There is no such thing as a perfect system. Each has to be continuously developed and evolved to cater to the needs of the times. The same is true with Bitcoin and the blockchain. The independent group of developers who are in charge of consistently improving policies and design have been working hard to make sure that the policies are responsive to the changes in market needs and possible issues that may arise in the future.
When a change is being implemented in the Blockchain, it is technically called a “fork.” Bitcoin forks are defined variantly as changes in the protocol of the bitcoin network or as the situations that occur “when two or more blocks have the same block height”. These Forks becomes a determinant of the validity of the rules that are implemented in the Blockchain network.
You might have been scratching your heads whenever you something like Bitcoin Cash, Bitcoin Gold, Bitcoin Unlimited, etc. Well, these variants of Bitcoin have one common origins and has become a little different from each other after a new fork has been implemented. But let’s make sense about this even more. In order to do that, we have to first go back to how Bitcoin works and how the blockchain operates.
How does Bitcoin operate?
As we all know, Bitcoin is a digital currency that uses cryptography to process transactions. The cryptograms are a set of mathematical formulas that are solved by high-power computers and specialized software in order to create and add a block to the entire blockchain. This entire process is done by “miners” whose purpose is not only to process and verify transactions in the blockchain but are also tasked with creating new Bitcoins (hence, the name “mining”).
Each block contains a batch of transactions processed together. Initially, the blockchain is designed in order for each block to only be limited to only 1MB and there are only as many transactions that can go at once. This was manageable before but as the popularity if Bitcoin grew, there are more and more people who need their transactions to be processed. This has caused delays to the processing of a transaction and paved way to the debate on whether the block size has to be changed.
When a change in protocol, such as a change in the size of the block in order to accommodate more transactions at once, what happens is that there will become a fork. This example illustrates the kind of fork that could potentially change how bitcoins operate altogether. But there are other types of Forks as well. But before that let us first dive deeper what fork means in the context of blockchain.
Blockgeeks define as fork as a “condition whereby the state of the blockchain diverges into chains where a part of the network has a different perspective on the history of transactions than a different part of the network.” So in the simplest terms, a fork is just a divergence in the perspective of the state of the blockchain.
Two types of crypto forks
A soft fork is a change in the state of blockchain that diverges from the main blockchain that still allows the chain from the past to still be readable. Think of it as a software update for Microsoft Excel that is backward compatible. This means that updating your software to Microsoft Excel 2016 will still allow you to view files in Microsoft Excel 2007, except those elements that are affected by the update. For example, Microsoft Excel 2016 allows users to add GIF files in the spreadsheet. If you use a 2007 version, you will still be able to read the entire file, except the GIF that was added there.
Opposite to soft forks, hard forks are not backward compatible. This means that the changes in the Blockchain protocol could not be read or processed in the old chains. If you do not join the upgraded version of the blockchain then you do not get access to any of the new updates or interact with users of the new system whatsoever. Think of it as an upgrade from PS 3 to PS4. Buying games on PS4 will not allow you to play the games you bought in PS3 and vice versa.
To make it more clearer, Andreas Antonopoulos describes the difference between hard and soft fork like this: “If a vegetarian restaurant would choose to add pork to their menu it would be considered to be a hard fork. if they would decide to add vegan dishes, everyone who is vegetarian could still eat vegan, you don’t have to be vegan to eat there, you could still be vegetarian to eat there and meat eaters could eat there too so that’s a soft fork.”
Popular Bitcoin Forks
There are several Bitcoin forks that have happened in the past 10 years since the cryptocurrency first appeared in the market. Some of these Forks have entirely changed the game, some of them are just minor upgrades that are necessary to make the process more streamlined. Here are a few of the most popular forks:
- Bitcoin Cash: Forked at block 478558, 1 August 2017, for each bitcoin (BTC), an owner got 1 Bitcoin Cash (BCH)
- Bitcoin Gold: Forked at block 491407, 24 October 2017, for each BTC, an owner got 1 Bitcoin Gold (BTG)
- Bitcoin SV: Forked at block 556766, 15 November 2018, for each Bitcoin Cash (BCH), an owner got 1 Bitcoin SV (BSV).
- March 2013 Chain Fork (migration from BerkeleyDB to LevelDB caused a chain split)
- CVE-2018-17144 (Bitcoin 0.15 allowed double spending certain inputs in the same block. Not exploited)
Final thougts on bitcoin forks
Bitcoin may be better than most cryptocurrencies but it is not a perfect system. Occasionally, there are system issues that need to be resolved. This is the reason why forks exists. These are the changes in the Blockchain protocol that affects policies and their application. Some forks are backward compatible, some are not. Regardless of what kind of fork has happened or will happen, it is important that you remain informed on this issues as they have the capacity to change the rules in the Bitcoin community. If you want to learn more about Bitcoin, the blockchain, and Bitcoin mixing, continue reading our blog!