More and more people are immersing themselves in the world of cryptocurrency. The world is quite complex to understand without technical training and knowledge of specific terms. To assess the situation on the market, manage investments correctly, and navigate the flow of news and ratings of cryptocurrencies, today we get acquainted with the term fork.
To begin with, it is important to understand that the term fork in the world of cryptocurrencies means two different concepts.
The term fork originally came from software developers. A Fork (or branch) means a separation from the main development of a new version that carries fundamental differences. In the world of cryptocurrencies, typical representatives of forks can be called Litecoin and DASH - the bitcoin software base was taken as a basis, and after making important changes, new cryptocurrencies appeared. Forks are usually based on similar principles, but introduce new developments and improvements. Also included in forks is Bitcoin Cash, which separated from Bitcoin in August 2017. Another prominent example of a fork is the split of Ethereum in 2016 into Ethereum and Ethereum Classic.
The second meaning of the term fork, often used in the cryptocurrency community, is the division of a blockchain into several branches.
In order to understand the essence of such a fork, let us once again consider the principle of blockchain. At its core, blockchain is a chain of blocks. A block is formed from information about transactions in the system. It has restrictions that are different for each cryptocurrency. Such completed blocks are included in the chain one after another, creating a continuous and straightforward chain of transactions - blockchain. Usually it has one rigid direction, but if a fork occurs, it is called a fork.
Bitcoin Cash and is such a fork because the basis was the existing Bitcoin blockchain, but due to the increase in the block size, Bitcoin Cash is no longer compatible with Bitcoin. A similar situation was observed in the case of Ethereum and Ethereum Classic.
Now let’s look at what softfork and hardfork are.
The term softfork refers to changes in the protocol, technology or software of a cryptocurrency that do not affect the existing network, that is, network nodes or nodes running on old software continue to function normally. A striking example of such a soft fork is the introduction of segwit technology into the Bitcoin protocol. Even though the old nodes cannot use segwit transactions, they continue to function normally and the network continues to function correctly.
Bitcoin Cash and Ethereum Classic are a hard fork.. The blockchain that uses Bitcoin Cash is not compatible with bitcoin due to its different block size, although it is based on the original blockchain.
A hard fork does not necessarily give rise to a new cryptocurrency. For example, when Ethereum was created, a plan was initially laid down for the release of hard forks that would expand the protocol and add new features.
And in conclusion, I would like to note that the terms altcoin and fork are often used interchangeably in the community. This is not always true, since a cryptocurrency can be written completely from scratch and not be a fork. But at the same time it will be an altcoin.
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