Different Types of Bitcoin Forks and Why Should You Care About Them
By AsianMarketCap Official on The Capital
Bitcoin fork is a split in the Bitcoin network. A Bitcoin fork happens when a new code is “branched” out of Bitcoin’s source code in order to slightly change the rules of the Bitcoin network.
A Bitcoin fork is basically an alteration of the current Bitcoin code (or protocol). It means someone is changing the rules of the Bitcoin network.
There are two kinds of forks: Soft Fork and Hard Fork.
SOFT FORK
Think of soft fork as an update in a cryptocurrency protocol that is backward compatible with nodes running old software. It means that all of the updates that you can enjoy in the newer version won’t be visible to you in the older version. For a soft fork to be successful, it needs to receive a “majority consensus,” which is like a public vote. An analogy for a soft fork might be upgrading your mobile phone’s operating system.
HARD FORK
The primary difference between a soft fork and hard fork is that the latter is not backward compatible. Once it is utilized, there is absolutely no going back whatsoever. If you do not join the upgraded version of the blockchain then you do not get access to any of the new updates or interact with users of the new system whatsoever.
Why Should You Care About Bitcoin Forks?
There are several reasons you should care about Bitcoin forks:
1. You may want to switch over to the new rules and the new coin because you think it’s better than using the original Bitcoin.
2. The fork could have an impact on the Bitcoin community, Bitcoin’s adoption, and even Bitcoin’s price.
3. Finally, you may want to profit from the fork by selling the new coins that can be claimed by every Bitcoin holder at the time of the fork.
BITCOIN FORK HISTORY
Not all forks are created equal. While there have been countless Bitcoin forks since its launch in 2009, here are some prominent ones and what they tried to achieve.
Bitcoin XT
It is one of the earlier Bitcoin hard forks that achieved some popularity. It was launched in late 2014 and was proposed by Mike Hearn, who wanted to improve Bitcoin’s scalability by increasing the block size to 8 megabytes from 1 megabyte. Bitcoin XT failed to get significant traction.
Bitcoin Classic
With Bitcoin XT’s decline by the end of 2015, other members of the community sought to bring their own big-block BTC solution to the table in an effort to scale Bitcoin. Known as Bitcoin Classic, this solution launched in early 2016 and increased the block size from 1 megabyte to “only” 2 megabytes. Bitcoin Classic eventually lost support and faded away just like Bitcoin XT.
Bitcoin Unlimited
It was another Bitcoin fork that dealt with block size. However, Bitcoin Unlimited took a different approach which was to allow users to choose a block size to accept. The block size that achieved majority consensus would become the new block size limit. Unluckily, Bitcoin Unlimited encountered many bugs which made users lose faith in the protocol and eventually abandon it.
Bitcoin Cash
Bitcoin Cash was created in response to Bitcoin’s inability to scale (again) and disagreements with a scalability proposal known as SegWit, a soft fork that made transaction sizes smaller by separating signature data from transaction data. Bitcoin Cash was created by prominent figures like Roger Ver (early Bitcoin evangelist and investor) and Jihan Wu (Co-Founder of Bitmain). BCH increased the block size limit to 8 megabytes. Bitcoin Cash happens to be one of the top cryptocurrencies nowadays.
Bitcoin Gold
Bitcoin Gold hard fork followed right after BCH. It wanted to make mining more egalitarian by limiting mining to consumer graphics cards, thereby excluding ASICs that had taken over Bitcoin. Although Bitcoin Gold still remain in circulation, it has suffered from major security problems like being a victim of a 51% attack for several times. A 51% attack is when a malicious actor or group gains 51% (majority) control of a network’s mining power to do things like block certain transactions and spend the same crypto twice by spending it once, reversing the transaction and spending it again (“double spend”).
Conclusion
In only a few short years, Bitcoin has already spawned a large number of forks. While it is still uncertain, it’s highly likely that this cryptocurrency will continue to experience both soft and hard forks in the future as well, continually growing the cryptocurrency community while also making it increasingly complicated.
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