What is a Blockchain Fork?

What is a Blockchain Fork

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A fork in the context of cryptocurrency refers to a change in the underlying protocol or software of a blockchain network. This change can be a minor update, or it can be a major alteration to the way the network operates. There are two types of forks: a soft fork and a hard fork.

A soft fork is a backward-compatible change to the protocol. This means that nodes running the older version of the software will still be able to interact with the network, but they may not be able to access certain new features. In a soft fork, only a majority of the miners or validators need to upgrade to the new software for the change to be adopted.

A hard fork is a change to the protocol that is not backward-compatible. This means that nodes running the older version of the software will no longer be able to interact with the network. In a hard fork, all users and miners need to upgrade to the new software to adopt the change.

When a hard fork happens, it creates a new version of the blockchain with its rules and new coins. If a new coin is created during a hard fork, the holders of the original coin receive the new coins in the same proportion as the amount of the original coins they held.

Popular Forks

There have been many forks in the cryptocurrency space, but some of the most notable ones include the following:

  • Bitcoin Cash (BCH) hard fork: This fork occurred in August 2017, resulting from a disagreement in the Bitcoin community about how to scale the network. The result was the creation of a new blockchain (Bitcoin Cash) with increased block sizes and a different consensus algorithm.
  • Ethereum Classic (ETC) hard fork: This fork occurred in July 2016 after a hack resulted in losing millions of dollars worth of Ether. The Ethereum community implemented a hard fork to reverse the hack and return the stolen funds. Some community members, however, opposed the decision and continued to mine and use the original, unmodified blockchain, leading to the creation of Ethereum Classic.
  • Bitcoin Gold (BTG) hard fork: This fork occurred in October 2017, and it aimed to create a new version of Bitcoin that would be more decentralized by changing the consensus algorithm to one that is ASIC-resistant.
  • Bitcoin Satoshi’s Vision (BSV) hard fork: This fork occurred in November 2018, resulting in a disagreement in the Bitcoin Cash community about the best way to scale the network. It created a new blockchain with a larger block size limit and new rules.
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Forked coins are completely independent of their parent coins and have unique value and community. Moreover, not all forks are successful, and some might have no actual impact.

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