at the most famous schisms in the crypto world and advise you on how to use some of their principles for your future investment strategies.
Article content – Blockchain:
- The Bitcoin Cult – Why did altcoins have a difficult start?
- Block war – Why was there a dispute over the size of mining blocks?
- Code is Law – How did Ethereum break down the basic dogma of blockchain?
- Work ennobles blockchain – Why does the transition to Proof-of-Stake bother some people?
- Freedom or anarchy – How is the issue of regulation vs. decentralization being addressed?
- The NFT controversy—Why did digital images become a problem?
- Final lesson for investors
The Bitcoin Cult – Why did altcoins have a difficult start?
In the beginning, there was only Bitcoin, and many considered it to be the only true digital currency. However, around 2011, alternative cryptocurrencies began to appear – such as Litecoin, Monero, and Ethereum. This divided the community: maximalists claimed that only Bitcoin was legitimate, while others wanted to try new possibilities. And what was the impact? Altcoins have gained ground and today make up a huge part of the crypto world, even though the core of maximalists continues to stand only behind Bitcoin.
Block war – Why was there a dispute over the size of mining blocks?
With its growing popularity, Bitcoin began to become slow and expensive. Part of the community wanted to increase the size of blocks and allow more transactions so that it could truly be a currency for everyone. The other part insisted on small blocks to remain as decentralized as possible and advocated for an “off-chain” solution. How did it end up? The community eventually split. The majority stayed with the original Bitcoin (which now functions as digital gold), while a minority left for Bitcoin Cash and an even smaller minority for Bitcoin SV.
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Code is Law – How did Ethereum break down the basic dogma of blockchain?
After The DAO hack, Ethereum faced a dilemma: roll back the blockchain and repair the damage, or leave everything as it is because “code is law.” It was a rift between pragmatists and fundamentalists.
Vitalik’s group performed a hard fork, creating today’s Ethereum. The fundamentalists stayed with the original chain as Ethereum Classic. Ethereum became the second-largest blockchain and home to smart contracts, while Ethereum Classic survives in the minority as a symbol of immutability.
Work ennobles blockchain – Why does the transition to Proof-of-Stake bother some people?
From the beginning, there was general agreement on the Proof-of-Work principle, which we know as classic block mining. The security of such a system was ensured by its computing power and energy consumption. But it was expensive and environmentally demanding.
And so an alternative emerged: Proof-of-Stake. Instead of mining, validity is ensured by those who hold coins and “bet” them. This is much more energy efficient. However, part of the crypto community saw this as a betrayal. They claimed that blockchain without mining loses its meaning. It was actually a dispute over what gives blockchain its legitimacy: labor or capital.
And how is it today? Ethereum and many new projects now run on Proof-of-Stake, while the Bitcoin community remains uncompromisingly committed to Proof-of-Work, claiming that it is the only truly secure method of consensus.
Freedom or anarchy – How is the issue of regulation vs. decentralization being addressed?
With the advent of banks and government regulations, a dispute arose: should crypto remain anarchic and anonymous, or should it adapt and become part of the official financial system? Some wanted to maintain absolute privacy, while others favored regulated exchanges, licenses, and ETFs. Cypherpunks wanted to maintain complete anonymity, even if it meant conflict with the state. Institutional players, on the other hand, wanted a clean and regulated environment with clear rules. And what was the result? The community practically split in two—cypherpunks retreated to anonymous projects (Monero, Pirate Chain), while the mainstream embraced a regulated environment (Coinbase, Binance, Bitcoin ETFs).
The NFT controversy—Why did digital images become a problem?
With the advent of NFTs and Web3, the crypto community split again. Some saw it as a huge opportunity – artists could finally sell their digital work and have rights to it in the digital space. Ordinary users could own game items or data. Others, however, saw it as the commercialization of blockchain, a marketing bubble that betrayed the original idea of crypto.
In 2023, the dispute escalated even further. Ordinals technology emerged, allowing images or text to be written directly into Bitcoin blocks. Essentially, NFTs found their way onto Bitcoin. As a side effect, this caused network congestion and increased transaction costs.
Many began to see this as spamming the blockchain. They didn’t like having to pay higher transfer fees for funny monkeys. They stayed away from NFTs and Web3, which they consider a superficial casino. However, most of the crypto community remained loyal to NFTs, and it doesn’t look like their use will fade away anytime soon.
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Final lesson for investors
If we were to draw any conclusions from all the above-mentioned disputes, it would be a few lessons that can be useful to any investor.
First – divisions happen regularly. They do not represent the end of the world or the collapse of the crypto community. Every major dispute looked like the apocalypse at its peak. But in the end, the market always split – the majority went with one branch, while the minority survived on the sidelines. You should therefore keep in mind that crypto is not static. The division of the community is simply part of the evolution of the crypto world and not its defeat.
Second – go with the flow. Most capital always goes where there are the most developers. Ethereum has held its ground because most developers have followed it. Bitcoin has remained dominant because the strongest miners and community have remained around it. Therefore, when investing, always follow the direction of the infrastructure, not ethics and ideology.
Thirdly – fundamentalism survives, but rarely wins. There is always a part of the community that insists on the “true faith.” These branches survive, but usually become minority ones. There is a clear lesson for investors here. Fanatical purism may be valuable for understanding the digital world, but from an investor’s perspective, it is always safer to stick with the branch where the majority is.
And the final lesson – it doesn’t work without regulation. Cypherpunks wanted complete anonymity, but reality has shown that it doesn’t work without regulation. Large investors simply will not put their money into an uncertain game. That is why we now have Bitcoin ETFs and Coinbase in the US. Investors should always follow the regulated flow, because that is often what determines where the main capital will go. Experiments and the wild west will always exist, but the giants will not linger there.
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