In the evolving and ever-changing world of cryptocurrency, new and exciting phenomena arise, including hard forks. Hard forks occur when two groups supporting a cryptocurrency disagree on how the code should evolve. If the changes are incompatible, the code diverges into two chains, essentially doubling the amount of each holder’s coin. Forking a coin is theoretically easy. However, maintaining a fork requires great effort and support by members of the community. This Article discusses the November 15, 2018 Bitcoin Cash hard fork and subsequent lawsuit, analyzing anti-trust, negligence, and conversion claims. Forcing de facto fiduciary duties on developers and miners fails to consider that cryptocurrency is a product, likening developers to copyright holders, and the basic premises of fiduciary law. Next, this Article examines the effect of lawsuits on crypto-communities, including legal and economic ramifications of hard forks. While developers may hold some power in cryptocurrency management, external regulations would be impractical and lead to serious ramifications. This Article proposes that developers and miners should protect themselves through contract law and public blockchain networks should be treated as pseudo-sovereigns with internal regulations, for situations such as hard forks.
Chelsea D. Button, The Forking Phenomenon and The Future of Cryptocurrency in the Law, 19 UIC Rev. Intell. Prop. L. 1 (2019)