Sep 24, · The fork is a cryptocurrency with some changes in the current Bitcoin protocol (BTC) and a change in its rules. Imagine you play one game and want to change its rules. It means all other players will have to agree to change the rules. If you reach the agreement, the changes are implemented and the game continues as ute-strohner.deing System: WINDOWS, OSX, IOS, ANDROID. Oct 23, · A Bitcoin Fork is a term describing a split in the Bitcoin network. A fork can result in the creation of new coins that can be claimed by existing Bitcoin owners. In this post I’ll explain in detail what Bitcoin forks are, what risks they entail and how to . Bitcoin Forks explained and what to consider Bitcoin Cash was the first cryptocurrency forked off Bitcoin, and it was received with considerable controversy; it certainly shook the crypto world back in August last year. From then, two other forks have been born from the main Bitcoin network: Bitcoin .
Bitcoin fork explainedA Short Guide to Bitcoin Forks - CoinDesk
Soft forks of cryptocurrencies allow you to combine new rules with old ones. While the goal of a hard fork is to weaken the action of some rules that are implemented in an unreduced version of the protocol, the task of a soft fork is to tighten some of them. SegWit is a good example of Bitcoin soft fork. The Bitcoin community has long been discussing how to boost the speed of Bitcoin transactions.
Since a new transaction block is mined every 10 minutes on average and this point has not been discussed , the idea was to increase the number of transactions that can be included in each block. To do this, the community proposed a solution called Segregated Witness abbreviated SegWit.
The main idea was to free up space in each block, which can be used to include more transactions. This was achieved by removing the public key and signature associated with each transaction from the block and sending them through another messaging channel.
The cryptocurrency blockchain is usually open-source, which means that the code is free and accessible to everyone; both for viewing and for use.
As currencies evolve and change over time, some changes need to be made to their protocols. Such changes can range from a small addition of a new function to mass changes, such as increasing the maximum block size.
Sometimes, within the community of miners, blockchain changes can be viewed in different ways. Some accept changes, while others do not. Such divisions in the network infrastructure can also lead to the creation of new blockchains and new cryptocurrencies. The Bitcoin hard fork list is actually longer, but those were rather small improvements than separate viable cryptocurrencies. Below, we observe seven main Bitcoin hard fork cryptocurrency projects. The fork appeared on August 19, The authors were the developers of the original Bitcoin Core — they created Bitcoin XT to solve the problem of network scaling.
Bitcoin XT developers went by increasing the block size, which in the original Bitcoin chain was 1 MB. Right from the start, the Bitcoin XT project has been harshly criticized by many leaders of the Bitcoin community.
Moreover, an account, allegedly owned by the creator of Bitcoin Satoshi Nakamoto, spoke out against the fork. However, back in , information was circulating in the community that the profile could be hacked, and therefore there is a theory that it was Satoshi who opposed Bitcoin XT. It solved the same problem — increasing the size of the block — but in a fundamentally different way. Bitcoin Unlimited let network nodes to decide what size blocks they should issue.
The creators relied on democracy — everyone who has a complete node got the opportunity to decide on the size of the block. The power of the free market, which rules the world of the traditional economy and financial systems, was created by the creators of Bitcoin Unlimited to serve the digital economy.
The impact of the project was added by the joining of developers Tom Sonde and Tom Harding, who left Bitcoin XT, which had begun to decay, and another, which appeared a little later, but also did not last long, — Bitcoin Classic. Bitcoin Unlimited, like its predecessor, Bitcoin XT, was not successful — the community was thrilled by the prospect that the proposed scheme could be used by large centralized pools, suppressing the opinion of the majority of users with superior computing power.
Besides, a large number of blocks of different sizes could lead to multiple involuntary forks and the formation of a number of false chains — which would ultimately lead to the fall of bitcoin itself. Bitcoin Classic appeared only a month later than Bitcoin Unlimited, in February , but began to crumble even faster. The creator of the fork was Gavin Andersen, the author of Bitcoin XT, who continues to pursue his goal — to increase the throughput of the blockchain by increasing the size of the block.
This time it was planned to increase exactly twice, up to 2 Mb, and two years later — up to 4 Mb. Jonathan Tumim, another of the creators of Bitcoin Core, also joined Andersen. It was supported by such mining pools as Antpool Bitmain , BW. Roger Ver, the owner of Bitcoin.
Bitcoin Classic never found direct and high-profile opponents, but it never became fully functional. The main reason why discussions have been dragging on for the second year now is the need to conduct a hard fork, which will temporarily affect the overall security of the network and may result in a split.
However, after the appearance of Bitcoin Cash, which produces blocks up to 8 MB, the developers of Bitcoin Classic said that they considered the goal to be achieved. Bitcoin Cash is one of the most famous forks, which really ended with a chain split and the formation of a new cryptocurrency of the same name. This happened on July 23, , and so far, Bitcoin Cash is showing good results in the market.
Many experts are inclined to believe that while the authority of the original Bitcoin and its associations keep it afloat, but even Bitcoin Cash itself has managed to gain some influence and stays firmly in the top ten most popular cryptocurrencies.
Bitcoin Cash has a number of significant differences from the original Bitcoin. There are three main code additions:. Bitcoin Gold is another cryptocurrency that separated from Bitcoin on October 24, , a day earlier than the developers planned deadline. To achieve this goal, the authors changed the hashing algorithm, switching to using Proof of Work by Equihash. The peculiarity of this PoW is that Equihash is suitable for GPU mining — mining of cryptocurrency, passing through graphic cards.
The same type of mining is already used in some other cryptocurrencies, in particular, ZCash. Equihash is also resistant to ASIC processors. In fact, the creators of Bitcoin Gold are trying to expand the circle of potential miners — the distribution and availability of GPUs are higher than the ASICs, which means there will be more users who can mine cryptocurrency and become network nodes.
This will increase the level of decentralization and reduce pressure on the community from large commercial mining pools. According to the developers, large pools have actually monopolized the network, and the community must fight this. The result of this struggle was Bitcoin Gold. There were ideas and opponents who insisted that the market for GPU processors is controlled by only two large manufacturers, which means that there is a risk again — but the hard fork was produced anyway, and Bitcoin Gold is now traded on exchanges — albeit with a rather unstable rate.
The main idea behind Bitcoin SV was the preservation of the vision of Bitcoin, which was founded by Satoshi Nakamoto himself. Along with that, there has also been confusion about the various types of forks, how they get activated and the risks they pose.
A byproduct of distributed consensus, forks happen anytime two miners find a block at nearly the same time. But forks also can be willingly introduced to the network. This occurs when developers seek to change the rules the software uses to decide whether a transaction is valid or not. When a block contains invalid transactions, that block is ignored by the network, and the miner who found that block loses out on a block reward. As such, miners generally want to mine only valid blocks and build on the longest chain.
What is it? You can think of a hard fork as an expansion of the rules. What happens? Nodes that continue running the old version of the software will see the new transactions as invalid. So, to switch over to the new chain and to continue to mine valid blocks, all of the nodes in the network need to upgrade to the new rules.
What can go wrong? The problem comes when some sort of political impasse arises, and a portion of the community decides to stick by the old rules no matter what. The hash rate, or network computing power, behind the old chain is irrelevant. What matters is that its data and ruleset is still perceived to have value, meaning miners still want to mine a chain and developers still want to support it.
The ethereum DAO hard fork was a perfect case study of how a community can split over rules. Now, we have two blockchains using a variant of the software — ethereum and ethereum classic, both of which boast a different ethos and a different currency.
Say, instead of 1MB blocks, a new rule might only allow K blocks. Non-upgraded nodes will still see the new transactions as valid k is less than 1MB in this example. However, if non-upgraded nodes continue to mine blocks, the blocks they mine will be rejected by the upgraded nodes. This is why soft forks need a majority of hash power in the network. When a soft fork is supported by only a minority of hash power in the network, it could become the shortest chain and get orphaned by the network.