Before investing in crypto, you have to make sure to understand all the basic underlying concepts and related terms, one of which is the ‘fork’ in cryptocurrency. Forking in crypto is a change in the blockchain’s protocol which often results in the blockchain splitting into two. In other terms, it’s also called a ‘chain split’.
The two split chains will share the same address, history and so on but the second one will now follow a different set of protocols. As a result, a new forked cryptocurrency is made. To know more about it, from its types and FAQs, check out what BTC Post has listed below!
The main types of Forks
To better understand the fork in cryptocurrency, you first have to know its two main types, namely the soft and hard forks. Both have their own set of functions, uses and characteristics. To grasp the two, here is a rundown on how each one works:
A soft fork is a change in the basic rules of a cryptocurrency that does not result in a new split chain and cryptocurrency. What makes this different from a hard fork is that it is backwards-compatible, meaning old nodes in the system will recognize the new split chain. Additionally, all previously mined blocks will be regarded as invalid both by the old and modified nodes since the old rules will no longer be followed.
A hard fork, on the other hand, is a permanent change to the blockchain’s protocol that results in a split chain if a huge sum of users don’t agree to the change and want to keep using the old chain. This also means that it is no longer backwards-compatible since old nodes won’t follow the new rules and will therefore consider newly confirmed blocks as invalid.
This is how new forked cryptocurrencies such as Bitcoin Gold, Bitcoin Cash and so on that branch from the original Bitcoin chain come to be.
FAQs about the crypto fork
Now you know the basics of the crypto fork and its two main types, it’s time to answer all the FAQs! Knowing these is important to give you a better understanding of the whole concept of crypto forks. Without further ado, here’s a list of the FAQs about crypto forks:
What are the major types of Bitcoin hard forks?
Bitcoin now has its own sets of hard forks such as the Bitcoin Gold and Bitcoin Cash. Both were created in different timelines and have their own characteristics. To understand both, you have to know them apart. Here’s a summary of each one:
Bitcoin Gold was launched back in October 2017. Its main purpose was to make Bitcoin mining a fairer process using basic graphics processing units rather than specialised and more costly technology designed for Bitcoin mining. The goal was to improve the original Bitcoin’s independence and decentralisation.
Bitcoin Cash is another hard fork under Bitcoin which occurred back in August of 2017, just months before the creation of Bitcoin Gold. Its main purpose was to solve all the problems Bitcoin was experiencing such as lag and delayed transactions.
It achieved this by using 8-megabyte blocks rather than the standard 1-megabyte blocks, allowing the blockchain to process 116 transactions per second (tsp). Compared to Bitcoin’s 7 tsp, this increase is an improvement.
Other hard forks from Bitcoin
Apart from the two major Bitcoin forks mentioned above, there are also several others to consider. From some of the most current to the oldest, here’s a rundown:
- Bitcoin Post-Quantum occurred in December 2018
- Bitcoin Zeo occurred in September 2018
- Bitcoin Private occurred in January 2018
- Bitcoin Atom occurred in January 2018
- Bitcoin God occurred in December 2017
- Bitcore occurred in November 2017
- Super Bitcoin occurred in December 2017
- Bitcoin Diamond occurred in November 2017.
What happens to my investment when a cryptocurrency forks?
In situations where your cryptocurrency forks, this will result in you having the same number of coins in both chains. Nothing will decrease or increase, all you have to do is pick which chain you’d want to use. But before choosing, make sure to research both chains since each one holds its own set of differences. Depending on your preference, one might be more suited to you than the other.
Can both forks exist?
Yes, but for both forks to coexist, both chains must be used gradually by the community. This will allow the two chains to stay active and functional. But in other cases, either one can completely disappear. Examples of successful coexisting forks include the Ethereum (ETH) and Ethereum Classic (ETC) blockchains.
How can I stay informed about crypto forks?
There are several ways to get informed about crypto forks but one of the best ways is through social media such as Twitter and Facebook where you can find crypto groups you can join in. You can also consider forums like Reddit and so on where enthusiasts gather to talk about crypto.
Creating an account on these mediums is a great way to stay updated and informed about anything related to cryptocurrency, especially big announcements like forks, new cryptocurrencies and so on.
Twitter is one of the most widely used platforms when it comes to talking about trending crypto topics since big names and companies such as Binance and other exchanges release announcements and updates through their accounts here. So skimming and scanning through this is a great way to stay updated not just about crypto forks but the industry in general.
Do forks result in free cryptocurrency?
Some forks result in free cryptocurrency but not all. When a fork occurs, some of them are completely closed and will disappear, while others just have the same underlying code. This implies that the coins in a new split chain are not identical to those in the original chain. Note that, if you have coins in the previous chain, this simply gets cloned into the split chain and no new coins will be added but will differ in value.
Bitcoin (BTC) $ 25,880.00 2.35%
Ethereum (ETH) $ 1,796.06 2.32%
Tether (USDT) $ 1.00 0.3%
BNB (BNB) $ 239.39 8.13%
USD Coin (USDC) $ 1.00 0.13%
XRP (XRP) $ 0.502732 4.41%
Lido Staked Ether (STETH) $ 1,793.66 2.4%
Cardano (ADA) $ 0.247743 22.4%
Dogecoin (DOGE) $ 0.060556 10.85%
TRON (TRX) $ 0.068505 11.66%
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