What Is Cryptocurrency Fork? – Everything You Need To Know!
A cryptocurrency fork is generally known as a software update or protocol update. That is, within the cryptocurrency, the fork is referred to as upgrading to a higher-level blockchain network.
When networks constantly evolve and technology advances, fork becomes a recurring procedure. There are two types of forks in crypto, a Hard fork, and a soft fork. Are you eager to know more about them? Read this article till the end.
What Is Cryptocurrency Fork?
A Crypto fork can be said as an effort to revert the blockchain history to a point prior to the hack. Most commonly fork occurs when the investors and stakeholders cannot agree with the protocol updates. The splits society into two, fighting for the same ideology.
That is fork leaves two blockchains on the different parts of the network, depending on which type of fork is happening. The fork is necessary to stay updated in the crypto field and fix issues and increase performance.
As said earlier, there are two types of the fork in the cryptocurrency. Both of them work to change the protocol or the software in which cryptocurrency works.
A backward compatible change in crypto protocol is known as a soft fork. The non-updated nodes in the protocol can process transactions still and they can push new blocks to the blockchain.
But they don’t break the rules of new protocol updates. This is the major difference between a soft fork and a hard fork. The old rules of the protocol before the update don’t make any obstacles to the new rules making it backward compatible. Eventually, the old nodes will update the new version.
The hard fork is entirely different from the soft fork. In a hard fork, after a software update, the old nodes create obstacles to the functioning of the newly updated nodes.
This creates two different channels or versions of blockchain, one running in the old version of blockchain and the other in the new updated version. This fork requires all users and nodes to upgrade to the latest version of the protocol or software which makes it non-backward compatible.
What’s Behind The Fork?
Crypto fork happens due to many reasons. The split happened in the crypto communities and the implementation of the new features is the major reason.
A hard fork occurs when a permanent split or divergence in the community occurs. The communities decide that they will no longer follow the rules of the old version of the protocol in the same blockchain.
This leads to the emergence of a new version of blockchain from the same block. Recently, this happened to the crypto king, Bitcoin.
Some of the Miners, developers, and users need a large block of Bitcoin, which precedes the rule of the old protocol. This made two versions, Bitcoin Cash, and Bitcoin.
Forks are often used to implement a fundamental change or to create a new asset with the same property but with significant alterations. It happens either intentionally or unintentionally when the nodes do not reproduce the same data.
When coming to the end of this article, we hope that we had quenched your thirst for eagerness.