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A Simple Guide to Bitcoin Forks

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“Forks” are of common occurrence in computing software and it’s a technical term that eludes many Bitcoin enthusiasts. If you’ve been paying attention to Bitcoin lately, you’ll notice that it has had its fair share of forking.

What are forks?

A ‘fork’ is a term that defines a technical event that happens on a blockchain because different participants need to come to an agreement regarding common rules.

Basically a fork is when a blockchain separates in two and it can happen because:

  • Miners discover a block at the same time, which result in two split chains. This is however a temporary fork as the chain that finds the next block becomes the longest chain, the shorter one being abandoned by the network.
  • Developers make a conscious change in the underlying implemented protocols. These changes in the codebase can be due to adding new features to develop the network or changing core rules (such as block size).

Hard forks

A hard fork is a software upgrade that isn’t compatible with the older version. All participants must upgrade to the new software to continue participating and have their transactions validated. Those who did not upgrade will be separated from the network and their new transactions will not be validated.

Soft forks

A soft fork is an upgrade that I backwards compatible with previous versions. This means that non-upgraded nodes of the network can validate and verify new transactions. It is much easier to implement a soft fork as it only needs a majority of participants to upgrade the software. It must be noted that the functionality of a non-upgraded participant is affected.

Bitcoin Cash

When the Bitcoin community decided to fix the speed of the network and include more transactions in one block, two rules were going to be implemented to improve the problem.

The first rule optimized the way the transactions were written so that more transactions could fit in one block. The second rule changed the block size from 1MB to 2MB.

The community initially seemed to agree on these upgrades, and they were meant to be carried out in two phases. The first phase of the process went without problems, but a group of miners decided to go ahead and upgrade the second rule on their own.

And that is how Bitcoin Cash was created. Bitcoin Cash has a block size of 8MB (Bitcoin has 1MB) making it a lot faster than Bitcoin. But speed isn’t all when deciding which coin is better. Bitcoin Cash’s power isn’t distributed among a large number of strangers, as is the case with most cryptocurrencies. Said power is restricted to a small elite.

Bitcoin Gold

Bitcoin Gold was created to make Bitcoin mineable on CPUs and GPUs and better distributed geographically. This means that miners do not need to use ASICs (Application Specific Integrated Circuit). These specifically designed computer chips are very expensive and have no other use than mining. This led Bitcoin mining to be limited only to a rich miners or large mining companies.

The deployment of such a rule meant that anyone who owned a PC could participate and start earning rewards.

A problem would be the lack of Replay Protection. Without it, a transaction on a fork can be replayed on the other branch. That means if you owned some Bitcoins before the fork, you get a copy of the new currency, and if you let’s say spend one of your coins from one branch there are chances that the other coins from the other branch will be spent too.

Bitcoin2X

This fork was planned in August 2017 and it was to upgrade the second rule that was meant to be implemented when Bitcoin Cash emerged (the one that changed the size of the blockchain from 1MB to 2MB).

But this was met with great scepticism as BitcoinX2 was meant to completely replace Bitcoin.

For this fork to succeed, all miners, wallets, companies, basically everything and everyone that deals with cryptocurrency has to agree to the fact that BitcoinX2 would replace Bitcoin.

The final fork was one that was scheduled to happen in November, but it was announced that all plans regarding the fork have been temporarily suspended.


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