Forks in cryptocurrency terminology are splits that occur within the transaction chain. These splits are based on users’ opinions, usually around much-needed features or the direction of the particular cryptocurrency. A fork will create a new version of the cryptocurrency.
There are many different forks, especially with regards to Bitcoin. Ethereum has also had a few forks in its lifespan.
Perhaps the easiest way to think of a fork is that it introduces a new set of rules for a cryptocurrency to follow. When a new rule, or fork, is introduced, the users mining that particular blockchain can choose to follow one set of rules or another, similar to a fork in the road.
In Bitcoins case, as it became more popular, it become much slower. The entire system was unreliable and fees became more expensive. This is when the idea of a fork came in.
A fork allows a new development structure on a cryptocurrency platform without compromising the original.
There are two types of forks:
A soft fork is a change to a cryptocurrency protocol rather than the end product. A soft fork is backward-compatible, meaning that the new fork will be recognized by old nodes, effectively meaning there is no change to miners or users except an enhanced platform. It also means that there are no new products being launched.
Hard Forks are new versions of a cryptocurrency that are entirely split from the original version. There is no backward compatibility, meaning no transactions or communications occur between the two. The change is permanent. Hard Forks can be seen as creating a new cryptocurrency based entirely on an older one – like a clone, but with different features.
Forks are similar to organizational splits, with a company moving in two parts in two separate directions.
For Bitcoin, its two biggest hard forks were Bitcoin Cash and Bitcoin Gold.
The Bitcoin Cash hard fork occurred on August 1st, 2017. It was designed to overcome issues that Bitcoin had like slow transactions. The Bitcoin Cash fork uses 8-megabyte blocks instead of the 1-megabyte blocks used by the original Bitcoin, making it easier to scale as more people interact with the service.
Bitcoin Gold occurred in October 2017, with the aim of making mining a more equal process. To mine original Bitcoin, one requires a large amount of expensive equipment, usually in cooled warehouses. Bitcoin Gold allows its users to mine on standard graphics processing units instead of specific hardware developed exclusively for the mining of Bitcoin. It aims to “Make Bitcoin Decentralized Again”, pointing out that the only entities able to mine Bitcoin currently are major wealthy players.
In Ethereum’s case, there have been three big ETH forks – Ethereum Classic, EtherZero (now defunct), and Metropolis.
The Metropolis Ethereum fork is the current fork and ultimately aims to prepare Ethereum for the transition from a Proof of Work system-based altcoin into a Proof of Stake one.
The final step in terms of forks for ETH will be Serenity, which completes the above mention task. It is due to arrive in late 2022.
Protecting Your Cryptocurrency
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