Everything You Need To Know About Cryptocurrency Forks

Forks that are related to the amazing crypto world, not to in any sense less amazing world of food. Basically, Fork is simply a cool name for a software or a protocol update.

Forks that are related to the amazing crypto world, not to in any sense less amazing world of food.

Basically, Fork is simply a cool name for a software or a protocol update. Forks create a new version of blockchain and, depending on what type of fork this is, two blockchains will run on different parts of the network at the same time. Forks can be backwards-compatible or incompatible, and depending on this they will be labelled as hard or soft.

What Causes Forks in Crypto?

The main reason if often the split of the community, new future implementations or the combination of both. Split holds the proud first place and leads in the number of examples as well. When the community decides that they will no longer follow the rules of the old protocol on the same blockchain a split or divergence resulting in fork occurs. So the community decides to change the rules and make a new blockchain, a new version of the original blockchain evolves from the particular one block. The USA in a weird sense is an example of a hard fork: settlers in a colony decided to split from the British Empire and form a new country, sounds a bit familiar.

There are two main types of programming forks: hard and soft.

Hard Forks

This is a radical change to a protocol that makes old versions invalid. However, they might continue running and will end up in another protocol with different data from the new version. Confusions and errors might follow this process. Hard fork means a permanent divergence from the previous versions of the blockchain, nodes on the last versions won’t be accepted by the new ones.

To put it simply, this fork will result in two separate paths: one follows new, upgraded blockchain and the other follows the old path. Typically, followers of the old path will soon after switch to the new path as they will realize that the old one is irrelevant and outdated. For example, some users dislike new IOS updates, but 99% eventually goes with it.

The reasons for hard fork implementation include the correction of important security risks found in the previous software version, adding new functionality, or even reversing transactions.

For example with bitcoin, hard forks are necessary for changes that define main parameters such as the size of the block. Here are some factual examples of hard forks in the crypto world.

Sometimes hard forks are planned, and information about them is listed in the project’s roadmap. No new coin is created and the community is in consensus when the hard fork is planned. A good example is Ethereium’s Byzantium. The first phase of Ethereum’s 2-phase upgrading plan, Byzantium happened in October 2017 and represented an upgrading of Ethereum’s blockchain base for better scalability and the integration of private transactions. 2nd phase is planned and will occur in the near future. Byzantium is not be confused with the Eastern Roman Empire, there is no historical parallel.

An opposite to planned hard forks are contentious hard forks. A contentious hard fork is due to disagreements within the community which results in a part of them creating a new chain (in their perspective a better one) by introducing big changes to the code, for example, the creation of Bitcoin Cash.

Bitcoin cash is a hard fork created by a part of the community that wanted Bitcoin to scale better through increasing its block size from the current 1MB to 8MB. The aim was to allow more transactions to be processed, thus reducing fees that users pay. This hard fork resulted in the birth of a new cryptocurrency called Bitcoin Cash.

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Soft Forks

When soft forks occur, old nodes will recognize the news blocks as valid thus making this kind of fork backwards-compatible.

The consensus among the majority of miners is enough for enforcing the new rules, unlike during the hard fork where the upgrade of all nodes to the new version is required. The main goal of soft works is to implement new and better functionalities but only backwards-compatible ones. Sorry for another historical example but soft forks resemble smth like a French revolution when the country “updated” itself from a monarchy and became a republic”, but it was the same old France.

P2SH, put in motion to alter Bitcoin’s address formatting and BIP 66, which aimed to improve signature validation, are examples of successful soft forks which have taken place in past.

Hard Forks vs. Soft Forks

In general, they are the same thing – when a cryptocurrency’s code is changed, an old version remains the same while a new one is also created. The main difference is that with a soft fork, only one blockchain will stay valid as all users adopt the update. While both kinds of forks create a divergence, a hard fork creates two blockchains in the end, and a soft fork is meant to result in one.

No matter what was the reason for the creation of a cryptocurrency, Crypterium supports the main coins such as Bitcoin, Ethereum and Litecoin. Stay tuned because gradually, the platform will add up new coins.

About Crypterium

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Our goal is clear: with Crypterium, whatever you can do with traditional money you will able to do with digital assets. This idea is supported, among others, by the co-founder of TechCrunch Keith Teare and over 400,000 registered users, and the number is growing by day.

The team is led by former General Manager of Visa Central amp; Eastern Europe Steven Parker, and C-level executives from global financial institutions, like Renaissance Insurance, London Derivatives Exchange, American Express etc.

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