This article is telling about:
- definition of forks;
- hard and soft forks;
- BTC hard forks history;
- Ethereum experience;
- advantages and danger of branching.
More and more related to crypto-currencies terms appear, and from 2013 the use of such an expression as “bitcoin fork” came into the language of active virtual money users, investors, as well as experts and analysts. The fork in the cryptocurrency world has nothing to do with cutlery. It is a complex phenomenon that disturbs conservative users and inspires fans of new, interesting and unexplored things. So, let’s look at the details of what this concept is, what types of forks exist and on the basis of opinions of professionals we try to give a forecast for the future.
What is bitcoin fork?
Before being fully involved into a question, it is necessary just to define it. A fork is a branch. Imagine the train rushing along the rails, but its way is not perfectly straight from point A to point B. Now and again the train passes through branches to other routes and confidently continues its course.
A similar phenomenon occurs in the cryptocurrency blockchain, in particular in the BTC system: a complex computing process at some stage changes its structure – this is usually affected by the interference of developers, for example, after changing the code – and a separate branch with its own rules and laws is allocated. So from the main thread a bitcoin fork is separated.
Any cryptocurrency which is separated from bitcoin can be considered to be its fork. In fact, litecoin is the next link with its own characteristics and rules. Dogecoin, in turn, appeared on the basis of litecoin. On the basis of Ethereum the Expanse project was created, the successor of Ripple is Stellar, etc. However, not all crypto-currencies are direct followers of BTC. Monero, for instance.
Throughout its existence, the BTC has forked several times. One of the most significant figures among the cryptocurrency developers cryptocurrency and LTC creator, Vitaliy Buterin, noted an interesting fact back in 2013 that when block 225430 was over gone it was split into two parts, with one half of the network adding blocks to the first version and the other half to the second correspondently. Each branch had its own transaction history and two BTC networks operated in parallel.
What is soft and hard fork?
All forks are divided into soft and hard. Soft forks undergo minor changes in the protocol. These adjustments will be fully compatible with the previous version. In other words, the nodes of the new version will be compatible with the nodes of the old one. Hard forks are crypto-currencies, the protocols of which have fully changed relative to the source protocol.
If this source was bitcoin, then it is a complete and irreversible change of the initial code. The hash algorithm, the emission rate and the block size are subject to change in the direction of increase. The software of the previous version will no longer meet the new specifications; therefore, you will have to completely update the software. Any bitcoin hard fork is essentially an independent cryptocurrency.
BTC hard forks history
Before we present the list of the most significant bitcoin forks, it should be noted that until 2013 there was no problem with the scalability of the network. Limiting the block size of 1 MB, implemented by Satoshi, limits the volume of transactions that are allowed inside the structure of this block. The enlargement will increase the number of transactions; therefore, the load on the network will be reduced. BTC forks analysis allows you to trace the whole history of this digital phenomenon.
The appearance of this fork was announced in August 2015. The developers of Bitcoin Core took those compulsory measures to solve the notorious issue with scalability of the network. Changes were made to the code, and the block was expanded. Innovation has been heavily criticized, but this was the first step in optimizing the network, the ability to commit more transactions and popularize cryptocurrency in general.
This bitcoin hard fork was released in early 2016. Its goal was also to increase the size of the block, but not forcibly, as in the case of Bitcoin XT, but according to the decision of the network nodes that produce the blocks. The idea of a free market was realized and appealed to many users, because it reflected the meaning of traditional economy and finance.
Technically there were no risks: too large or small blocks would simply not be viable. But this conclusion was made recklessly, because it was confusion with the size and led to a drop in interest in Bitcoin Unlimited. Ordinary users were afraid to deal with this fork because of the probable monopolization by large pools.
Bitcoin Classic was literally followed by Unlimited. The developers of Bitcoin XT decided to rehabilitate themselves in the eyes of the community and again got down to business. Unfortunately this project was a fiasco as well. The principle of fork consisted in a step-by-step increase in the block size from 2 MB to 4 MB in two years. This idea was approved by large pools, but in practice no one ventured to support its functionality.
From the entire evolutionary chain this bitcoin fork managed to become a full-value autonomous cryptocurrency. The novelty was presented in 2017, immediately put its best foot forward, won the users’ confidence and even entered the top 10 best cryptocurrencies for today. From the pre-source, which is BTC, Bitcoin Cash differs in the block size of 8 MB, implemented by the technology of protecting the transaction from failures (so-called repetitions and erasures). Protection also increased due to the signing of inbound values.
Bitcoin Gold became another successful project of 2017. The developers set an ambitious target to create “digital gold” and actively fight against monopoly in the field of cryptocurrency. The hash algorithm has been completely changed, so access to the mining has been gained by a wider range of users who use graphics chips. In theory, it allows any person to become a network node, not just large pools. Critics of Bitcoin Cold are sure that the game is in favor of graphics chips manufacturers and nothing more.
Ethereum hard fork
Ethereum is a cryptocurrency which also has a history of forks. Of course, it is not as long as BTC can boast, but the attention of specialists and society is concentrated on the evolutionary process in ETH blockchain. In 2017, the appearance of Byzantium, Metropolis and Ethereum Classic (ETC) was announced. The beginning of 2018 was marked by the release of EtherZero.
Vitaliy Buterin and his team are actively upgrading their cryptocurrency. In particular, experts are working to increase the rate of block confirmation, optimize the reward amount for each unit, improve privacy functions, for example, by adding cryptographic elements, improve the capabilities of the Ethereum virtual machine.
Do forks have any future? Is branching safe for the cryptocurrency concept in general? Only for the current 2018 experts predict the appearance of about two dozen forks, but they are unlikely to overcome the popularity of original BTC. The very possibility of creating forks opens up great chances for different frauds. It is easy and tempting to attract people to the new forks and under this cover to lure out their private keys, isn’t it? Bitcoin developer Gavin Andresen recommends transferring funds to new addresses before trying to interact with new hard forks. It will allow you to avoid banal theft, from which neither real nor virtual property is insured.