Comprehensive governance, which provides clear guidelines about software updates, is necessary to help stabilize cryptocurrencies. This was the message from researchers of a new study that analyzes the governance challenges of cryptocurrencies.
According to the authors of the Environment Systems and Decisions report, published in the Springer’s journal, participants in cryptocurrency networks such as Bitcoin, need to be better at forecasting software changes to help improve the privacy and security of cryptocurrency transactions.
More efficient governance, will result in cryptocurrencies maintaining their value, says Benjamin Trump, the lead author of the study.
The effect of cryptocurrency forks
The study explored the cryptocurrency ‘forks’, particularly ‘hard forks’, when a single cryptocurrency splits into two. By creating changes to the programming of the coin, hard forks generate incompatibility between the older and newer version.
By creating a new blockchain, hard forks result in incompatible transactions between the versions, as transactions on the old chain are not recognized on the new one, and vice versa.
The research’s exploration of cryptocurrency forks showed that many of the Bitcoin forks and altcoins failed to survive longer than several months, while others such as Litecoin, Vertcoin, and Dogecoin, have gone on for years.
Trump believes that hard forks are a significant hurdle to the mainstream adoption of certain cryptocurrencies.
“Hard forks are a threat to maintaining a stable and predictable operating platform that is essential if cryptocurrencies are to be adopted for daily financial transactions,” said the study’s lead author.
Making cryptocurrency a more reliable medium of exchange
To overcome such issues and hurdles and to ensure bitcoin and other digital coins are more reliable and internationally-recognized as a predictable medium of exchange, the study concludes there needs to be a more stable governance of cryptocurrencies.
The researchers believe suitable measures to implement more stable governance to help stabilize cryptocurrencies could be the establishing of metric which can “pre-emptively identify whether software changes are needed well before inflection points arise.”
Gabrielle Pickard-Whitehead is a freelance journalist and copywriter based in the Peak District, UK. Since 2006, Gabrielle has followed her passion for writing and has sculptured a rewarding career out of her love for the written word. Gabrielle thrives on creating compelling content related to current affairs, politics, financial news and the latest advancements in technology and innovation. Gabrielle is excited about having the chance to write about the constantly-evolving world of crytocurrency and enabling people to learn more about this rapidly-advancing digital asset.