Fork: Cryptocurrencies like Bitcoin and Ethereum are built on blockchain, an open source decentralised platform that anybody may contribute to. The software is named blockchain because it is essentially made up of blocks of data (picture a very long railway) that can be monitored from the network’s inception. Because the programme is open source, the various communities are responsible for maintaining and developing the underlying code.
A fork happens when a community modifies the blockchain protocol or a set of ground rules. When this occurs, the chain splits, resulting in a second blockchain that shares all of the original’s history but pursues a different path.
Why is this important?
Most digital currencies have distinct development teams in charge of network updates and enhancements, similar to how changes to internet protocols enable web surfing to improve over time. As a result, a fork may occur to improve the security of a coin or to introduce new features.
However, programmers in charge of creating a new currency may leverage a fork to build totally new currencies and ecosystems.
Soft fork: Think of a soft fork as a blockchain software update. As long as all users embrace it, it becomes a new set of monetary norms. Soft forks were used to provide new functions or features to Bitcoin and Ethereum, primarily at the programming level. The adjustments are backwards compatible with pre-fork blocks since the ultimate outcome is a single blockchain.
A hard fork happens when code changes to the point that the new version is no longer backward compatible with earlier blocks. In this case, the blockchain breaks into two parts: the original blockchain and a new version with different rules. This results in the creation of a whole new cryptocurrency, which is the source of many well-known coins. The hard fork created cryptocurrencies such as Bitcoin Cash and Bitcoin Gold from the original Bitcoin blockchain.
Why do forks occur?
Blockchains, like any software, need upgrades for a variety of reasons, including:
- to add functionality
- To address security concerns
- To settle a community argument on the future of cryptocurrencies
How do forks continue to change the cryptocurrency landscape?
- The Ethereum blockchain is intended to execute “smart contracts,” which are pieces of code that automatically carry out a series of specified actions when specific conditions are met. Smart contract applications range from games to logistics tools to DeFi dapps.
- Parallelism may be formed between the Ethereum blockchain and a computer’s operating system as a platform capable of executing all of these apps. Ethereum forks – Ethereum, Ethereum Classic, and Ethereum 2.0 – are analogous to updated versions of an operating system that add features or increase efficiency over prior ones.
- An older fork may continue to be a solid and established platform, but a newer fork may provide programmers with totally new methods to engage. (It is conceivable that earlier and newer versions may combine or continue to develop independently.)
- Consider a soft fork to be a “software update” (such as when your phone prompts you to upgrade to the current operating system) and a hard fork to be a whole new operating system (like Linux and Mac OS are evolutions of the UNIX platform, which already half a century old).
